<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1998
REGISTRATION NOS. 333- , AND 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
COUNTRYWIDE HOME LOANS, INC.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
---------------
NEW YORK DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
13-2631719 13-2641992
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
4500 PARK GRANADA
CALABASAS, CA 91302
(818) 225-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
DAVID S. LOEB
DIRECTOR
COUNTRYWIDE HOME LOANS, INC.
AND
PRESIDENT AND CHAIRMAN OF THE BOARD
COUNTRYWIDE CREDIT INDUSTRIES, INC.
4500 PARK GRANADA
CALABASAS, CA 91302
(818) 225-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
KENNETH R. BLACKMAN EDWARD J. FINE
FRIED, FRANK, HARRIS, SHRIVER & BROWN & WOOD LLP
JACOBSON ONE WORLD TRADE CENTER
ONE NEW YORK PLAZA NEW YORK, NEW YORK 10048
NEW YORK, NEW YORK 10004 (212) 839-5300
(212) 859-8000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement, as
determined by market conditions.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
(Continued on next page)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
(Continued from previous page)
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES AMOUNT TO BE OFFERING OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1)(2) PRICE PER UNIT PRICE(3) FEE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities......... $3,000,000,000 100%(3) $3,000,000,000 $834,000
- -------------------------------------------------------------------------------------
Guarantees of Debt
Securities............. $3,000,000,000 (4) (4) None
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Debt Securities and
Guarantees to be sold in
market-making transac-
tions(5)................ -- -- -- --
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Or, if any Debt Securities are issued at an Original Issue Discount, such
greater amount as shall result in an aggregate public offering price of
$3,000,000,000.
(2) In U.S. dollars or the equivalent thereof in foreign currency or currency
units.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).
(4) No separate consideration will be received for the Guarantees of Debt
Securities.
(5) This Registration Statement registers an indeterminate amount of Debt
Securities and Guarantees to be sold by Countrywide Securities Corporation
in market-making transactions where required.
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains alternate pages to the registrants'
Prospectus Supplement for Medium-Term Notes to be used in connection with any
market-making transactions by Countrywide Securities Corporation, an affiliate
of the registrants, who may act as an agent in connection with the sale of the
Medium-Term Notes.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS IS +
+NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE +
+REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS +
+EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS ARE NOT AN +
+OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY +
+THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER 30, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus Dated , 1998)
$3,000,000,000
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES H
UNCONDITIONALLY GUARANTEED BY
[LOGO]
COUNTRYWIDE CREDIT INDUSTRIES, INC.
- --------------------------------------------------------------------------------
This is a public offering to be conducted on a continuous basis by Countrywide
Home Loans, Inc. ("we" or "CHL") of Medium-Term Notes, Series H. We will issue
Notes with the general terms described below. We will agree to the specific
terms of the Notes at the time they are offered for sale. After these terms are
established, they will be described in a pricing supplement to this prospectus
supplement and the attached prospectus.
MATURITY: Nine months or more from date of issue.
REDEMPTION: We will specify in the pricing supplement the terms under which
we may, or may be required to, redeem or repay the Notes prior
to maturity.
INTEREST: Either a fixed or floating rate as we will specify in the
pricing supplement. We will establish interest payment dates and
describe them in the pricing supplement.
CURRENCY: U.S. dollars or such foreign currencies as we may designate in
the pricing supplement.
GUARANTEE: Countrywide Credit Industries, Inc., our parent company, will
guarantee the payment of principal, any premium and interest on
the Notes.
RANKING: The Notes will be unsecured and unsubordinated indebtedness and
will rank equally with our other unsecured and unsubordinated
indebtedness. The guarantee will be an unsecured and
unsubordinated obligation of Countrywide Credit Industries, Inc.
INVESTING IN THE NOTES INVOLVES RISKS. RISK FACTORS BEGIN ON PAGE S-2.
Unless we state differently in the pricing supplement, the pricing terms of the
Notes will be:
<TABLE>
<CAPTION>
PER NOTE TOTAL
--------------------- ------------------------
<S> <C> <C>
Public Offering Price.......... 100.000% $3,000,000,000
Commission or Discount......... .125%-.75% $3,750,000-$22,500,000
Proceeds to Countrywide Home
Loans, Inc..................... 99.875%-99.25% $2,996,250,000-
$2,977,500,000
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus supplement or the attached prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
We will offer the Notes through the agents named below. We also may sell
Notes to an agent for resale to other investors and may sell Notes directly to
investors. We will deliver the Notes in either certificated form or through the
book-entry facilities of The Depository Trust Company, as described in the
pricing supplement.
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
CHASE SECURITIES INC.
DEUTSCHE BANK SECURITIES
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
COUNTRYWIDE SECURITIES CORPORATION
, 1998
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................... S-3
Description of Notes....................................................... S-5
Federal Income Tax Consequences............................................ S-22
Plan of Distribution of Notes.............................................. S-27
Validity of Notes.......................................................... S-28
</TABLE>
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information..................................................... 2
CHL and CCI................................................................ 3
Use of Proceeds............................................................ 4
Selected Consolidated Financial Data....................................... 5
Description of Debt Securities and Guarantees.............................. 6
Plan of Distribution....................................................... 12
Validity of Debt Securities................................................ 13
Experts.................................................................... 13
</TABLE>
------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We and
Countrywide Credit Industries, Inc. ("CCI" or the "Guarantor") 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 and CCI 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
supplement and the accompanying prospectus is accurate as of the date on the
front cover of this prospectus supplement only. Our and CCI's business,
financial condition, results of operations and prospects may have changed since
that date.
S-2
<PAGE>
RISK FACTORS
Your investment in the Notes will include certain 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.
STRUCTURE RISKS
GENERAL
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. Such 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 such 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 such 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
If your Notes are redeemable at our option or are otherwise subject to
mandatory redemption, we may choose to redeem (in the case of optional
redemption) or must redeem (in the case of mandatory redemption) your Notes at
times when prevailing interest rates may be relatively low. At those times, 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.
UNCERTAIN TRADING MARKETS
We cannot assure you a trading market for your Notes will ever develop or be
maintained. Many factors independent of our creditworthiness affect the trading
market. These factors include:
. complexity and volatility of any index or formula applicable to the Notes,
. method of calculating the principal, premium and interest in respect of the
Notes,
. time remaining to the maturity of the Notes,
. outstanding amount of the Notes,
. redemption features of the Notes,
. amount of other debt securities linked to any index or formula applicable to
the Notes, and
. level, direction and volatility of market interest rates generally.
In addition, certain Notes may have a more limited trading market and
experience more price volatility because they were designed for specific
investment objectives or strategies. There may be a limited number of buyers
when you decide to sell those Notes. This may affect the price you receive for
those Notes if you choose to sell them prior to maturity or your ability to
sell those Notes at all. You should not purchase Notes unless you understand
and know you can bear the foregoing investment risks.
EXCHANGE RATES AND EXCHANGE CONTROLS
If you invest in Notes that are denominated and/or payable in a currency
other than U.S. dollars ("Foreign Currency Notes"), there will be significant
risks not associated with an investment in a debt security denominated and
payable in U.S. dollars, including the possibility of material changes in the
exchange rate between U.S. dollars and your payment currency and the imposition
or modification of exchange controls by the applicable governments. We have no
control over the factors that generally affect these risks, such as economic,
financial and political events and the supply and demand for the applicable
currencies. Moreover, if payments on your Foreign Currency Notes are determined
by reference to a formula containing a multiplier or leverage factor, the
effect of any change in the exchange rates between the applicable currencies
will be magnified. In recent years, exchange rates between certain currencies
have been highly volatile and volatility between such currencies or with other
currencies may be expected in the future.
S-3
<PAGE>
Fluctuations between currencies in the past are not necessarily indicative,
however, of fluctuations that may occur in the future. Depreciation of your
payment currency would result in a decrease in the U.S. dollar equivalent yield
of your Foreign Currency Notes, in the U.S. dollar equivalent value of the
principal and any premium payable at maturity or earlier redemption of your
Foreign Currency Notes and, generally, in the U.S. dollar equivalent market
value of your Foreign Currency Notes.
Governmental exchange controls could affect exchange rates and the
availability of your payment currency on a required payment date. Even if there
are no exchange controls, it is possible that your payment currency will not be
available on a required payment date because of circumstances beyond our
control. In such cases, we will be allowed to satisfy our obligations in
respect of your Foreign Currency Notes in U.S. dollars.
YOU SHOULD CONSULT YOUR FINANCIAL AND LEGAL ADVISORS ABOUT THE RISKS
ASSOCIATED WITH FOREIGN CURRENCY NOTES. YOU SHOULD NOT PURCHASE SUCH NOTES IF
YOU ARE UNSOPHISTICATED WITH REGARD TO FOREIGN CURRENCY TRANSACTIONS.
CREDIT RATINGS
The credit ratings of our medium-term note program may not reflect the
potential impact of all risks related to structure and other factors on the
value of your Notes. In addition, actual or anticipated changes in our credit
ratings will generally affect the market value of your Notes.
S-4
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
supplements the description of the general terms and provisions of the Debt
Securities set forth in the accompanying Prospectus, to which description
reference is hereby made. Unless otherwise specified in a Pricing Supplement,
the terms of the Notes will be as set forth below.
GENERAL
The Notes are to be issued as a series of Debt Securities limited to U.S.
$3,000,000,000, or its equivalent in one or more foreign currencies or currency
units, aggregate initial offering price under an Indenture dated as of January
1, 1992, as amended, supplemented or modified from time to time, including
Supplemental Indenture No. l thereto dated as of June 15, 1995 (collectively,
the "Indenture"), among Countrywide Home Loans, Inc. ("CHL"), Countrywide
Credit Industries, Inc. (the "Guarantor") and The Bank of New York, as trustee
(the "Trustee"), which is described more fully under "Description of Debt
Securities and Guarantees" in the accompanying Prospectus. The statements
herein concerning the Notes and the Indenture do not purport to be complete and
are qualified in their entirety by reference to the provisions of the
Indenture, including the definitions of certain terms used herein without
definition.
The Notes will be offered on a continuous basis and will mature on any day
nine months or more from their dates of issue, as specified in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, interest-bearing Notes will either bear interest at a fixed rate
("Fixed Rate Notes") or bear interest at a floating rate ("Floating Rate
Notes"), as specified in the applicable Pricing Supplement. Notes also may be
issued that do not bear any interest currently or that bear interest at a below
market rate.
Each Note will be represented by either a global security registered in the
name of a nominee of The Depository Trust Company, New York, New York ("DTC"),
as depositary (a "Book-Entry Note"), or a certificate issued in definitive form
(a "Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in Book-Entry Notes will be shown on, and transfers
thereof will be effected only through, records maintained by DTC (with respect
to interests of its Participants (as defined below)) and by its Participants
(with respect to interests of beneficial owners (as defined below)). Book-Entry
Notes will not be issuable as Certificated Notes, except under the limited
circumstances described herein.
Unless otherwise specified in the applicable Pricing Supplement, the minimum
denomination of Notes will be $1,000 or the equivalent thereof in any foreign
currency or currency unit (if other than U.S. dollars) (a "Specified Currency")
as may be designated by CHL, and integral multiples of $1,000 in excess thereof
or the equivalent thereof in such Specified Currency.
Interest rates offered by CHL with respect to the Notes may differ depending
upon, among other things, the aggregate principal amount purchased in any
single transaction. Notes with similar terms but different interest rates may
be offered concurrently to different investors. Notes with different variable
terms also may be offered concurrently to different investors.
Unless otherwise specified herein or in the applicable Pricing Supplement,
"Exchange Rate" means, with respect to a Specified Currency, the noon dollar
buying rate for such Specified Currency for cable transfers quoted by the
Exchange Rate Agent (as specified in the applicable Pricing Supplement) in The
City of New York on the Record Date or Special Record Date (each as defined
below) or the fifteenth day immediately preceding the Maturity Date or on such
other date provided in the applicable Note or in the Indenture, as the case may
be, as certified for customs purposes by the Federal Reserve Bank of New York.
Certificated Notes may be presented for registration of transfer or exchange
at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The
City of New York. Registration of transfers or exchanges of Book-Entry Notes
may be effected only through a participating member of the Depositary (as
defined below).
S-5
<PAGE>
The Notes will constitute unsecured and unsubordinated indebtedness of CHL
and will rank equally with CHL's other unsecured and unsubordinated
indebtedness. As of August 31, 1998, the Guarantor had no secured indebtedness
outstanding, and CHL had $77,323,000 aggregate principal amount of secured
indebtedness outstanding, all of which was short-term indebtedness. As of that
date, CHL had $7,704,397,000 aggregate principal amount of unsecured and
unsubordinated indebtedness outstanding, which indebtedness ranked equally with
CHL's other unsecured and unsubordinated indebtedness and will rank equally
with the Notes. See "Description of Debt Securities and Guarantees--General"
and "--Guarantees" in the accompanying Prospectus. A substantial portion of the
assets of CHL may be pledged under various credit agreements among CHL and
various lending institutions. See Note F to CCI's Consolidated Financial
Statements incorporated by reference into the accompanying Prospectus.
The Indenture does not contain any provisions that would limit the ability of
CHL, the Guarantor or any of their respective affiliates to incur indebtedness
(secured or unsecured) or that would afford Holders of the Notes protection in
the event of a highly leveraged transaction, restructuring, change in control,
merger or similar transaction involving CHL or the Guarantor that may adversely
affect Holders of the Notes.
If so specified in the applicable Pricing Supplement, the Notes will be
redeemable at the option of CHL or repayable at the option of the Holder prior
to maturity. See "--Redemption and Repayment" below. The Notes will not be
subject to any sinking fund.
"Business Day" means (A) any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law, regulation or executive order to close in New York, New
York or Los Angeles, California; provided, however, if the Specified Currency
specified in the applicable Pricing Supplement is other than U.S. dollars, such
day is also not a day on which banking institutions are authorized or required
by law, regulation or executive order to close in the relevant Principal
Financial Center (as defined below) (or if the Specified Currency is Euro
("Euro"), such day is also not a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is closed), and (B)
with respect to Floating Rate Notes as to which LIBOR (as defined below) is an
applicable Base Rate, a London Banking Day (as defined below). "Principal
Financial Center" means 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 and
Swiss francs, the "Principal Financial Center" shall be The City of New York,
Sydney, Toronto, Frankfurt, Amsterdam, Milan and Zurich, respectively. "London
Banking Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
The "Maturity Date" means the earlier of the date on which the principal of a
Note is redeemed (the "Redemption Date") or repaid (the "Repayment Date") or
the date on which the Note will mature (the "Stated Maturity Date").
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on Floating
Rate Notes will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655)), and all amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded, in the case of U.S. dollars, to the
nearest cent (with one-half cent being rounded upward) or, in the case of a
Specified Currency other than U.S. dollars, to the nearest unit (with one-half
unit being rounded upward).
The Pricing Supplement relating to each Note will describe the following
terms:
(1) the Specified Currency;
(2) whether such Note is a Fixed Rate Note, a Floating Rate Note or such
other Note as is specified in such Pricing Supplement;
(3) if other than 100%, the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Note will be issued
to the public (the "Issue Price");
S-6
<PAGE>
(4) the trade date;
(5) the date on which such Note will be issued (the "Issue Date");
(6) the Stated Maturity Date and whether the Stated Maturity Date may be
extended by CHL, and if so, the Extension Periods and Final Maturity
Date (each as defined below);
(7) if such Note is a Fixed Rate Note, the rate per annum at which such
Note will bear interest, if any, and the Interest Payment Dates (as
defined below) and whether such rate may be reset by CHL prior to the
Stated Maturity Date and, if so, the date(s) and basis or formula
therefor;
(8) if such Note is a Floating Rate Note, whether it is a "Floating
Rate/Fixed Rate Note" and, if so, the Fixed Rate Commencement Date
and Fixed Interest Rate (each as defined below), as well as the Base
Rate, the Initial Interest Rate, the Interest Determination Dates,
the Interest Reset Dates, the Interest Payment Dates, the Index
Maturity, the Maximum Interest Rate and/or the Minimum Interest Rate,
if any, and the Spread and/or Spread Multiplier, if any (each as
defined below), and any other terms relating to the particular method
of calculating the interest rate for such Note, and whether the
Spread and/or Spread Multiplier may be reset by CHL prior to the
Stated Maturity Date and, if so, the date(s) and basis or formula
therefor;
(9) whether such Note may be redeemed at the option of CHL, or repaid at
the option of the Holder, prior to maturity, and if so, the earliest
date of redemption (the "Initial Redemption Date") and optional
date(s) of repayment (each, an "Optional Repayment Date") and the
other provisions relating to such redemption or repayment;
(10) whether such Note will be issued initially as a Book-Entry Note or a
Certificated Note; and
(11) any other terms of such Note not inconsistent with the provisions of
the Indenture.
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
Principal, premium, if any, and interest will be paid by CHL in the Specified
Currency. If and as specified in the applicable Pricing Supplement, at the
request of a Holder of a Note payable in a Specified Currency other than U.S.
dollars, payments of principal, premium, if any, and interest in respect of
such Note will be paid in U.S. dollars. Under such circumstances, CHL will be
required to tender payment in U.S. dollars at the Exchange Rate, and any costs
associated with such conversion would be borne by such Holder through deduction
from such payments. Such Holder may elect to receive payments in U.S. dollars
by delivering a written request to the Trustee not later than the close of
business on the Record Date immediately preceding the Interest Payment Date or
the fifteenth day immediately preceding the Maturity Date, as the case may be.
Such election will remain in effect until revoked by written notice from such
Holder to the Trustee, but written notice of any such revocation must be
received by the Trustee not later than the close of business on the Record Date
immediately preceding the Interest Payment Date or the fifteenth day
immediately preceding the Maturity Date, as the case may be. Upon request, the
Trustee will mail a copy of a form of request to any Holder.
Unless otherwise specified in the applicable Pricing Supplement, interest on
the certificated Notes due on any Interest Payment Date other than the Maturity
Date will be paid, except as provided below, by mailing a check in the
Specified Currency (from an account at a bank located outside of the United
States if such check is payable in a Specified Currency other than U.S.
dollars) to the Holder at the address of such Holder appearing on the Security
Register on the applicable Record Date. Unless otherwise specified in the
applicable Pricing Supplement, the first payment of interest on any Note
originally issued between a Record Date and an Interest Payment Date will be
made on the Interest Payment Date following the next Record Date to the Holder
on such next Record Date. Notwithstanding the foregoing, on any Interest
Payment Date other than the Maturity Date, a Holder of U.S. $10,000,000 (or the
equivalent thereof in a Specified Currency other than U.S. dollars) or more in
aggregate principal amount of Notes (whether or not having identical terms and
provisions)
S-7
<PAGE>
shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive
such payment by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the United States, but only if
appropriate wire transfer instructions have been received in writing by the
Trustee not later than the Record Date immediately preceding such Interest
Payment Date, and (ii) if the Specified Currency is other than U.S. dollars, to
receive such payment by wire transfer of immediately available funds to an
account maintained by the payee with a bank located in a jurisdiction in which
payment in such Specified Currency is then lawful. CHL will pay any
administrative costs imposed by banks in connection with making payments by
wire transfer, but any tax, assessment or other governmental charge imposed
upon payments will be borne by the Holders of the Notes in respect of which
payments are made. Beneficial owners of Global Notes (as defined below) will be
paid in accordance with the procedures of the Depositary and its Participants
in effect from time to time as described under "--Book-Entry Notes" below.
Unless otherwise specified in the applicable Pricing Supplement, payments of
principal, premium, if any, and interest on the Maturity Date will be made in
immediately available funds in the Specified Currency upon presentation and
surrender of Notes at the Corporate Trust Office of the Trustee. In the case of
such payments in a Specified Currency other than U.S. dollars, Notes shall be
presented and surrendered to the Trustee in time for the Trustee to make such
payments in accordance with its normal procedures.
If any Interest Payment Date other than the Maturity Date for any Floating
Rate Note would otherwise fall on a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next Business Day, except that
if interest thereon is determined by reference to LIBOR and such next Business
Day falls in the next calendar month, such Interest Payment Date shall be the
immediately preceding Business Day. If the Maturity Date for any Fixed Rate
Note or Floating Rate Note or the Interest Payment Date for any Fixed Rate Note
falls on a day which is not a Business Day, payment of principal, premium, if
any, and interest with respect to such Note will be made on the next Business
Day with the same force and effect as if made on such date, and no interest on
such payment will accrue to such next Business Day.
Any interest not punctually paid or duly provided for with respect to a Note
("Defaulted Interest") will forthwith cease to be payable to the Holder thereof
on the applicable Record Date and may either be paid to the person in whose
name such Note is registered at the close of business on a special record date
(the "Special Record Date") for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to the Holder of such Note
not less than ten days prior to such Special Record Date, or may be paid at any
time in any other lawful manner, all as more completely provided in the
Indenture.
Unless otherwise specified in the applicable Pricing Supplement, the "Record
Date" with respect to any Interest Payment Date for Floating Rate Notes shall
be the fifteenth day immediately preceding such Interest Payment Date, and for
Fixed Rate Notes shall be the December 31 or June 30 immediately preceding such
Interest Payment Date, in each case whether or not such date shall be a
Business Day.
PAYMENT CURRENCY
If any payment of principal, premium, if any, or interest in respect of any
Note is to be made in a Specified Currency other than U.S. dollars and such
Specified Currency is not available to CHL for making such payment due to the
imposition of exchange controls or other circumstances beyond the control of
CHL, CHL will be entitled to satisfy its obligations to the Holder of such Note
by making such payment in U.S. dollars on the basis of the Exchange Rate (as
defined below) two Business Days prior to the Interest Payment Date or the
Maturity Date, as the case may be (or, if no rate is quoted for such Specified
Currency on such date, the last date such Exchange Rate is quoted). Any payment
made under such circumstances in U.S. dollars where the required payment is in
a Specified Currency other than U.S. dollars will not constitute an Event of
Default under the Indenture. For purposes of this section, the "Exchange Rate"
for a foreign currency will be the noon Dollar selling rate for such foreign
currency for cable transfers quoted by the Exchange Rate Agent in The City of
New York, as certified for customs purposes by the Federal Reserve Bank of New
York.
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All determinations referred to above made by an Exchange Rate Agent shall be
at its sole discretion (except to the extent expressly provided that any
determination is subject to approval) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder of such Note and
such Exchange Rate Agent shall have no liability therefor.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Issue Date at the rate per
annum stated on the face thereof until the principal amount thereof is paid or
made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, interest on each Fixed Rate Note will be payable semi-
annually in arrears on each January 15 and July 15 (each, an "Interest Payment
Date") and on the Maturity Date. Each payment of interest shall include
interest accrued from and including the Issue Date or the most recent Interest
Payment Date to which interest has been paid or duly provided for, as the case
may be, to, but excluding, the applicable Interest Payment Date or the Maturity
Date, as the case may be (each, an "Interest Period"). Unless otherwise
specified in the applicable Pricing Supplement, interest on the Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest at a rate determined by reference
to an interest rate basis (each, a "Base Rate"), which may be adjusted by a
Spread and/or Spread Multiplier. The applicable Pricing Supplement will
designate one or more of the following Base Rates as applicable to each
Floating Rate Note: (a) the Commercial Paper Rate (as defined below), (b)
LIBOR, (c) the Certificate of Deposit Rate (as defined below), (d) the Federal
Funds Rate (as defined below), (e) the Prime Rate (as defined below), (f) the
Treasury Rate (as defined below), (g) the CMT Rate (as defined below), (h) the
11th District Cost of Funds Rate (as defined below) or (i) such other interest
rate basis or formula as is set forth in such Pricing Supplement and in such
Floating Rate Note. The "Index Maturity" for any Floating Rate Note is the
period of maturity of the instrument or obligation from which the Base Rate is
calculated.
Unless otherwise specified in the applicable Pricing Supplement, the interest
rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate, or the lowest, highest or average of two or more specified
Base Rates, (a) plus or minus the Spread, if any, and/or (b) multiplied by the
Spread Multiplier, if any. The "Spread" is the number of basis points (one
basis point equals one-hundredth of a percentage point) specified in the
applicable Pricing Supplement to be added or subtracted from the related Base
Rate applicable to such Floating Rate Note, and the "Spread Multiplier" is the
percentage specified in the applicable Pricing Supplement as being applicable
to such Floating Rate Note by which such Base Rate will be multiplied to
determine the applicable interest rate on such Floating Rate Note.
If a Floating Rate Note is designated as a "Floating Rate/Fixed Rate Note,"
unless otherwise specified in the applicable Pricing Supplement, the interest
rate will be calculated in the same manner as any other Floating Rate Note
until a designated date when the interest rate will become fixed (the "Fixed
Rate Commencement Date"). The interest rate in effect for the period commencing
on the Fixed Rate Commencement Date and continuing until the Maturity Date will
be the rate per annum specified in the applicable Pricing Supplement as the
"Fixed Interest Rate" or, if no Fixed Interest Rate is specified, the interest
rate in effect on the day immediately preceding the Fixed Rate Commencement
Date. Unless otherwise specified herein or in the applicable Pricing
Supplement, the Fixed Rate Commencement Date shall also constitute an Interest
Payment Date for purposes of calculating and paying interest. Unless otherwise
specified herein or in the applicable Pricing Supplement, the Floating
Rate/Fixed Rate Note shall be treated as a Floating Rate Note until the Fixed
Rate Commencement Date and as a Fixed Rate Note from the Fixed Rate
Commencement Date and thereafter. Material United States Federal income tax
considerations associated with an investment in a Floating Rate/Fixed Rate Note
will be specified in the applicable Pricing Supplement.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum numerical limitation,
or ceiling, on the rate of interest which may accrue during
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any Interest Period ("Maximum Interest Rate"); and (ii) a minimum numerical
limitation, or floor, on the rate of interest which may accrue during any
Interest Period ("Minimum Interest Rate"). In addition to any Maximum Interest
Rate which may be applicable to any Floating Rate Note pursuant to the above
provisions, the interest rate on a Floating Rate Note will in no event be
higher than the maximum rate permitted by New York law, as the same may be
modified by United States law of general application.
Except as provided below, the rate of interest on each Floating Rate Note
will be reset daily, weekly, monthly, quarterly, semi-annually or annually, as
specified in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement, the "Interest Reset Date" will be, in the
case of Floating Rate Notes which reset (a) daily, each Business Day; (b)
weekly, the Wednesday of each week (with the exception of weekly reset Floating
Rate Notes as to which the Treasury Rate is an applicable Base Rate, which will
reset the Tuesday of each week, except as specified below); (c) monthly, the
third Wednesday of each month (with the exception of monthly reset Floating
Rate Notes as to which the 11th District Cost of Funds Rate is an applicable
Base Rate, which will reset on the first calendar day of each month); (d)
quarterly, the third Wednesday of March, June, September and December; (e)
semi-annually, the third Wednesday of the two months specified in the
applicable Pricing Supplement; and (f) annually, the third Wednesday of the
month specified in the applicable Pricing Supplement. If an Interest Reset Date
for any Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Reset Date shall be postponed to the next Business Day, except
that if interest thereon is determined by reference to LIBOR and such next
Business Day falls in the next calendar month, such Interest Reset Date shall
be the immediately preceding Business Day.
The interest rate in effect on each day will be (i) if such 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 (ii) if such 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. The "Interest Determination Date" means the
Commercial Paper Rate Determination Date, the LIBOR Determination Date, the CD
Rate Determination Date, the Federal Funds Rate Determination Date, the Prime
Rate Determination Date, the Treasury Rate Determination Date, the CMT Rate
Determination Date or the 11th District Rate Determination Date (each as
defined below), as the case may be. If interest on a Floating Rate Note is
determined by reference to two or more Base Rates, the "Interest Determination
Date" means the most recent Business Day which is at least two Business Days
prior to the applicable Interest Reset Date on which each Base Rate shall be
determinable. Each Base Rate shall be determined and compared as of such date,
and the applicable interest rate shall take effect on the related Interest
Reset Date.
Interest on Floating Rate Notes will be payable on the Interest Payment Dates
specified in the applicable Pricing Supplement (each, an "Interest Payment
Date") and on the Maturity Date. Unless otherwise specified in the applicable
Pricing Supplement, interest payments shall be the amount of interest accrued
from and including the most recent Interest Payment Date to which interest has
been paid or duly provided for, or, if no interest has been paid or duly
provided for, from and including the Issue Date to but excluding the applicable
Interest Payment Date or the Maturity Date, as the case may be (each, an
"Interest Period").
With respect to a Floating Rate Note, accrued interest shall be calculated by
multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factor calculated for each day in the Interest Period for which
accrued interest is being calculated. The interest factor for each such day is
computed by dividing the interest rate applicable to such day by 360, if an
applicable Base Rate is the Commercial Paper Rate, Certificate of Deposit Rate,
Federal Funds Rate, Prime Rate, 11th District Cost of Funds Rate or LIBOR, or
by the actual number of days in the year, if an applicable Base Rate is the
Treasury Rate or CMT Rate. If more than one Base Rate is applicable to a
Floating Rate Note, the interest factor will be calculated in the same manner
as if only the Base Rate specified for such purpose in the applicable Pricing
Supplement applied.
Unless otherwise specified in the applicable Pricing Supplement, The Bank of
New York will be the calculation agent (the "Calculation Agent") with respect
to the Floating Rate Notes. Upon the request of the
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Holder of any Floating Rate Note, the Calculation Agent will provide the
interest rate then in effect and, if determined, the interest rate which will
become effective on the next Interest Reset Date with respect to such Floating
Rate Note. The "Calculation Date," if applicable, pertaining to a Floating Rate
Note will be the earlier of (i) the 10th day after the Interest Determination
Date pertaining to a Base Rate or, if such day is not a Business Day, the next
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or the Maturity Date, as the case may be.
The interest rate in effect with respect to a Floating Rate Note from the
Issue Date to the first Interest Reset Date (the "Initial Interest Rate") will
be specified in the applicable Pricing Supplement. The interest rate for each
subsequent Interest Reset Date, except in the case of a Floating Rate/Fixed
Rate Note for the period subsequent to the Fixed Rate Commencement Date, will
be determined by the Calculation Agent as follows.
COMMERCIAL PAPER RATE
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each applicable Interest Reset Date will be
determined by the Calculation Agent as of the second Business Day prior to such
Interest Reset Date (a "Commercial Paper Rate Determination Date") and will be
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates," or any successor
publication ("H.15(519)"), under the caption "Commercial Paper--Nonfinancial."
In the event that such rate is not published prior to 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Commercial Paper Rate Interest
Determination Date, then the Commercial Paper Rate will be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M.
Quotations for U.S. Governmental Securities" ("Composite Quotations") under the
heading "Commercial Paper--Nonfinancial." If by 3:00 P.M., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the Commercial Paper Rate will be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York
City time, on such Commercial Paper Rate Determination Date of three leading
dealers of commercial paper in The City of New York selected by the Calculation
Agent for commercial paper of the specified Index Maturity, placed for a non-
financial entity issuer whose bond rating is "Aa," or the equivalent, from a
nationally recognized statistical rating organization; provided, however, that
if the dealers selected as aforesaid by the Calculation Agent are not quoting
offered rates as mentioned in this sentence, the Commercial Paper Rate for such
Interest Reset Date will be the Commercial Paper Rate in effect on such
Commercial Paper Rate Determination Date.
"Money Market Yield" will be a yield (expressed as a percentage) calculated
in accordance with the following formula:
D X 360
Money Market Yield = 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 corresponding to the Index Maturity specified in the applicable
Pricing Supplement.
LIBOR
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for
each applicable Interest Reset Date will be determined by the Calculation Agent
as follows:
(i) If "LIBOR Reuters" is specified in the applicable Pricing Supplement,
on the second London Banking Day prior to the applicable Interest Reset
Date (a "LIBOR Determination Date"), the Calculation Agent will determine
LIBOR as the arithmetic mean of the offered rates for deposits in U.S.
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dollars for the period of the Index Maturity which appear on the "Reuters
Screen LIBO Page" at approximately 11:00 A.M., London time, on such LIBOR
Determination Date. "Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuter Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks).
If "LIBOR Telerate" is specified in the applicable Pricing Supplement or
if no other method is specified in such Pricing Supplement as the method
for determining LIBOR, on the LIBOR Determination Date, the Calculation
Agent will determine LIBOR as the rate for deposits in U.S. dollars for the
period of the Index Maturity which appears on "Telerate Page 3750" at
approximately 11:00 A.M., London time, on such LIBOR Determination Date.
"Telerate Page 3750" means the display page so designated on Bridge
Telerate, Inc. (or such other page as may replace such page on that service
for the purpose of displaying London interbank offered rates of major
banks).
(ii) If LIBOR Reuters is specified in the applicable Pricing Supplement
and fewer than two offered rates for the applicable Index Maturity appear
on the Reuters Screen LIBO Page or if LIBOR Telerate is applicable for
determining LIBOR and no rate appears on Telerate Page 3750, as applicable,
the Calculation Agent will request the principal London offices of each of
four major banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in U.S. dollars for the period of the Index Maturity
commencing on the second London Banking Day following such LIBOR
Determination Date to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Determination Date and
in a principal amount equal to an amount of not less than U.S. $1,000,000
that is representative of a single transaction in such market at such time.
If at least two such quotations are provided, LIBOR will be the arithmetic
mean of such quotations. If fewer than two quotations are provided, LIBOR
in respect of that LIBOR Determination Date will be the arithmetic mean of
rates quoted by three major banks in The City of New York selected by the
Calculation Agent at approximately 11:00 A.M., New York City time, on such
LIBOR Determination Date for loans in U.S. dollars to leading European
banks, for the period of the Index Maturity designated in the applicable
Pricing Supplement commencing on the second London Banking Day following
such LIBOR Determination Date and in the principal amount equal to an
amount of not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if fewer
than three banks selected as aforesaid by the Calculation Agent are quoting
rates as mentioned in this sentence, LIBOR in effect for such Interest
Reset Date will be LIBOR in effect on such LIBOR Determination Date.
CERTIFICATE OF DEPOSIT RATE
Unless otherwise specified in the applicable Pricing Supplement, the
"Certificate of Deposit Rate" for each applicable Interest Reset Date will be
determined by the Calculation Agent as of the second Business Day prior to the
Interest Reset Date (a "CD Rate Determination Date") and will be the rate for
negotiable certificates of deposit having the Index Maturity designated in the
applicable Pricing Supplement as published in H.15(519) under the caption "CDs
(Secondary Market)." In the event that such rate is not published prior to 3:00
P.M., New York City time, on the Calculation Date pertaining to such CD Rate
Determination Date, then the Certificate of Deposit Rate will be the rate on
such CD Rate Determination Date for negotiable U.S. dollar certificates of
deposit of the Index Maturity designated in the applicable Pricing Supplement
as published in Composite Quotations under the caption "Certificates of
Deposit." If by 3:00 P.M., New York City time, on such Calculation Date such
rate is not yet published in either H.15(519) or Composite Quotations, then the
Certificate of Deposit Rate will be calculated by the Calculation Agent and
will be the arithmetic mean of the secondary market offered rates as of 10:00
A.M., New York City time, on such CD Rate Determination Date of three leading
non-bank dealers (which may include one or more of the Agents or their
affiliates) in negotiable U.S. dollar certificates of deposit in The City of
New York selected by the Calculation Agent for negotiable certificates of
deposit of major United States money center banks (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index
Maturity designated in the applicable Pricing Supplement in a denomination of
U.S. $5,000,000; provided, however, that if the dealers selected as aforesaid
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by such Calculation Agent are not quoting offered rates as mentioned in this
sentence, the Certificate of Deposit Rate for such Interest Reset Date will be
the Certificate of Deposit Rate in effect on such CD Rate Determination Date.
FEDERAL FUNDS RATE
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" for each applicable Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest Reset
Date (a "Federal Funds Rate Determination Date") and will be the rate on such
Federal Funds Rate Determination Date for Federal Funds as published in
H.15(519) under the caption "Federal Funds (Effective)." In the event that such
rate is not published prior to 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Federal Funds Rate Determination Date, the
Federal Funds Rate will be the rate on such Federal Funds Rate Determination
Date as published in Composite Quotations under the heading "Federal Funds
(Effective)." If by 3:00 P.M., New York City time, on such Calculation Date
such rate is not yet published in either H.15(519) or Composite Quotations,
then the Federal Funds Rate will be calculated by the Calculation Agent and
will be the arithmetic mean of the rates for transactions in overnight U.S.
dollar federal funds arranged by three leading brokers of U.S. dollar federal
funds transactions in The City of New York selected by the Calculation Agent as
of 9:00 A.M., New York City time, on such Federal Funds Rate Determination
Date; provided, however, that if the three brokers selected as aforesaid by the
Calculation Agent are not quoting rates as mentioned in this sentence, the
Federal Funds Rate for such Interest Reset Date will be the Federal Funds Rate
in effect on such Federal Funds Rate Determination Date.
PRIME RATE
Unless otherwise specified in the applicable Pricing Supplement, the "Prime
Rate" for each applicable Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest Reset
Date (a "Prime Rate Determination Date") and will be the rate on such date as
such rate is published in H.15(519) under the heading "Bank Prime Loan." If
such rate is not published prior to 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Prime Rate Determination Date, then the
Calculation Agent shall determine the Prime Rate as the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the "Reuters
Screen USPRIME1 Page" as such bank's prime rate or base lending rate as in
effect for such Prime Rate Determination Date. "Reuters Screen USPRIME1 Page"
means the display designated as page "USPRIME1" on the Reuter Monitor Money
Rates Service (or such other page as may replace the USPRIME1 Page on that
service for the purpose of displaying prime rates or base lending rates of
major United States banks). If fewer than four such rates but more than one
such rate appear on the Reuters Screen USPRIME1 Page for such Prime Rate
Determination Date, the Calculation Agent shall determine the Prime Rate as the
arithmetic mean of the prime 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 in The
City of New York on such Prime Rate Determination Date by three major money
center banks in The City of New York selected by the Calculation Agent. If
fewer than two such rates appear on the Reuters Screen USPRIME1 Page, the
Calculation Agent shall determine the Prime Rate as the arithmetic mean on the
basis of the prime rates quoted as of the close of business in The City of New
York on such Prime Rate Determination Date by three substitute banks or trust
companies that are organized and doing business under the laws of the United
States or any state thereof, have total equity capital of at least U.S.
$500,000,000 and are subject to supervision or examination by Federal or state
authorities; provided, however, that if fewer than three such substitute banks
or trust companies are quoting prime rates as mentioned in this sentence, the
Prime Rate for such Interest Reset Date will be the Prime Rate in effect on
such Prime Rate Determination Date.
TREASURY RATE
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined by reference to
the Treasury Rate (a "Treasury Rate Interest Determination Date"), the rate
from the auction held
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on such Treasury Rate Interest Determination Date (the "Auction") of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Pricing Supplement under the caption "AVGE INVEST
YIELD" on the display on Bridge Telerate, Inc. (or any successor service) on
page 56 or page 57 or, if not so published by 3:00 P.M., New York City time, on
the related Calculation Date, the auction average rate of such Treasury Bills
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the Auction
of Treasury Bills having the Index Maturity specified in the applicable Pricing
Supplement are not so published by 3:00 P.M., New York City time, on the
related Calculation Date, or if no such Auction is held, then the Treasury Rate
will be the rate (expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) on such Treasury Rate
Interest Determination Date of Treasury Bills having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the caption "U.S. Government Securities/Treasury Bills/Secondary Market" or, if
not yet published by 3:00 P.M., New York City time, on the related Calculation
Date, the rate on such Treasury Rate Interest Determination Date of such
Treasury Bills as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "U.S. Government Securities/Treasury Bills/Secondary Market." If such
rate is not yet published in H.15(519), H.15 Daily Update or another recognized
electronic source, then the Treasury Rate will be calculated by the Calculation
Agent and will be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on such Treasury Rate 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 applicable Pricing Supplement;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the Treasury Rate determined as of
such Treasury Rate Interest Determination Date will be the Treasury Rate in
effect on such Treasury Rate Interest Determination Date.
Treasury Rate Notes, like other Notes, are not obligations of the United
States government and are not guaranteed by the United States government.
CMT RATE
Unless otherwise specified in the applicable Pricing Supplement, the "CMT
Rate" for each applicable Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest Reset
Date (the "CMT Rate Determination Date"), and will be the rate displayed on the
Designated CMT Telerate Page (as defined below) 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 (as defined below) for (i) if the Designated CMT Telerate Page
is 7051, the rate on such CMT Rate Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the week, or the month, as applicable,
ended immediately preceding the week or the month, as applicable, in which the
applicable CMT Rate Determination Date occurs. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such CMT Rate Determination Date,
then the CMT Rate for such CMT Rate Determination Date will be such treasury
constant maturity rate for the Designated CMT Maturity Index as published in
the relevant H.15(519). If such rate is no longer published in the relevant
H.15(519), or if not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CMT Rate Determination Date, then the CMT
Rate for such CMT Rate Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for the CMT Rate
Determination Date with respect to such 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 the relevant
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H.15(519). If such information is not provided by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such CMT Rate Determination Date,
then the CMT Rate for such CMT Rate Determination Date will be calculated by
the Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately 3:30
P.M., New York City time, on such CMT Rate Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and 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 such Designated CMT Maturity Index
minus one year. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such CMT Rate Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on such CMT Rate Determination
Date of three Reference Dealers in The City of New York (from five such
Reference Dealers selected by the Calculation Agent and 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 U.S.
$100,000,000. If three or four (and not five) of such Reference Dealers are
quoting as described above, then the CMT Rate will be based on the arithmetic
mean of the offer prices obtained and neither the highest nor the lowest of
such quotes will be eliminated; provided, however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting as described
herein, the CMT Rate for such Interest Reset Date will be the CMT Rate in
effect on such CMT Rate Determination Date. If two Treasury Notes with an
original maturity as described in the second preceding sentence have remaining
terms to maturity equally close to the Designated CMT Maturity Index, the
quotes for the Treasury Note with the shorter remaining term to maturity will
be used.
"Designated CMT Telerate Page" means the display on Bridge Telerate, Inc. (or
any successor service) on the page specified in the applicable Pricing
Supplement (or any other page as may replace such page on that service for the
purpose of displaying Treasury Constant Maturities as published in H.15(519)),
for the purpose of displaying Treasury Constant Maturities as published in
H.15(519). If no such page is specified in the applicable Pricing Supplement,
the Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
Treasury Notes (either one, two, three, five, seven, ten, twenty or thirty
years) specified in the applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.
11TH DISTRICT COST OF FUNDS RATE
Unless otherwise specified in the applicable Pricing Supplement, the "11th
District Cost of Funds Rate" for each applicable Interest Reset Date will be
determined by the Calculation Agent as of the last Business Day of the month
prior to such Interest Reset Date (the "11th District Rate Determination
Date"), and will be the rate equal to the monthly weighted average cost of
funds for the calendar month preceding such 11th District Rate Determination
Date as set forth under the caption "11th District" on the display on Bridge
Telerate, Inc. on Page 7058 as of 11:00 A.M., San Francisco time, on such 11th
District Rate Determination Date. If such rate does not appear on Telerate Page
7058 on any related 11th District Rate Determination Date, the 11th District
Cost of Funds Rate for such 11th District Rate Determination Date shall be the
monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced by
the Federal Home Loan Bank ("FHLB") of San Francisco as such cost of funds
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for the calendar month preceding the date of such announcement. If the FHLB of
San Francisco fails to announce such rate for the calendar month next preceding
such 11th District Rate Determination Date, then the 11th District Cost of
Funds Rate for such Interest Reset Date will be the 11th District Cost of Funds
Rate in effect on such 11th District Rate Determination Date.
INDEXED NOTES
CHL may from time to time offer Notes ("Indexed Notes") with the amount of
principal, premium and/or interest payable in respect thereof to be determined
with reference to the price or prices of specified commodities or stocks, to
the exchange rate of one or more designated currencies (including a composite
currency such as the ECU) relative to an indexed currency or to other items, in
each case as specified in the applicable Pricing Supplement. In certain cases,
Holders of Indexed Notes may receive a principal payment on the Maturity Date
that is greater than or less than the principal amount of such Indexed Notes
depending upon the relative value on the Maturity Date of the specified indexed
item. Information as to the method for determining the amount of principal,
premium, if any, and/or interest payable in respect of Indexed Notes, certain
historical information with respect to the specified indexed item and any
material tax considerations associated with an investment in Indexed Notes will
be specified in the applicable Pricing Supplement. See also "Risk Factors--
Structure Risks--General."
RESET NOTES
The Pricing Supplement relating to each Note will indicate whether CHL has
the option with respect to such Note to reset the interest rate, in the case of
a Fixed Rate Note, or to reset the Spread and/or Spread Multiplier, in the case
of a Floating Rate Note (in each case, a "Reset Note"), and, if so, (i) the
date or dates on which such interest rate or such Spread and/or Spread
Multiplier, as the case may be, may be reset (each an "Optional Interest Reset
Date") and (ii) the basis or formula, if any, for such resetting. Material
United States Federal income tax considerations associated with an investment
in a Reset Note will be specified in the applicable Pricing Supplement.
CHL may exercise such option with respect to a Note by notifying the Trustee
of such exercise at least 45 but not more than 60 calendar days prior to an
Optional Interest Reset Date for such Note. If the Company so notifies the
Trustee of such exercise, not later than 40 calendar days prior to such
Optional Interest Reset Date the Trustee will send by telegram, telex,
facsimile transmission or letter (first class, postage prepaid) to the Holder
of such Note a notice (the "Reset Notice") indicating (i) that CHL has elected
to reset the interest rate, in the case of a Fixed Rate Note, or the Spread
and/or Spread Multiplier, in the case of a Floating Rate Note, (ii) such new
interest rate or such new Spread and/or Spread Multiplier, as the case may be,
and (iii) the provisions, if any, for redemption by CHL during the period from
such Optional Interest Reset Date to the next Optional Interest Reset Date or,
if there is no such next Optional Interest Reset Date, to the Stated Maturity
Date of such Note (each such period, a "Subsequent Interest Period"), including
the date or dates on which, or the period or periods during which, and the
price or prices at which such redemption may occur during such Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 calendar days prior to an
Optional Interest Reset Date for a Note, CHL may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Reset
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Subsequent Interest Period commencing on such Optional Interest
Reset Date by causing the Trustee to send by telegram, telex, facsimile
transmission or letter (first class, postage prepaid) notice of such higher
interest rate or higher Spread and/or Spread Multiplier, as the case may be, to
the Holder of such Note. Such notice shall be irrevocable. All Notes with
respect to which the interest rate or Spread and/or Spread Multiplier is reset
on an Optional Interest Reset Date, and with respect to which Holders of such
Notes have not surrendered such Notes for repayment (or have validly revoked
any such surrender) pursuant to the next paragraph, will bear such higher
interest rate, in the case of a Fixed Rate Note, or higher Spread and/or Spread
Multiplier, in the case of a Floating Rate Note.
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If CHL elects prior to an Optional Interest Reset Date to reset the interest
rate or the Spread and/or Spread Multiplier of a Note, the Holder of such Note
will have the option to elect repayment of such Note by CHL on such Optional
Interest Reset Date at a price equal to the principal amount thereof plus any
accrued interest to such Optional Interest Reset Date. In order to obtain
repayment of such Note to be so repaid on such Optional Interest Reset Date,
the Holder thereof must follow the procedures set forth below under "Redemption
and Repayment" for optional repayment, except that the period for delivery of
such Note or notification to the Trustee shall be at least 25 but not more than
35 calendar days prior to such Optional Interest Reset Date. A Holder who has
tendered a Note for repayment following receipt of a Reset Notice may revoke
such tender for repayment by written notice to the Trustee received prior to
5:00 P.M., New York City time, on the 10th calendar day prior to such Optional
Interest Reset Date.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether CHL has
the option to extend the Stated Maturity Date of such Note for one or more
periods of one to five whole years (each such period, an "Extension Period") up
to but not beyond the date (the "Final Stated Maturity Date") set forth in such
Pricing Supplement.
CHL may exercise such option with respect to a Note by notifying the Trustee
of such exercise at least 45 but not more than 60 calendar days prior to the
Stated Maturity Date of such Note in effect prior to the exercise of such
option (the "Current Stated Maturity Date"). If CHL so notifies the Trustee of
such exercise, not later than 40 calendar days prior to the Current Stated
Maturity Date the Trustee will send by telegram, telex, facsimile transmission
or letter (first class, postage prepaid) to the Holder of such Note a notice
(the "Extension Notice") relating to such Extension Period, indicating (i) that
CHL has elected to extend the Current Stated Maturity Date of such Note, (ii)
the new Stated Maturity Date and the Final Stated Maturity Date, (iii) in the
case of a Fixed Rate Note, the interest rate applicable to the Extension Period
or, in the case of a Floating Rate Note, the Spread and/or Spread Multiplier
applicable to the Extension Period, and (iv) the provisions, if any, for
redemption by CHL during the Extension Period, including the date or dates on
which, or the period or periods during which, and the price or prices at which
such redemption may occur during the Extension Period. Upon the sending by the
Trustee of an Extension Notice to the Holder of a Note, the Current Stated
Maturity Date of such Note shall be extended automatically, and, except as
modified by the Extension Notice and as described in the next two paragraphs,
such Note will have the same terms as prior to the sending of such Extension
Notice.
Notwithstanding the foregoing, not later than 20 calendar days prior to the
Current Stated Maturity Date of a Note, CHL may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Extension
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period by causing the Trustee to send by telegram,
telex, facsimile transmission or letter (first class, postage prepaid) notice
of such higher interest rate or higher Spread and/or Spread Multiplier, as the
case may be, to the Holder of such Note. Such notice shall be irrevocable. All
Notes with respect to which the Current Stated Maturity Date is extended, and
with respect to which the Holders of such Notes have not surrendered such Notes
for repayment (or have validly revoked any such surrender) pursuant to the next
paragraph, will bear such higher interest rate, in the case of a Fixed Rate
Note, or higher Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period.
If CHL elects to extend the Current Stated Maturity Date of a Note, the
Holder of such Note will have the option to elect repayment of such Note by CHL
on the Current Stated Maturity Date at a price equal to the principal amount
thereof plus any accrued interest to the Current Stated Maturity Date. In order
for a Note to be so repaid on the Current Stated Maturity Date, the Holder
thereof must follow the procedures set forth below under "Redemption and
Repayment" for optional repayment, except that the period for delivery of such
Note or notification to the Trustee shall be at least 25 but not more than 35
calendar days prior to the Current
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Stated Maturity Date. A Holder who has tendered a Note for repayment following
receipt of an Extension Notice may revoke such tender for repayment by written
notice to the Trustee received prior to 5:00 P.M., New York City time on the
10th calendar day prior to the Current Stated Maturity Date.
RENEWABLE NOTES
If so indicated in the applicable Pricing Supplement, the term of all or any
portion of a Note may be renewed beyond the Stated Maturity Date by the Holder
in accordance with the procedures described in such Pricing Supplement.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be subject
to all of the provisions, or any combination of the provisions, described above
under "--Reset Notes," "--Extension of Maturity" and "--Renewable Notes."
BOOK-ENTRY NOTES
CHL has established a depositary arrangement with DTC with respect to the
Book-Entry Notes, the terms of which are summarized below. Any additional or
differing terms of such depositary arrangement will be described in the
applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes having the same Specified Currency, Issue
Date, Stated Maturity Date, redemption and/or repayment provisions, if any,
reset and/or extension provisions, if any, Interest Payment Dates, if any, and,
in the case of Fixed Rate Notes, interest rate or, in the case of Floating Rate
Notes, Base Rate or Rates, Initial Interest Rate, Index Maturity, Interest
Reset Dates, Spread and/or Spread Multiplier, if any, Minimum Interest Rate, if
any, and/or Maximum Interest Rate, if any, will be represented by one or more
global securities (each, a "Global Note"). Each Global Note representing Book-
Entry Notes will be deposited with, or on behalf of, DTC, or such other
depositary as is specified in the Pricing Supplement (the "Depositary"), and
registered in the name of a nominee of such Depositary. Global Notes may not be
transferred except as a whole by the applicable Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any nominee to a successor
of such Depositary or a nominee of such successor.
Book-Entry Notes will not be exchangeable for Certificated Notes and, except
under the limited circumstances described below, will not otherwise be issuable
in definitive form.
DTC has advised CHL and the Agents as follows:
DTC will initially act as securities depositary for the Global Notes. The
Global Notes will be issued as fully registered securities registered in
the name of Cede & Co. (DTC's partnership nominee). One fully registered
Global Note will be issued with respect to each $200,000,000 of principal
amount of Notes.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. DTC holds
securities that its participants ("Participants") deposit with it. DTC also
facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by
the New York Stock
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Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to DTC's system is also
available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
Purchases of securities under DTC's system must be made by or through
Direct Participants, which will receive a credit for the securities on
DTC's records. The ownership interest of each actual purchaser of each
security (a "beneficial owner") is in turn recorded on the Direct
Participant's and Indirect Participant's records. Beneficial owners will
not receive written confirmation from DTC of their purchase, but such
beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participant or Indirect Participant through which
the beneficial owner entered into the transaction. Transfers of ownership
interests in the securities are to be accomplished by entries made on the
books of Participants acting on behalf of beneficial owners. Beneficial
owners will not receive certificates representing their ownership interests
in securities, except in the event that use of the book-entry system for
the securities is discontinued.
To facilitate subsequent transfers, all securities deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the
securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such securities are credited, which may or
may not be the beneficial owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to beneficial owners is
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to
securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the securities are credited on the record date (identified
in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the securities will
be made to DTC. DTC's practice is to credit Direct Participants' accounts
on the payable date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by Participants to beneficial owners
will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
Participant and not of DTC, the applicable Paying Agent, or CHL, subject to
any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal and interest to DTC is the responsibility of CHL
or the applicable Paying Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the beneficial owners shall be the responsibility of Direct
Participants and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Global Notes at any time by giving reasonable notice to CHL,
the Trustee or the applicable Paying Agent. Under such circumstances, in
the event that a successor securities depositary is not obtained, the
Global Notes are required to be printed and delivered.
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CHL may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). In that event, the
Global Notes will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that CHL believes to be reliable, but CHL takes
no responsibility for the accuracy thereof.
So long as the Depositary for a Global Note, or its nominee, is the
registered owner of such Global Note, such Depositary or such nominee, as the
case may be, will be considered the sole owner or Holder of the Book-Entry
Notes represented by such Global Note for all purposes under the Indenture
governing such Book-Entry Notes. Except as set forth below, owners of
beneficial interests in such Global Notes will not be entitled to have Notes
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of Certificated Notes 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 Depositary and, if such person is not a Participant, those of
the Participant through which such person owns its interests, in order to
exercise any rights of a Holder under the Indenture or such Note. The laws of
some jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Note.
Principal, premium, if any, and interest payments on Notes registered in the
name of or held by the Depositary or its nominee will be made to the Depositary
or its nominee, as the case may be, as the registered owner or the Holder of
the Global Note representing such Book-Entry Notes. None of CHL, the Guarantor,
the Trustee, the Calculation Agent, any Paying Agent or the Security Registrar
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Note for such Book-Entry Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
If the Depositary is at any time unwilling, unable or ineligible to continue
as Depositary and a successor Depositary is not appointed by CHL within 60 days
or if an Event of Default under the Indenture has occurred and is continuing,
CHL will issue Certificated Notes in exchange for the Global Note or Notes
representing such Book-Entry Notes. In addition, CHL may at any time and in its
sole discretion determine not to have any Notes in registered form represented
by one or more Global Notes and, in such event, will issue Certificated Notes
in exchange for all Global Notes representing such Notes. In any such instance,
an owner of a beneficial interest in a Global Note will be entitled to physical
delivery of Certificated Notes represented by such Global Note equal in
principal amount to such beneficial interest and to have such Notes registered
in its name.
REDEMPTION AND REPAYMENT
If so specified in the applicable Pricing Supplement, CHL may at its option
on and after the Initial Redemption Date, if any, set forth in a Note redeem
such Note in whole or, from time to time, in part in increments of $1,000
(provided that any remaining principal amount thereof shall not be less than
$100,000 (or such other amount in a foreign currency or currency unit as is
specified in the applicable Pricing Supplement), or, if another minimum
denomination is set forth in the applicable Pricing Supplement, then such
minimum denomination) at the sum of (i) 100% of the unpaid principal amount
thereof or the portion thereof redeemed (or, if such Note is an Original Issue
Discount Security (as defined below), 100% of the Amortized Face Amount (as
defined below), or portion thereof redeemed, determined as of the Redemption
Date as provided below), plus (ii) the Initial Redemption Percentage specified
in the applicable Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable) multiplied by the unpaid principal amount
or the portion thereof redeemed (or, if such Note is an Original Issue Discount
Security, the Issue Price thereof, net of any portion of such Issue Price which
has been deemed paid prior to redemption (by reason of any payments, other than
a payment of qualified stated interest, in excess of the original issue
discount accrued to the date of such payment), or the portion of such Issue
Price (or such net amount) proportionate to the portion of the unpaid principal
amount of the Note redeemed), plus (iii) accrued but unpaid interest to the
Redemption
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Date (or, if such Note is an Original Issue Discount Security, any accrued but
unpaid interest to the Redemption Date but only to the extent such interest
would constitute qualified stated interest within the meaning of Treasury
Regulation Section 1.1273-1(c) under the Internal Revenue Code of 1986, as
amended (the "Code"), as in effect on the date hereof). Such Initial Redemption
Percentage shall decline at each anniversary of the Initial Redemption Date by
an amount equal to the Annual Redemption Percentage Reduction, if any,
specified in the applicable Pricing Supplement, until the Initial Redemption
Percentage equals zero percent. CHL may exercise such option by causing the
Trustee to mail a notice of such redemption to the Holder of such Note not less
than 30 but not more than 60 days prior to the Redemption Date. In the event of
redemption of such Note in part only, a new Note or Notes for the unredeemed
portion thereof shall be issued in the name of the Holder thereof upon the
cancellation thereof. If less than all of the Notes with like tenor and terms
to such Note are to be redeemed, the Notes to be redeemed shall be selected by
the Trustee by such method as the Trustee shall deem fair and appropriate.
An "Original Issue Discount Security" means any Note that has been issued at
an Issue Price lower, by an amount that equals or exceeds a de minimis amount
(as determined under United States Federal income tax rules applicable to
original issue discount instruments), than the principal amount thereof. The
"Amortized Face Amount" of such Note shall be the amount equal to the sum of
(a) the Issue Price plus (b) the aggregate of the portions of the original
issue discount (the excess of the amounts considered as part of the "stated
redemption price at maturity" of such Note within the meaning of Section
1273(a)(2) of the Code, whether denominated as principal or interest, over the
Issue Price of such Note) which shall theretofore have accrued pursuant to
Section 1272 of the Code (without regard to Section 1272(a)(7) of the Code)
from the Issue Date of such Note to the date of determination, minus (c) any
amount considered as part of the "stated redemption price at maturity" of such
Note which has been paid on such Note from the Issue Date to the date of
determination. If a Note is an Original Issue Discount Security, the amount
payable in the event of acceleration of the maturity thereof shall be the
Amortized Face Amount, plus accrued but unpaid qualified stated interest as
defined in clause (iii) of the first sentence of the preceding paragraph.
If so specified in the applicable Pricing Supplement, the Notes will be
repayable by CHL in whole or in part at the option of Holders thereof on their
respective Optional Repayment Dates specified in such Pricing Supplement. If no
Optional Repayment Date is specified with respect to a Note, such Note will not
be repayable at the option of the Holder thereof prior to the Stated Maturity
Date. Any repayment in part will be in increments of $1,000 (provided that any
remaining principal amount thereof shall be at least the minimum denomination).
Unless otherwise specified in the applicable Pricing Supplement, the repayment
price for any Note to be repaid means an amount equal to the sum of (i) 100% of
the unpaid principal amount thereof or the portion to be repaid thereof (or if
this Note is an Original Issue Discount Security, 100% of the Amortized Face
Amount, or portion thereof to be repaid, determined as of the Repayment Date)
plus (ii) accrued but unpaid interest to the Repayment Date (or, if this Note
is an Original Issue Discount Security, any accrued but unpaid interest to the
Repayment Date but only to the extent such interest would constitute qualified
stated interest within the meaning of Treasury Regulation Section 1.1273-1(c)).
For any Note to be repaid, such Note must be received, together with the form
thereon entitled "Option to Elect Repayment" duly completed, by the Trustee at
its Corporate Trust Office (or such other address of which CHL shall from time
to time notify the Holders) not more than 60 nor less than 30 days prior to the
Repayment Date. Exercise of such repayment option by the Holder will be
irrevocable, except as otherwise provided above under "--Reset Notes" and "--
Extension of Maturity."
While the Book-Entry Notes are represented by the Global Notes held by or on
behalf of the Depositary, and registered in the name of the Depositary or the
Depositary's nominee, the option for repayment may be exercised by the
Depositary, acting on behalf of each applicable Participant who is, in turn,
acting on behalf of the beneficial owners of the Global Note or Notes
representing such Book-Entry Notes, by delivering a written notice
substantially similar to the above mentioned form to the Trustee at its
Corporate Trust Office (or such other address of which CHL shall from time to
time notify the Holders), not more than 60 nor less than 30 days prior to the
Repayment Date. Notices of elections from the Depositary must be received by
the Trustee by
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5:00 P.M., New York City time, on the last day for giving such notice. In order
to ensure that a notice is received by the Trustee on a particular day, the
beneficial owner of the Global Note or Notes representing such Book-Entry Notes
must so direct the applicable Participant before such 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 the Global Note or Notes representing Book-Entry Notes
should consult the Participants through which they own their interest therein
for the respective deadlines for such Participants. All instructions given to
Participants from beneficial owners of Global Notes relating to the option to
elect repayment shall be irrevocable, except as otherwise provided above under
"--Reset Notes" and "--Extension of Maturity." In addition, at the time such
instructions are given, such beneficial owners shall cause the applicable
Participant to transfer such beneficial owner's interest in the Global Note or
Notes representing the related Book-Entry Notes, on the Depositary's records,
to the Trustee. See "--Book-Entry Notes" above.
CHL or CCI may purchase Notes in the open market by tender or contract. Notes
so purchased may be held, resold or surrendered to the Trustee for
cancellation.
If applicable, CHL will comply with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934, as amended, and any other securities laws or
regulations in connection with any such repayment.
GUARANTEES
The Notes will be unconditionally guaranteed by CCI as to payment of
principal, premium, if any, and interest, when and as the same shall become due
and payable, whether at maturity or upon redemption or repayment or otherwise.
See "Description of Debt Securities and Guarantees" in the accompanying
Prospectus.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the anticipated United States Federal
income tax consequences of the purchase, ownership and disposition of Notes by
United States Holders (as defined below). This discussion represents the
opinion of Fried, Frank, Harris, Shriver & Jacobson (a partnership including
professional corporations) insofar as it relates to matters of United States
federal income tax laws and legal conclusions with respect thereto. The summary
is for general information only and is based on the Code, the Treasury
Regulations promulgated or proposed thereunder, and judicial and administrative
interpretations thereof, all as in effect on the date hereof and all of which
are subject to change, possibly with retroactive effect, or to different
interpretations.
The tax treatment of a holder of the Notes may vary depending upon the
particular situation of the holder. The summary is limited to investors who
will hold the Notes as "capital assets" within the meaning of Section 1221 of
the Code and does not deal with holders in special tax situations (including,
but not limited to, insurance companies, tax-exempt organizations, financial
institutions, dealers in securities or currencies, traders in securities,
holders whose functional currency is not the U.S. dollar, or holders who will
hold Notes as a hedge against currency risks or as a position in a "straddle"
for tax purposes), who may be subject to special rules not discussed below. The
summary does not apply to holders that are not United States Holders (defined
below). The summary is applicable only to purchasers of Notes on original issue
at the issue price (as defined below) and does not address other purchasers.
The discussion below also does not address the effect of any state, local or
foreign tax law on a holder of Notes. As used herein, the term "United States
Holder" means an individual who is a citizen or resident of the United States,
a partnership or corporation organized in or under the laws of the United
States or any state thereof, an estate the income of which is subject to United
States Federal income taxation regardless of its source, or 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 (within the
meaning of Section 7701(a)(30) of the Code) have authority to control all
substantial decisions of the trust.
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The summary does not constitute, and should not be considered as, legal or
tax advice to prospective holders of Notes. Each prospective holder of Notes
should consult a tax advisor as to the particular tax consequences of holding
Notes to such holder, including the applicability and effect of any state,
local or foreign tax laws.
PAYMENTS OF INTEREST
Interest on a Note, other than interest on a Discount Note (defined below
under "Original Issue Discount") that is not a "qualified stated interest"
payment (also as defined under "Original Issue Discount"), will be taxable to a
holder as ordinary interest income at the time it is accrued or is received in
accordance with the holder's regular method of accounting for tax purposes. If
interest is paid in a Specified Currency other than U.S. dollars ("Foreign
Currency"), the amount of interest income realized by a holder will be the U.S.
dollar value of (a) in the case of a cash basis holder, the Foreign Currency
received (based on the spot rate in effect on the date of receipt), or (b) in
the case of an accrual basis holder, the Foreign Currency accrued during an
interest accrual period, or partial interest accrual period (based on (i) the
average exchange rate in effect during the accrual period, (ii) the spot rate
on the last day of the accrual period or (iii) the spot rate on the payment
date, if such date is within five business days of the last day of the accrual
period), in each case, regardless of whether the payment is in fact converted
into U.S. dollars. In the case of an accrual basis holder, at the time the
interest accrued is received, the holder will realize exchange gain or loss,
taxable as ordinary income or loss, equal to the difference, if any, between
the amount of Foreign Currency received with respect to such accrual period
(translated into U.S. dollars at the spot rate in effect on the date the
interest is received) and the amount of interest on the Note included in
income. The Federal income tax consequences of the disposition of Foreign
Currency received as interest are described below under "--Exchange of Amounts
in Foreign Currency."
ORIGINAL ISSUE DISCOUNT
General. A Note will be treated as issued at an original issue discount (a
"Discount Note") if the excess of the "stated redemption price at maturity" of
the Note over its issue price (defined as the first price at which a
substantial amount of Notes of the same issue is sold to the public) equals or
exceeds a de minimis amount (generally 1/4 of 1 percent of the Note's stated
redemption price at maturity multiplied by the number of complete years from
the issue date to maturity). "Stated redemption price at maturity" is the total
of all payments provided by the Note that are not payments of "qualified stated
interest." A "qualified stated interest" payment is a payment of stated
interest that is unconditionally payable in cash or property (other than debt
instruments of CHL) at least annually during the entire term of the Note,
including short periods, with respect to a Floating Rate Note, at certain
specified types of variable rates (as discussed below) or, with respect to a
Fixed Rate Note, at a single fixed rate. Interest is payable at a single fixed
rate only if the rate appropriately takes into account the length of the
intervals between payments. Stated interest that exceeds qualified stated
interest is included in the Note's stated redemption price at maturity.
Holders of Discount Notes having a maturity of more than one year from their
date of issue will be required to include original issue discount in income as
it accrues, which can result in recognition of income before the receipt of
cash attributable to such income. The amount of original issue discount
includable in income by the holder of such 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 in which it
holds such Discount Note ("accrued original issue discount"). The daily portion
is determined by allocating to each day in any "accrual period" a pro rata
portion of the original issue discount that accrued in such period (the excess
of (a) the product of the Discount Note's adjusted issue price at the beginning
of the accrual period and its yield to maturity, appropriately adjusted for the
length of the period, over (b) the sum of the qualified stated interest
payments, if any, payable during the accrual period). The "accrual period" for
a Discount Note may be of any length and may vary in length over the term of a
Note, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs either on the first day or
the last day of an accrual period. The "adjusted issue price" of a Discount
Note at the start of any accrual period is the sum of the issue price of the
Note plus the accrued original issue discount for each prior accrual period
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minus any prior payments on the Note that were not qualified stated interest
payments. Holders of Notes with a de minimis amount of original issue discount
must include a proportionate amount of each payment of stated principal
received in respect of the Notes in income as capital gain.
Floating Rate Notes. If a Floating Rate Note that otherwise qualifies as a
"variable rate debt instrument" under the applicable Treasury Regulations
provides for stated interest at a single "qualified floating rate" or a single
"objective rate" (each as defined in the Treasury Regulations) that is
unconditionally payable in cash or property (other than debt instruments of
CHL), or that will be constructively received, at least annually, then all
payments of stated interest with respect to such Note will be "qualified stated
interest." The amount of original issue discount (if any) with which such a
Note is issued will be determined under the rules discussed above by assuming
that the Floating Rate Note pays stated interest at the appropriate fixed rate
substitute (generally, the value, as of the Issue Date, of the floating rate,
or in the case of certain Floating Rate Notes, a fixed rate that reflects the
yield that is reasonably expected for such Notes).
The Treasury Regulations provide additional rules for a Floating Rate Note
that qualifies as a variable rate debt instrument and that provides for stated
interest at more than one floating rate or at a fixed rate for a portion of its
term. In certain cases, such a Floating Rate Note that is not issued at a
discount may be deemed to bear original issue discount for Federal income tax
purposes, with the result that inclusion of original issue discount in gross
income for Federal income tax purposes may vary from the cash payments of
interest received on such Note, generally accelerating income for cash method
taxpayers. For example, under the Treasury Regulations, a Floating Rate Note
may be a Discount Note where (a) it bears interest at a floating rate followed
by another floating rate and, as of the Issue Date, the values of the two
floating rates differ, or (b) it bears interest at a fixed rate followed by a
floating rate (or vice versa) and, as of the Issue Date, the value of the
floating rate differs from the fixed rate. The tax treatment of a United States
Holder of a Floating Rate Note ultimately will depend upon the precise terms of
the Notes offered; consequently, the proper tax treatment of such Notes will be
more fully described in the applicable Pricing Supplement.
A Floating Rate Note that does not qualify as a variable rate debt instrument
may be subject to United States Treasury Regulations concerning the treatment
of "contingent payment debt instruments" (the "contingent payment debt
regulations"). For example, a Floating Rate Note will be subject to the
contingent payment debt regulations if, among other things, it provides for
either a minimum rate of interest or a maximum rate of interest that, in either
case, is not fixed throughout its term and is reasonably expected, as of the
Issue Date, to cause the yield on the Note to be significantly more or less
than the yield determined without regard to the minimum or maximum rate of
interest. If a Floating Rate Note is subject to the contingent debt
regulations, then, inter alia, all gain and (subject to certain limitations)
loss recognized by a United States Holder with respect to the Note would be
ordinary, rather than capital, in nature and all United States Holders would be
required to accrue interest income on the Note as original issue discount over
the term of the Note based upon a projected payment schedule (subject to later
adjustments) provided by CHL. The tax treatment of a Floating Rate Note that is
treated as a contingent payment debt instrument will be more fully described in
the applicable Pricing Supplement.
Any determination of the type described above made by CHL when a Note is
issued may be subject to subsequent changes and clarifications of applicable
law or to challenge by the Internal Revenue Service.
Optional Redemption. For purposes of calculating the yield and maturity of a
Note, an unconditional option of CHL or a Holder to redeem a Note prior to the
Maturity Date will be presumed to be exercised if, by utilizing any date on
which the Note may be redeemed as its maturity date and the amount payable on
that date in accordance with the terms of the Note (the "redemption price") as
its stated redemption price at maturity, the yield on the Note is lower than
its yield to maturity in the case of an option exercisable by CHL (or, in the
case of an option exercisable by a Holder, is greater than its yield to
maturity). If such an option is not in fact exercised when presumed to be,
solely for purposes of accruing original issue discount, the Note will be
treated as if it were redeemed, and a new Note issued, on the presumed exercise
date for an amount equal to its adjusted issue price on that date.
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Short-Term Notes. A Note that matures one year or less from the date of its
issuance (a "Short-Term Note") will be treated as having been issued at an
original issue discount equal to the excess of the total principal and interest
payments on the Note over its issue price. In general, an individual or other
cash basis holder of a Short-Term Note is not required to currently include in
income accrued original issue discount for United States Federal income tax
purposes unless it elects to do so. Accrual basis holders and certain other
holders are required to include in income accrued original issue discount on
Short-Term Notes on a straight-line basis unless an irrevocable election is
made to include in income accrued original issue discount under the constant
yield method (based on daily compounding). In the case of a holder not required
and not electing to include accrued original issue discount in income
currently, any gain realized on the sale or retirement of the Short-Term Note
will be ordinary income to the extent of the original issue discount accrued on
a straight-line basis (or, at the holder's irrevocable election, under a
constant yield method, based on daily compounding) through the date of sale or
retirement. A holder who is not required and does not elect to include in
income accrued original issue discount on a Short-Term Note will be required to
defer deduction of a portion of the holder's interest expense with respect to
any indebtedness incurred or maintained to purchase or carry the Note.
Foreign Currency Denominated Discount Notes. In the case of a Discount Note
denominated in a Foreign Currency, for purposes of calculating original issue
discount, a holder should: (i) calculate the amount and accrual of original
issue discount in respect of the Note in the Foreign Currency; (ii) determine
the U.S. dollar amount of original issue discount includable in income for each
accrual period by translating the Foreign Currency amounts into U.S. dollars
based on the average exchange rate in effect during that accrual period or
based on the spot rate (A) on the last day of the relevant accrual period (or
partial accrual period) or (B) on the payment date, if such date is within five
business days of the last day of the accrual period; and (iii) recognize any
Foreign Currency gain or loss when the original issue discount is received to
the extent of the difference between the amount determined pursuant to clause
(ii) above and the U.S. dollar value of such payment determined by translating
the Foreign Currency at the spot rate in effect on the date of payment. The
Federal income tax consequences of the disposition of any Foreign Currency
received are described below under "--Exchange of Amounts in Foreign Currency."
For these purposes, all receipts with respect to a Note will be treated first
as the receipt of qualified stated interest (determined under Section 1273 of
the Code and the Treasury Regulations), second as payments of previously
accrued original issue discount (to the extent thereof, with payments treated
as made for the earliest accrual periods first), and thereafter as the receipt
of principal.
NOTES PURCHASED AT A PREMIUM
A holder that purchases a Note for an amount in excess of the sum of all
amounts payable on the Note after the purchase date other than payments of
qualified stated interest may elect to treat that excess as "amortizable bond
premium," in which case the amount required to be included in the holder's
income each year with respect to interest on the Note will generally be reduced
by the amount of amortizable bond premium allocable (based on the Note's yield
to maturity) to that year. Any such election would apply to all bonds (other
than bonds the interest on which is excludable from gross income) held by the
holder at the beginning of the first taxable year to which the election applies
or thereafter acquired by the holder, and is irrevocable without the consent of
the Internal Revenue Service. Amortizable bond premium on a Note denominated in
a Foreign Currency will, if a holder so elects, reduce the amount of Foreign
Currency interest income on the Note. An electing holder will recognize
exchange gain or loss at the time it offsets the portion of the premium
amortized with respect to any period against the interest income for such
period, by treating such portion as a return of principal. Recently finalized
U.S. Treasury Regulations, generally effective for bonds acquired on or after
March 2, 1998, generally apply amortizable bond premium to reduce the amount of
interest included in income on an "accrual period" basis, with certain
carrybacks and carryforwards, and also generally provide special rules for
certain variable rate debt instruments.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
A holder may elect to treat all interest on any Note as original issue
discount and calculate the amount includible in gross income under the constant
yield method described above. For the purposes of this election, interest
includes stated interest, acquisition discount, original issue discount, de
minimis original issue discount,
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<PAGE>
market discount, de minimis market discount and unstated interest, as adjusted
by any amortizable bond premium or acquisition premium. The election is made
for the year in which the holder acquired the Note, and may not be revoked
without the consent of the Internal Revenue Service.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A holder's tax basis in a Note generally will be its cost, increased by the
amount of any original issue discount included in the holder's income with
respect to the Note and reduced by the amount of any cash payments on the Note
that are not qualified stated interest payments and by the amount of any
amortizable bond premium applied to reduce interest on the Note. In the case
of a Note denominated, and purchased, in a Foreign Currency, the holder's
initial tax basis will be the U.S. dollar value of the Foreign Currency on the
date of purchase of the Note (or, in certain circumstances, on the settlement
date of the transaction).
A holder will recognize gain or loss on the sale or retirement of a Note
equal to the difference between the amount realized on the sale or retirement
and the holder's tax basis in the Note. The amount realized on a sale or
retirement for an amount in a Foreign Currency will be the U.S. dollar value
of that currency on the date of such sale or retirement (or, in certain
circumstances, on the settlement date of the transaction).
As a general rule (with the exception, among other things, of amounts
attributable to accrued but unpaid interest, amounts attributable to changes
in exchange rates, and amounts received with respect to certain Short-Term
Notes), gain or loss recognized on the sale or retirement of a Note will be
capital gain or loss and will be long-term capital gain or loss if the Note
was held for more than one year. In the case of non-corporate U.S. Holders,
such long-term capital gain generally will be subject to a maximum tax rate of
20% if the Note was held for more than one year. Gain or loss recognized by a
holder on the sale or retirement of a Note denominated in a Foreign Currency
will be treated as ordinary income or loss to the extent such gain or loss is
attributable to changes in exchange rates. However, exchange gain or loss is
taken into account only to the extent of total gain or loss realized on the
transaction.
If Treasury Regulations proposed on March 17, 1992 are finalized in their
current form, certain United States Holders will be able to elect to apply
mark-to-market treatment to all foreign currency denominated financial
transactions they enter into, including a Note denominated in a Foreign
Currency, for purposes of determining the amount and timing of foreign
currency gain or loss to be recognized on the Notes. Under these proposed
regulations, similar non-elective rules will apply with respect to the
determination of foreign currency gain or loss on Notes denominated in certain
hyperinflationary currencies.
EXCHANGE OF AMOUNTS IN FOREIGN CURRENCY
Foreign Currency received on the sale or retirement of a Note will generally
have a tax basis equal to the U.S. dollar value of that currency at the time
of such sale or retirement. Foreign Currency received as interest on a Note
will have a tax basis equal to its U.S. dollar value on the date such interest
was received. Foreign Currency which is purchased generally will have a tax
basis equal to the U.S. dollar cost of acquisition. Any gain or loss
recognized on a sale or other disposition of Foreign Currency (including its
use to purchase Notes or upon exchange for U.S. dollars) will be ordinary
income or loss. Accordingly, a holder that converts U.S. dollars to a Foreign
Currency and immediately uses that Foreign Currency to purchase a Note
denominated in the same currency normally will not recognize gain or loss in
connection with such conversion and purchase. However, a holder that purchases
a Note with previously owned Foreign Currency may recognize ordinary income or
loss in an amount equal to the difference between the holder's tax basis in
the Foreign Currency and the U.S. dollar value of the Note on the date of
purchase.
BACKUP WITHHOLDING
A holder of a Note may be subject to backup withholding at a rate of 31%
with respect to payments of principal and any premium or interest (including
original issue discount) made on the Note or the proceeds of a sale or
exchange of the Note before maturity unless such holder (a) is a corporation
or comes within certain
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other exempt categories and, when required, demonstrates this fact, or (b)
provides a taxpayer identification number, certifies that the holder is not
subject to backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A holder of a Note that does not
provide CHL, or its agent, with a correct taxpayer identification number or an
adequate basis for exemption may be subject to penalties imposed by the
Internal Revenue Service. The backup withholding tax is not an additional tax
and will generally be credited against a holder's United States Federal income
tax liability provided the required information is furnished to the Internal
Revenue Service.
On October 6, 1997, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the backup withholding and
information reporting rules described above. 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,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
PLAN OF DISTRIBUTION OF NOTES
Under the terms of a Selling Agency Agreement (the "Agency Agreement"), the
Notes are offered on a continuous basis by CHL through Lehman Brothers Inc.,
Chase Securities Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P.
Morgan Securities Inc., NationsBanc Montgomery Securities LLC, Salomon Smith
Barney Inc. and Countrywide Securities Corporation (the "Agents"), each of
which has agreed to use its reasonable best efforts to solicit purchases of the
Notes. CHL will pay to each Agent a commission, in the form of a discount,
ranging from .125% to .750% of the principal amount of any Note (or in the case
of any Original Issue Discount Security, the price to the public), depending on
its maturity, sold through such Agent, except that the commission payable by
CHL to the Agents with respect to Notes with maturities of greater than 30
years will be negotiated at the time CHL issues such Notes. Each Agent will
have the right, in its discretion reasonably exercised, to reject in whole or
in part any offer to purchase Notes received by such Agent.
CHL will have the sole right to accept offers to purchase Notes and may
reject any such offer in whole or in part. CHL also may sell Notes to an Agent,
acting as principal, at a discount to be agreed upon at the time of sale, for
resale to one or more investors or other purchasers at varying prices related
to prevailing market prices at the time of such resale, as determined by such
Agent or, if so specified in the applicable Pricing Supplement, for resale at a
fixed public offering price. CHL reserves the right to sell Notes from time to
time directly on its own behalf to investors or through other agents, dealers
or underwriters; if CHL grants any discount or pays any commission to such
persons, such discount or commission will be disclosed in the applicable
Pricing Supplement.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers. The Agents may sell Notes to any dealer at a discount and
such discount allowed to any dealer may be all or part of the discount to be
received by such Agent from CHL. Unless otherwise indicated in the applicable
Pricing Supplement, any Note sold to an Agent as principal will be purchased by
such Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to an agency sale of a Note of
identical maturity, and may be resold by the Agent to investors and other
purchasers from time to time in one or more transactions, including negotiated
transactions, at fixed prices or at varying prices as described above. After
the initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold on a
fixed price basis), concession and discount may be changed.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in The City of New York on the date of settlement.
See "Description of Notes--General."
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<PAGE>
Until the distribution of the Notes is completed, rules of the Securities and
Exchange Commission may limit the ability of the Agents and certain selling
group members to bid for and purchase the Notes. As an exception to these
rules, the Agents are permitted to engage in certain transactions that
stabilize the price of the Notes. Such transactions 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 more Notes than are set forth on the cover page of
this Prospectus Supplement or the applicable Pricing Supplement) the Agents may
reduce that short position by purchasing Notes in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
None of CHL, CCI or any of the Agents makes any representation or prediction
as to the direction or magnitude or any effect that the transactions described
above may have on the price of the Notes. In addition, none of CHL, CCI or any
of the Agents makes any representation that the Agents will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). CHL and CCI have
agreed to indemnify each Agent against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments an Agent may
be required to make in respect thereof. CHL and CCI have agreed to reimburse
the Agents for certain expenses, including fees and disbursements of counsel to
the Agents.
CHL has been advised by the Agents that they may from time to time purchase
and sell Notes in the secondary market, but that they are not obligated to do
so. No assurance can be given that there will be a secondary market for the
Notes or liquidity in the secondary market if one develops.
The distribution of the Notes will conform to the requirements set forth in
Rule 2710(c)(8) and the applicable sections of Rule 2720 of the Conduct Rules
of the National Association of Securities Dealers, Inc.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for CHL and CCI by Fried,
Frank, Harris, Shriver & Jacobson, a partnership including professional
corporations, New York, New York. The statements under "Federal Income Tax
Consequences," to the extent they constitute statements of law, are set forth
herein in reliance upon the opinion of Fried, Frank, Harris, Shriver &
Jacobson. Edwin Heller (whose professional corporation retired as a partner of
Fried, Frank, Harris, Shriver & Jacobson in September 1996) is of counsel to
Fried, Frank, Harris, Shriver & Jacobson and is a director of CCI. Brown & Wood
LLP, New York, New York will serve as counsel to the Agents. Brown & Wood LLP
also serves as counsel for CWMBS, Inc. and CWABS, Inc., each a wholly owned
subsidiary of CCI, in connection with offerings of mortgage-backed and asset-
backed securities.
S-28
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY +
+NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN +
+OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY +
+THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER 30, 1998
PROSPECTUS
COUNTRYWIDE HOME LOANS, INC.
DEBT SECURITIES
UNCONDITIONALLY GUARANTEED BY
[LOGO]
COUNTRYWIDE CREDIT INDUSTRIES, INC.
------------
Through this prospectus, Countrywide Home Loans, Inc. ("we" or "CHL") may
periodically offer debt securities, in the amounts, at the prices and on other
terms as we will determine at the time of offering. Our parent company,
Countrywide Credit Industries, Inc. (the "Guarantor" or "CCI"), will guarantee
all payments of principal of and any premium and interest on the debt
securities.
We may offer debt securities in one or more series or issue any debt
securities of a particular series all at once or over time. The offering price
of all debt securities issued under this prospectus may not exceed
$3,000,000,000 (or the equivalent of that amount in one or more foreign
currencies, currency units or composite currencies). We will describe the
specific terms of any debt securities offered in a prospectus supplement that
will accompany this prospectus, including the title, the principal amount, the
public offering price, the denomination, the maturity, any premium, any
interest rate (which may be fixed, floating or adjustable), the time and method
of calculating any interest payment, the place where the principal of and any
premium and interest may be paid, the currency in which the principal of and
any premium and interest may be paid, any redemption or repayment terms at our
or the holder's option, any sinking fund, conversion or exchange provisions,
any other special terms, and other terms relating to the offer and sale of
those debt securities.
Unless we specify differently in a prospectus supplement, any debt securities
we issue under this prospectus will be unsecured and unsubordinated
indebtedness and will rank equally with all of our other unsecured and
unsubordinated indebtedness. Any guarantee of these debt securities will be an
unsecured and unsubordinated obligation of CCI.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------
The date of this Prospectus is , 1998.
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND IN ANY PROSPECTUS SUPPLEMENT ACCOMPANYING THIS
PROSPECTUS OR THAT CHL AND CCI HAVE REFERRED YOU TO. NEITHER CHL NOR CCI HAS
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. YOU SHOULD
NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR IN ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE
DOCUMENTS.
------------------
ADDITIONAL INFORMATION
CCI files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document CCI files at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. CCI's SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov and at the public
reference rooms of the New York Stock Exchange, 20 Broad Street, New York, New
York and the Pacific Stock Exchange, 115 Sansome Street, San Francisco,
California.
The SEC allows CCI to "incorporate by reference" the information CCI files
with it, which means that CCI can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that CCI files
with the SEC will automatically update and supersede this information. CCI
incorporates by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until all the debt securities offered under this
prospectus are sold. This prospectus is part of the registration statement CCI
filed with the SEC.
1. Annual Report on Form 10-K for the year ended February 28, 1998.
2. Quarterly Report on Form 10-Q for the quarter ended May 31, 1998.
3. Quarterly Report on Form 10-Q for the quarter ended August 31, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning Countrywide Credit Industries, Inc., 4500 Park Granada, Calabasas,
California 91302, telephone (818) 225-3000, Attention: Investor Relations.
2
<PAGE>
THE COMPANY AND CCI
COUNTRYWIDE HOME LOANS, INC.
Countrywide Home Loans, Inc. (the "Company" or "CHL"), the principal
subsidiary of CCI, is engaged primarily in the mortgage banking business and as
such originates, purchases, sells, and services mortgage loans. CHL's mortgage
loans are principally prime credit quality first-lien mortgage loans secured by
single- (one- to four-) family residences ("Prime mortgages"). CHL also offers
home equity loans both in conjunction with newly produced Prime mortgages and
as a separate product. In addition, CHL offers sub-prime credit quality first-
lien single-family mortgage loans ("Sub-prime loans"). The principal sources of
revenue of CHL are: (i) loan origination fees, (ii) gains from the sale of
loans, if any, (iii) interest earned on mortgage loans during the period that
they are held by CHL pending sale, net of interest paid on funds borrowed to
finance such mortgage loans, (iv) loan servicing fees and (v) interest benefit
derived from the custodial balances associated with CHL's servicing portfolio.
CHL produces mortgage loans through three separate divisions. The Consumer
Markets Division originates Prime mortgages, home equity loans and Sub-prime
loans using direct contact with consumers through its nationwide network of
retail branch offices, its telemarketing systems and its site on the World Wide
Web. The Wholesale Division produces Prime mortgages, home equity loans and
Sub-prime loans through mortgage brokers and other financial intermediaries.
Through the Correspondent Division, CHL purchases loans from other mortgage
bankers, commercial banks, savings and loan associations, credit unions and
other financial intermediaries. CHL customarily sells substantially all loans
that it originates or purchases. To guarantee timely and full payment of
principal and interest on Federal National Mortgage Association securities,
Federal Home Loan Mortgage Corporation securities and Government National
Mortgage Association securities and to transfer credit risk of the loans, CHL
pays guarantee fees to these agencies.
CHL services on a non-recourse basis substantially all of the mortgage loans
that it originates or purchases pursuant to servicing agreements with investors
in the loans. In addition, CHL purchases bulk servicing contracts also on a
non-recourse basis to service single-family residential mortgage loans
originated by other lenders. Servicing mortgage loans includes collecting and
remitting loan payments, answering questions from customers, making advances
when required, accounting for principal and interest, holding custodial
(impound) funds for payment of property taxes and hazard insurance, making any
physical inspections of the property, counseling delinquent mortgagors,
supervising foreclosures and property dispositions in the event of unremedied
defaults and generally administering the loans. CHL receives a fee for
servicing mortgage loans ranging generally from 1/4% to 1/2% per annum on the
declining principal balances of the loans. CHL has sold, and may sell in the
future, a portion of its portfolio of loan servicing rights to other mortgage
servicers.
CHL's principal financing needs are the financing of loan funding activities
and the investment in servicing rights. To meet these needs, CHL currently
utilizes commercial paper supported by its revolving credit facility, medium-
term notes, mortgage repurchase agreements, subordinated notes, pre-sale
funding facilities and cash flows from operations. In the past, CHL has
utilized whole loan repurchase agreements, servicing-secured bank facilities,
private placements of unsecured notes and other financings, direct borrowings
from its revolving credit facility and contributions from CCI of the proceeds
of public offerings of preferred and common stock.
CHL is a New York corporation, originally incorporated in 1969. Its principal
executive offices are located at 4500 Park Granada, Calabasas, California
91302, and its telephone number is (818) 225-3000.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
Founded in 1969, CCI is a holding company which through its principal
subsidiary, CHL, is engaged primarily in the mortgage banking business, and as
such originates, purchases, sells and services mortgage loans. CCI, through its
other wholly owned subsidiaries, offers products and services complementary to
its mortgage banking business. Countrywide Insurance Services, Inc. acts as an
agent in the sale of insurance,
3
<PAGE>
including homeowners, fire, flood, earthquake, auto, annuities, home warranty,
life and disability, to CHL's mortgagors and others. LandSafe, Inc., and its
subsidiaries, acts as a title insurance agent and provides escrow, credit
reporting and home appraisal services. LandSafe, Inc. also offers title
insurance commitments and policies, settlement services and property profiles
to realtors, builders, consumers, mortgage brokers and other financial
institutions. Second Charter Reinsurance Corporation, into which Charter
Reinsurance Corporation was merged on October 1, 1997, partially reinsures
mortgage loans originated by CCI that are insured by those mortgage insurance
companies with which this subsidiary has entered into a reinsurance agreement.
CTC Real Estate Services serves as trustee under deeds of trust in connection
with foreclosures on loans in CCI's servicing portfolio in California and other
states. Countrywide Tax Services Corporation provides tax services to ensure
that property taxes are paid current at origination and throughout the life of
the loan. Countrywide Servicing Exchange, a national servicing brokerage and
consulting firm, acts as an agent facilitating transactions between buyers and
sellers of bulk servicing contracts. Countrywide Securities Corporation is a
securities broker-dealer that trades securities, including mortgage-backed
securities and other mortgage-related assets, with broker-dealers and
institutional investors. Countrywide Financial Services, Inc. (formerly Leshner
Financial Services, Inc.) operates as a fund manager and service provider for
unaffiliated mutual funds, broker-dealers, investment advisors and fund
managers. CCI also has two subsidiaries, CWMBS, Inc. and CWABS, Inc., through
which CCI issues mortgage- and asset-backed securities that are backed by Prime
mortgage loans, Sub-prime loans or home equity loans.
CCI is a Delaware corporation, and was originally incorporated in New York
under the name of OLM Credit Industries, Inc. Its principal executive offices
are located at 4500 Park Granada, Calabasas, California 91302, and its
telephone number is (818) 225-3000.
USE OF PROCEEDS
Except as may be otherwise stated in any prospectus supplement, CHL intends
to use the net proceeds from the sale of its debt securities (the "Debt
Securities") for general corporate purposes, which may include retirement of
indebtedness of CHL and investment in servicing rights through the current
production of loans and the bulk acquisition of contracts to service loans.
4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated financial data with respect to CCI set forth below for each
of the five fiscal years in the period ended February 28, 1998 has been
derived from, and should be read in conjunction with, the related audited
financial statements and accompanying notes incorporated by reference herein.
See "Incorporation of Certain Documents by Reference." The consolidated
financial information presented below as of and for the six-month periods
ended August 31, 1998 and August 31, 1997 is unaudited; however, in the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation have been included. The results
of operations for the six-month period ended August 31, 1998 are not
necessarily indicative of the results of operations that may be expected for
the full year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31, YEARS ENDED FEBRUARY 28(29),
------------------------ -----------------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
----------- ----------- ----------- ---------- ---------- ---------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF
EARNINGS DATA:
Revenues:
Loan origination fees.. $ 295,806 $ 118,654 $ 301,389 $ 193,079 $ 199,724 $ 203,426 $ 379,533
Gain (loss) on sale of
loans................. 330,832 185,631 417,427 247,450 92,341 (41,342) 88,212
----------- ----------- ----------- ---------- ---------- ---------- ----------
Loan production
revenue............... 626,638 304,285 718,816 440,529 292,065 162,084 467,745
Interest earned........ 368,241 185,862 440,058 350,263 308,449 249,560 300,999
Interest charges....... (347,082) (181,822) (424,341) (316,705) (281,573) (205,464) (219,898)
----------- ----------- ----------- ---------- ---------- ---------- ----------
Net interest income.... 21,159 4,040 15,717 33,558 26,876 44,096 81,101
Loan servicing income.. 494,174 436,083 907,674 773,715 620,835 460,351 326,695
Amortization and
impairment/recovery of
mortgage servicing
rights................ (590,304) (131,341) (561,804) (101,380) (342,811) (95,768) (242,177)
Servicing hedge benefit
(expense)............. 289,861 (11,281) 232,959 (125,306) 200,135 (40,030) 73,400
Less write-off of
servicing hedge....... -- -- -- -- -- (25,600) --
----------- ----------- ----------- ---------- ---------- ---------- ----------
Net loan administration
income................ 193,731 293,461 578,829 547,029 478,159 298,953 157,918
Commissions, fees and
other income.......... 90,894 64,634 138,217 91,346 63,642 40,650 48,816
Gain on sale of
subsidiary............ -- 57,381 57,381 -- -- -- --
Gain on sale of
servicing............. -- -- -- -- -- 56,880 --
----------- ----------- ----------- ---------- ---------- ---------- ----------
Total revenues........ 932,422 723,801 1,508,960 1,112,462 860,742 602,663 755,580
----------- ----------- ----------- ---------- ---------- ---------- ----------
Expenses:
Salaries and related
expenses.............. 308,240 188,585 424,321 286,884 229,668 199,061 227,702
Occupancy and other
office expenses....... 128,817 79,488 184,338 129,877 106,298 102,193 101,691
Guarantee fees......... 90,021 85,388 172,692 159,360 121,197 85,831 57,576
Marketing expenses..... 30,104 20,642 42,320 34,255 27,115 23,217 26,030
Other operating
expenses.............. 70,599 55,111 119,743 80,188 50,264 37,016 43,481
Branch and
administrative office
consolidation costs... -- -- -- -- -- 8,000 --
----------- ----------- ----------- ---------- ---------- ---------- ----------
Total expenses........ 627,781 429,214 943,414 690,564 534,542 455,318 456,480
----------- ----------- ----------- ---------- ---------- ---------- ----------
Earnings before income
taxes.................. 304,641 294,587 565,546 421,898 326,200 147,345 299,100
Provision for income
taxes.................. 118,810 114,889 220,563 164,540 130,480 58,938 119,640
----------- ----------- ----------- ---------- ---------- ---------- ----------
Net earnings............ $ 185,831 $ 179,698 $ 344,983 $ 257,358 $ 195,720 $ 88,407 $ 179,460
=========== =========== =========== ========== ========== ========== ==========
Per Share Data:
Basic.................. $ 1.68 $ 1.69 $ 3.21 $ 2.50 $ 1.99 $ 0.97 $ 2.02
Diluted................ 1.59 1.63 3.09 2.44 1.95 0.96 1.97
Cash dividends per
share................. 0.16 0.16 0.32 0.32 0.32 0.32 0.29
Weighted Average Shares
outstanding:
Basic.................. 110,640 106,655 107,491 103,112 98,352 91,240 88,792
Diluted................ 116,900 110,243 111,526 105,677 100,270 92,087 90,501
=========== =========== =========== ========== ========== ========== ==========
SELECTED BALANCE SHEET
DATA AT END OF PERIOD:
Mortgage loans and
mortgage-backed
securities shipped and
held for sale.......... $ 5,503,396 $ 3,733,401 $ 5,292,191 $2,579,972 $4,740,087 $2,898,825 $3,714,261
Total assets............ 14,251,263 10,359,482 12,219,181 7,689,090 8,321,652 5,589,138 5,602,884
Short-term debt......... 3,963,449 3,693,412 4,043,774 2,567,420 4,423,738 2,664,006 3,111,945
Long-term debt.......... 5,034,500 2,589,500 4,195,732 2,367,661 1,911,800 1,499,306 1,197,096
Common shareholders'
equity................. 2,343,082 1,815,023 2,087,943 1,611,531 1,319,755 942,558 880,137
=========== =========== =========== ========== ========== ========== ==========
OPERATING DATA (DOLLAR
AMOUNTS IN MILLIONS):
Loan servicing portfolio
(at period end)(1)..... $ 194,597 $ 168,973 $ 182,889 $ 158,585 $ 136,835 $ 113,111 $ 84,678
Volume of loans
produced............... 43,810 19,921 48,772 37,811 34,584 27,866 52,459
Ratio of earnings to
fixed charges(2)....... 1.87 2.60 2.30 2.30 2.13 1.69 2.32
</TABLE>
- --------
(1) Includes warehoused loans and loans under subservicing agreements.
(2) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before Federal income taxes, plus fixed
charges. Fixed charges include interest expense on debt and the portion of
rental expenses which is considered to be representative of the interest
factor (one-third of operating leases).
5
<PAGE>
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities. The extent, if
any, to which such general provisions do not apply to the Debt Securities
offered by any Prospectus Supplement will be described in such Prospectus
Supplement.
The Debt Securities are to be issued under the Indenture dated as of January
1, 1992, as amended, supplemented or modified from time to time, including by
Supplemental Indenture No. 1 thereto, dated as of June 15, 1995 (the
"Indenture"), among CHL, the Guarantor and The Bank of New York, as Trustee
(the "Trustee"), which is incorporated by reference in the Registration
Statement of which this Prospectus forms a part. Each series of Debt Securities
issued pursuant to the Indenture will be issued pursuant to an amendment or
supplement thereto in the form of a supplemental indenture or pursuant to an
Officers' Certificate, in each case delivered pursuant to resolutions of the
Board of Directors of CHL and in accordance with the provisions of Section 301
or Article Ten of the Indenture, as the case may be. The terms of the Debt
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"TIA"). The Debt Securities are subject to all such terms and the holders of
Debt Securities are referred to the Indenture and the TIA for a statement of
such terms.
The following summaries of certain provisions of each Indenture and the Debt
Securities are not complete and are qualified in their entirety by reference to
the provisions of the Indenture, including the definitions of capitalized terms
used herein without definition. Numerical references in parentheses are to
sections in the Indenture and unless otherwise indicated capitalized terms have
the meanings given them in the Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued from time to time in series. (Section 301)
The Debt Securities will constitute unsecured and unsubordinated indebtedness
of CHL and will rank pari passu in right of payment with CHL's other unsecured
and unsubordinated indebtedness. A substantial portion of the assets of CHL may
be pledged under various credit agreements among CHL and various lending
institutions. See Note D to CCI's Consolidated Financial Statements
incorporated by reference herein.
Reference is made to the Prospectus Supplement and pricing supplement, if
any, relating to the particular series of Debt Securities offered thereby for a
description of the terms of such Debt Securities in respect of which this
Prospectus is being delivered, including, where applicable:
(i) the title of such Debt Securities;
(ii) any limit on the aggregate principal amount of such Debt Securities;
(iii) the date or dates, or the method or methods, if any, by which such
date or dates shall be determined or extended, on which the
principal of such Debt Securities is payable;
(iv) any places other than the issuer's office or agency in The City of
New York where such Debt Securities shall be payable or surrendered
for registration of transfer or exchange;
(v) the denominations in which such Debt Securities shall be issuable;
(vi) the currency of denomination of such Debt Securities, which may be in
U.S. dollars, any foreign currency or currency unit, including
European Currency Units ("ECU"), and, if applicable, certain other
information relating to such foreign currency or currency unit;
(vii) the designation of the currency or currencies in which payment of
the principal of and premium, if any, and interest on such Debt
Securities will be made and whether payment of the principal of and
premium, if any, or the interest on Debt Securities designated in a
foreign currency or currency unit, at the election of a holder
thereof, may instead be payable in U.S. dollars and the terms and
conditions upon which such election may be made;
6
<PAGE>
(viii) the rate or rates (which may be fixed or floating), if any, at
which such Debt Securities will bear interest, or the method or
methods, if any, by which such rate or rates are to be determined
or reset, the date or dates, if any, from which such interest will
accrue, or the method or methods, if any, by which such date or
dates shall be determined or reset, the dates on which such
interest will be payable, the record date for the interest payable
on any interest payment date, and the basis upon which interest
shall be calculated if other than that of a 360-day year of twelve
30-day months;
(ix) the terms and conditions, if any, on which such Debt Securities may be
redeemed at the option of CHL or repaid at the option of the Holder
(as defined below) thereof;
(x) the obligation, if any, of CHL to redeem, repay or purchase such Debt
Securities pursuant to any sinking fund or analogous provisions, and
the terms and conditions on which such Debt Securities shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(xi) if other than the principal amount thereof, the portion of the
principal amount of such Debt Securities which will be payable upon
declaration of acceleration of the maturity thereof;
(xii) provisions, if any, for the defeasance of such Debt Securities;
(xiii) the ability, if any, of the Holder of a Debt Security to renew all
or any portion of a Debt Security;
(xiv) any additional Events of Default or restrictive covenants provided
for with respect to such Debt Securities;
(xv) any other terms not inconsistent with the Indenture, including any
terms which may be required by or advisable under United States laws
or regulations;
(xvi) if such Debt Securities are denominated or payable in a currency or
currency unit other than U.S. dollars, the designation of the initial
Exchange Rate Agent and, if other than as set forth in the Indenture,
the definition of the "Exchange Rate"; and
(xvii) the form of such Debt Securities and, if in global form, the name of
the depositary with respect thereto and the terms upon which and the
circumstances under which such Debt Securities may be exchanged.
(Section 301)
"Holder" means a person in whose name a Debt Security is registered in the
related Security Register.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
Debt Securities will be issued only in fully registered form without coupons.
Debt Securities denominated in U.S. dollars will be issued in denominations of
$1,000 or any integral multiple thereof unless otherwise provided in the
Prospectus Supplement relating thereto. (Section 302) The Prospectus Supplement
relating to a series of Debt Securities denominated in a foreign currency or
currency unit will specify the denominations thereof.
The Indenture does not contain any provisions that would limit the ability of
the Company, CCI or any of their respective affiliates to incur indebtedness
(secured or unsecured) or that would afford Holders of Debt Securities
protection in the event of a highly leveraged transaction, restructuring,
change in control, merger or similar transaction involving the Company or CCI
that may adversely affect Holders of the Debt Securities.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. One or more series of Debt
Securities may be floating rate debt securities, and may be exchangeable for
fixed rate debt securities. Federal income tax consequences and special
considerations applicable to any such series will be described in the
Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
principal of, and any premium or interest on, any series of Debt Securities
will be payable, and such Debt Securities will be exchangeable and transfers
thereof will be registerable, at the Corporate Trust Office of the Trustee,
initially at
7
<PAGE>
101 Barclay Street, New York, New York 10286, provided that, at the option of
CHL, payment of interest may be made by check mailed to the address of the
Person entitled thereto as it appears in the related Security Register.
(Sections 301, 305, 306, 307 and 1102)
No Debt Security shall be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose unless there appears on such Debt Security
a certificate of authentication substantially in the form provided for in the
Indenture duly executed by the Trustee by manual signature of one of its
authorized officers, and such certificate upon any Debt Security shall be
conclusive evidence, and the only evidence, that such Debt Security has been
duly authenticated and delivered under the Indenture and is entitled to the
benefits of the Indenture. (Section 203)
EVENTS OF DEFAULT
The Indenture provides that the following shall constitute "Events of
Default" with respect to any series of Debt Securities thereunder:
(i) default in payment of principal of (or premium, if any, on) any Debt
Security of such series at Maturity;
(ii) default for 30 days in payment of interest on any Debt Security of
such series when due;
(iii) default in the deposit of any sinking fund payment on any Debt
Security of such series when due;
(iv) default in the performance or breach of any other covenant or warranty
of CHL or the Guarantor in the Indenture, the Debt Securities or the
related Guarantees, continued for 60 days after written notice thereof
by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Debt Securities of such series at the time outstanding;
(v) default resulting in acceleration of maturity of any other indebtedness
for borrowed money of CHL, the Guarantor or any direct or indirect
subsidiary of the Guarantor in an amount in excess of $10,000,000 and
such acceleration shall not be rescinded or annulled for a period of 10
days after written notice thereof by the Trustee or the Holders of at
least 25% in aggregate principal amount of the Debt Securities of such
series at the time outstanding;
(vi) certain events of bankruptcy, insolvency or reorganization; and (vii)
any other Event of Default provided with respect to such series of Debt
Securities. (Section 601)
No Event of Default with respect to a particular series of Debt Securities
issued under the Indenture necessarily constitutes an Event of Default with
respect to any other series of Debt Securities issued thereunder.
The Indenture provides that if an Event of Default specified therein shall
occur and be continuing, either the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debt Securities of such series then
outstanding may declare the principal amount of the Debt Securities of such
series (or, in the case of Original Issue Discount Securities, such other
amount, if any, as provided for in the terms of such Original Issue Discount
Securities) to be due and payable immediately upon written notice thereof to
CHL. In certain cases, the Holders of a majority in aggregate principal amount
of the outstanding Debt Securities of any such series may, on behalf of the
Holders of all such Debt Securities, rescind and annul such declaration of
acceleration. (Section 602) "Original Issue Discount Security" means, except as
otherwise defined in a Debt Security, any Debt Security which is issued with
original issue discount within the meaning of Section 1273(a) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder.
The agreements governing certain of CHL's and the Guarantor's outstanding
indebtedness contain provisions to the effect that certain Events of Default
under the Indenture would constitute an event of default under such agreements
which, among other things, could cause an acceleration of the indebtedness
thereunder. See Note D to CCI's Consolidated Financial Statements incorporated
by reference herein.
8
<PAGE>
The Indenture contains a provision entitling the Trustee, subject to the duty
of the Trustee during default under any series of Debt Securities to act with
the required standard of care, to be indemnified by the Holders of the Debt
Securities of such series before proceeding to exercise any right or power
under the Indenture with respect to such series at the request of such Holders.
(Sections 701 and 703) The Indenture provides that no Holders of Debt
Securities of any series issued thereunder may institute any proceedings,
judicial or otherwise, to enforce such Indenture except in the case of failure
of the Trustee thereunder, for 60 days, to act after it has received a written
request to enforce the Indenture by the Holders of at least 25% in aggregate
principal amount of the then outstanding Debt Securities of such series, and an
offer of reasonable indemnity. (Section 607) This provision will not prevent
any Holder of Debt Securities from enforcing payment of the principal thereof,
premium, if any, and interest thereon at the respective due dates thereof.
(Section 608) The Holders of a majority in aggregate principal amount of the
Debt Securities of any series issued under the Indenture then outstanding may
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 it with
respect to the Debt Securities of such series. The Trustee may, however, refuse
to follow any direction that it determines may not lawfully be taken or would
be illegal or in conflict with such Indenture or involve it in personal
liability or which would be unjustly prejudicial to Holders of the Debt
Securities of such series not joining therein. (Section 612)
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to any series of Debt Securities issued
thereunder, give to the Holders thereof notice of such default, unless such
default has been cured or waived. Except in the case of a default in the
payment of principal of, or premium, if any, or interest on any Debt Securities
or payment of any sinking fund installment, the Trustee shall be protected in
the withholding of such notice if it determines in good faith that the
withholding of such notice is in the interest of the Holders of the Debt
Securities of such series. (Section 702)
CHL and the Guarantor will be required to file with the Trustee annually an
Officers' Certificate as to the absence of certain defaults under the terms of
the Indenture. (Section 1105)
MODIFICATION AND WAIVER
Modifications of and amendments to the Indenture may be made by CHL, the
Guarantor and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
outstanding Debt Security affected thereby:
(i) except as otherwise permitted in the Indenture in connection with Debt
Securities for which the Stated Maturity is extendible, change the
Stated Maturity of the principal of, or any installment of interest
on, such Debt Security;
(ii) reduce the principal amount of, or, except as otherwise permitted in
the Indenture in connection with Debt Securities for which the
interest rate may be reset, interest on, or any premium payable upon
redemption or repayment of, such Debt Security;
(iii) reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof;
(iv) adversely affect the right of repayment at the option of a Holder of
such Debt Security;
(v) reduce the amount of, or postpone the date fixed for, any payment
under any sinking fund or analogous provisions of such Debt Security;
(vi) change the place or currency or currency unit of payment of the
principal of, premium, if any, or interest on such Debt Security;
(vii) change or eliminate the rights of a Holder to receive payment in a
designated currency;
(viii) impair the right to institute suit for the enforcement of any
required payment on or with respect to such Debt Security;
9
<PAGE>
(ix) reduce the percentage of the aggregate principal amount of the
outstanding Debt Securities of any series the consent of whose Holders
is required for modification or amendment of the Indenture, for waiver
of compliance with certain provisions of the Indenture, or for waiver
of certain defaults;
(x) modify any of the provisions of Section 613 (described below) except
to increase such percentage or to provide that certain other
provisions of the Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Debt Security affected
thereby; or
(xi) modify or affect the terms and conditions of the related Guarantees
in a manner adverse to the interests of the Holders of the Debt
Securities.
The Indenture also contains provisions permitting CHL, the Guarantor and the
Trustee, without the consent of any Holders of Debt Securities under such
Indenture, to enter into supplemental indentures, in form satisfactory to the
Trustee, for any of the following purposes:
(i) to evidence the succession of another corporation to CHL or the
Guarantor and the assumption by such successor of the obligations and
covenants of CHL or the Guarantor contained in the Indenture and in
the Debt Securities and the related Guarantees, as the case may be;
(ii) to add to the covenants of CHL or the Guarantor, for the benefit of
the Holders of all or any series of Debt Securities issued under the
Indenture (and if such covenants are to be for the benefit of less
than all series of Debt Securities issued under the Indenture, stating
that such covenants are expressly being included solely for the
benefit of such series), or to surrender any right or power herein
conferred upon CHL or the Guarantor;
(iii) to add any additional Events of Default (and if such Events of Default
are to be applicable to less than all series of Debt Securities issued
under the Indenture, stating that such Events of Default are expressly
being included solely to be applicable to such series);
(iv) to add or change any of the provisions of the Indenture to such extent
as shall be necessary to permit or facilitate the issuance of Debt
Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons;
(v) to change or eliminate any of the provisions of the Indenture,
provided that any such change or elimination shall become effective
only when there is no Debt Security outstanding of any series created
prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision;
(vi) to establish the form or terms of Debt Securities of any series as
otherwise permitted by the Indenture;
(vii) to evidence and provide for the acceptance of appointment under the
Indenture by a successor Trustee with respect to the Debt Securities
of one or more series issued under the Indenture and to add to or
change any of the provisions of the Indenture as shall be necessary to
provide for or facilitate the administration of the trusts thereunder
by more than one Trustee, pursuant to the requirements of the
Indenture;
(viii) to secure the Debt Securities issued under the Indenture;
(ix) to cure any ambiguity, to correct or supplement any provision in such
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
shall not be inconsistent with any provision of the Indenture,
provided such other provisions shall not adversely affect the
interests of the Holders of Debt Securities of any series issued under
the Indenture in any material respect;
(x) to modify, eliminate or add to the provisions of the Indenture to such
extent as shall be necessary to effect the qualification of the
Indenture under the TIA or under any similar federal statute
subsequently enacted and to add to the Indenture such other provisions
as may be expressly required under the TIA; or
10
<PAGE>
(xi) to effect the assumption, by the Guarantor or a Subsidiary thereof,
of the payment obligations with respect to the Debt Securities and of
the performance of every covenant of the Indenture on the part of CHL
to be performed or observed. (Section 1001)
The Holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all Holders of Debt Securities
of that series, waive any past default under the Indenture with respect to Debt
Securities of that series except a default in the payment of the principal of
(or premium, if any), or interest on, any Debt Security of that series and
except a default in respect of a covenant or provision the modification or
amendment of which would require the consent of the Holder of each outstanding
Debt Security of the affected series. (Section 613)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the form
of one or more global securities ("Global Securities") that will be deposited
with, or on behalf of, a depositary (the "Depositary") identified in the
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for individual
certificates evidencing Debt Securities in definitive form represented thereby,
a Global Security may not be transferred except as a whole by the Depositary
for such Global Security to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor of such Depositary or a
nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to such
series.
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
Under the Indenture, neither CHL nor the Guarantor may consolidate with or
merge into any corporation, or transfer its assets substantially as an entirety
to any Person, unless: (i) the successor corporation or transferee assumes
CHL's or the Guarantor's obligations on the Debt Securities or the related
Guarantees, as the case may be, and under the Indenture, and in the case of a
consolidation or merger of CHL, the Guarantor delivers an affirmation of the
continuance of its obligations to the Trustee; (ii) 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 shall have occurred and be
continuing; and (iii) certain other conditions are met. (Sections 901 and 903)
SATISFACTION, DISCHARGE AND DEFEASANCE
The Indenture, with respect to any series of Debt Securities (except for
certain specified surviving obligations, including (A) any rights of
registration of transfer and exchange and (B) rights to receive the principal,
premium, if any, and interest on the Debt Securities) will be discharged and
cancelled upon the satisfaction of certain conditions, including the following:
(i) all Debt Securities of such series not theretofore delivered to the Trustee
for cancellation have become due or payable, will become due and payable at
their Stated Maturity within one year, or are to be called for redemption
within one year and (ii) the deposit with such Trustee of an amount in the
Specified Currency sufficient to pay the principal, premium, if any, and
interest to the Maturity of all Debt Securities of such series. (Section 501)
If so specified in the Prospectus Supplement with respect to Debt Securities
of any series, CHL, at its option, (i) will be discharged from any and all
obligations in respect of the Debt Securities of such series (except for
certain obligations to register the transfer or exchange of Debt Securities of
such series, replace stolen, lost or mutilated Debt Securities of such series,
maintain certain offices or agencies in each Place of Payment, and hold moneys
for payment in trust), or (ii) will not be subject to provisions of the
Indenture described above under "--Consolidation, Merger and Transfer of
Assets" with respect to the Debt Securities of such series, in each case if CHL
irrevocably deposits with the Trustee, in trust, money or U.S. Government
Obligations (as defined in the Indenture) which through the payment of interest
thereon and principal thereof in
11
<PAGE>
accordance with their terms will provide money in an amount sufficient (in the
opinion of independent public accountants) to pay all the principal (including
any mandatory sinking fund payments) of, and premium, if any, and interest on,
the Debt Securities of such series on the dates such payments are due in
accordance with the terms of such Debt Securities. To exercise any such option,
CHL is required to deliver to the Trustee (1) an opinion of counsel to the
effect that (a) the deposit and related defeasance would not cause the Holders
of the Debt Securities of such series to recognize income, gain or loss for
Federal income tax purposes, (b) CHL's exercise of such option will not cause
any violation of the Investment Company Act of 1940, as amended, and (c) if the
Debt Securities of such series are then listed on the New York Stock Exchange,
such Debt Securities would not be delisted as a result of the exercise of such
option and (2) in the case of the Debt Securities of such series being
discharged, a ruling received from or published by the United States Internal
Revenue Service to the effect that the deposit and related defeasance would not
cause the Holders of the Debt Securities of such series to recognize income,
gain or loss for Federal income tax purposes. (Sections 1401 and 1402)
GUARANTEES
The Debt Securities will be fully and unconditionally guaranteed (the
"Guarantees") by the Guarantor as to payment of principal, premium, if any, and
interest when and as the same shall become due and payable, whether at their
Stated Maturity or upon redemption or repayment or otherwise. (Section 401) The
Guarantees will rank pari passu in right of payment with all other unsecured
and unsubordinated obligations of the Guarantor.
The obligations of the Guarantor under the Guarantees will be full and
unconditional regardless of the enforceability of the Debt Securities or the
Indenture and will not be discharged until all obligations contained in such
Debt Securities and the Indenture are satisfied. Holders of the Debt Securities
may proceed directly against the Guarantor in the event of an Event of Default
with respect to such Debt Securities without first proceeding against CHL.
(Section 401)
Because the Guarantor is a holding company, the rights of its creditors,
including the Holders of the Debt Securities in the event the Guarantees are
enforced, to share in the distribution of the assets of any subsidiary upon the
subsidiary's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors, except to the extent the Guarantor may
itself be a creditor with recognized claims against the subsidiary.
CONCERNING THE TRUSTEES
The Bank of New York is the Trustee under the Indenture. CHL and CCI maintain
banking relationships in the ordinary course of business with the Trustee.
Among other things, The Bank of New York is a lending bank under an existing
revolving credit facility of CHL. See Notes to CCI's Consolidated Financial
Statements incorporated by reference herein.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
one or more underwriters or dealers; (ii) through agents; or (iii) directly to
a limited number of purchasers or to a single purchaser. The Prospectus
Supplement with respect to each series of Debt Securities will set forth the
terms of the offering of the Debt Securities of such series, including the name
or names of any underwriters, dealers or agents, the purchase price of such
Debt Securities, the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation or agents'
commissions, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers, and any securities exchanges on which
the Debt Securities of such series may be listed.
If one or more underwriters are used in the sale, the Debt Securities will be
acquired by such underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated
12
<PAGE>
transactions, at a fixed public offering price, or at varying prices determined
at the time of sale. The Debt Securities may be offered to the public through
underwriting syndicates represented by managing underwriters or by one or more
underwriters without a syndicate. Unless otherwise set forth in the Prospectus
Supplement, the obligations of the underwriters to purchase Debt Securities
will be subject to certain conditions precedent and the underwriters will be
obligated to purchase all the Debt Securities of a series if any are purchased.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Debt Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement or any supplement thereto. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a reasonable best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified entities
to purchase Debt Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date. Such contracts will be
subject only to those conditions set forth in the Prospectus Supplement. The
Prospectus Supplement will set forth the commissions payable for solicitations
of such contracts.
Agents and underwriters may from time to time purchase and sell Debt
Securities in the secondary market, but are not obligated to do so, and there
can be no assurance that there will be a secondary market for the Debt
Securities or that there will be liquidity in the secondary market if one
develops. From time to time, agents and underwriters may make a market in the
Debt Securities.
Agents and underwriters may be entitled under agreements entered into with
the Company and the Guarantor to indemnification by the Company and the
Guarantor, jointly and severally, against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof.
Agents and underwriters may be customers of, engage in transactions with or
perform services for, the Company or its affiliates in the ordinary course of
business.
The Company may designate Countrywide Securities Corporation to be an
underwriter, agent or dealer of one or more series of its Debt Securities. The
distribution of Debt Securities of any such series will conform to the
requirements set forth in the applicable sections of Rule 2720 of the Conduct
Rules of the National Association of Securities Dealers, Inc.
VALIDITY OF SECURITIES
The validity of the Debt Securities will be passed upon for the Company and
CCI by Fried, Frank, Harris, Shriver & Jacobson, a partnership including
professional corporations, New York, New York. Edwin Heller (whose professional
corporation retired as a partner of Fried, Frank, Harris, Shriver & Jacobson in
September 1996) is of counsel to Fried, Frank, Harris, Shriver & Jacobson and
is a director of CCI. Brown & Wood LLP, New York, New York will serve as
counsel for any underwriters and agents. Brown & Wood LLP also serves as
counsel for CWMBS, Inc. and CWABS, Inc., each a wholly owned subsidiary of CCI,
in connection with offerings of mortgage-backed and asset-backed securities.
EXPERTS
The consolidated financial statements of CCI incorporated by reference in the
Registration Statement, of which this Prospectus forms a part, have been
audited by Grant Thornton LLP, independent certified public accountants, for
the periods and to the extent indicated in their report thereon, and have been
so incorporated in reliance upon the authority of said firm as experts in
accounting and auditing.
13
<PAGE>
$3,000,000,000
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES H
UNCONDITIONALLY GUARANTEED BY
[LOGO OF COUNTRYWIDE CREDIT INDUSTRIES, INC. APPEARS HERE]
-------------
PROSPECTUS SUPPLEMENT
, 1998
-------------
LEHMAN BROTHERS
CHASE SECURITIES INC.
DEUTSCHE BANK SECURITIES
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
COUNTRYWIDE SECURITIES CORPORATION
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS IS +
+NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE +
+REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS +
+EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS ARE NOT AN +
+OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY +
+THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion, dated October 30, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus Dated , 1998)
$3,000,000,000
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES H
UNCONDITIONALLY GUARANTEED BY
[LOGO]
COUNTRYWIDE CREDIT INDUSTRIES, INC.
- --------------------------------------------------------------------------------
This is a public offering to be conducted on a continuous basis by Countrywide
Home Loans, Inc. ("we" or "CHL") of Medium-Term Notes, Series H. We will issue
Notes with the general terms described below. We will agree to the specific
terms of the Notes at the time they are offered for sale. After these terms are
established, they will be described in a pricing supplement to this prospectus
supplement and the attached prospectus.
MATURITY: Nine months or more from date of issue.
REDEMPTION: We will specify in the pricing supplement the terms under which
we may, or may be required to, redeem or repay the Notes prior
to maturity.
INTEREST: Either a fixed or floating rate as we will specify in the
pricing supplement. We will establish interest payment dates and
describe them in the pricing supplement.
CURRENCY: U.S. dollars or such foreign currencies as we may designate in
the pricing supplement.
GUARANTEE: Countrywide Credit Industries, Inc., our parent company, will
guarantee the payment of principal, any premium and interest on
the Notes.
RANKING: The Notes will be unsecured and unsubordinated indebtedness and
will rank equally with our other unsecured and unsubordinated
indebtedness. The guarantee will be an unsecured and
unsubordinated obligation of Countrywide Credit Industries, Inc.
INVESTING IN THE NOTES INVOLVES RISKS. RISK FACTORS BEGIN ON PAGE S-2.
Unless we state differently in the pricing supplement, the pricing terms of the
Notes will be:
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------------- -----------------------------
<S> <C> <C>
Public Offering Price............ 100.000% $3,000,000,000
Commission or Discount........... .125%-.75% $3,750,000-$22,500,000
Proceeds to Countrywide Home
Loans, Inc. .................... 99.875%-99.25% $2,996,250,000-$2,977,500,000
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus supplement or the attached prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
We will deliver the Notes in either certificated form or through the book-
entry facilities of The Depository Trust Company, as described in the pricing
supplement.
- --------------------------------------------------------------------------------
This prospectus supplement and the attached prospectus may be used by
Countrywide Securities Corporation, our affiliate, for offers and sales related
to market-making transactions in the Notes.
, 1998
<PAGE>
EXCHANGE OF AMOUNTS IN FOREIGN CURRENCY
Foreign Currency received on the sale or retirement of a Note will generally
have a tax basis equal to the U.S. dollar value of that currency at the time of
such sale or retirement. Foreign Currency received as interest on a Note will
have a tax basis equal to its U.S. dollar value on the date such interest was
received. Foreign Currency which is purchased generally will have a tax basis
equal to the U.S. dollar cost of acquisition. Any gain or loss recognized on a
sale or other disposition of Foreign Currency (including its use to purchase
Notes or upon exchange for U.S. dollars) will be ordinary income or loss.
Accordingly, a holder that converts U.S. dollars to a Foreign Currency and
immediately uses that Foreign Currency to purchase a Note denominated in the
same currency normally will not recognize gain or loss in connection with such
conversion and purchase. However, a holder that purchases a Note with
previously owned Foreign Currency may recognize ordinary income or loss in an
amount equal to the difference between the holder's tax basis in the Foreign
Currency and the U.S. dollar value of the Note on the date of purchase.
BACKUP WITHHOLDING
A holder of a Note may be subject to backup withholding at a rate of 31% with
respect to payments of principal and any premium or interest (including
original issue discount) made on the Note or the proceeds of a sale or exchange
of the Note before maturity unless such holder (a) is a corporation or comes
within certain other exempt categories and, when required, demonstrates this
fact, or (b) provides a taxpayer identification number, certifies that the
holder is not subject to backup withholding, and otherwise complies with
applicable requirements of the backup withholding rules. A holder of a Note
that does not provide CHL, or its agent, with a correct taxpayer identification
number or an adequate basis for exemption may be subject to penalties imposed
by the Internal Revenue Service. The backup withholding tax is not an
additional tax and will generally be credited against a holder's United States
Federal income tax liability provided the required information is furnished to
the Internal Revenue Service.
On October 6, 1997, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the backup withholding and
information reporting rules described above. 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,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
PLAN OF DISTRIBUTION OF NOTES
This Prospectus Supplement and the accompanying Prospectus are to be used by
Countrywide Securities Corporation, an affiliate of the Company and the
Guarantor, in connection with offers and sales related to market-making
transactions in the Notes. Countrywide Securities Corporation may act as
principal or agent in such transactions. Sales will be made at prices to be
determined at the time of sale. The distribution of the Notes will conform to
the requirements set forth in the applicable sections of Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for CHL and CCI by Fried,
Frank, Harris, Shriver & Jacobson, a partnership including professional
corporations, New York, New York. The statements under "Federal Income Tax
Consequences," to the extent they constitute statements of law, are set forth
herein in reliance upon the opinion of Fried, Frank, Harris, Shriver &
Jacobson. Edwin Heller (whose professional corporation retired as a partner of
Fried, Frank, Harris, Shriver & Jacobson in September 1996) is of counsel to
Fried, Frank, Harris, Shriver & Jacobson and is a director of CCI. Brown & Wood
LLP, New York, New York will serve as counsel to the Agents. Brown & Wood LLP
also serves as counsel for CWMBS, Inc. and CWABS, Inc., each a wholly owned
subsidiary of CCI, in connection with offerings of mortgage-backed and asset-
backed securities.
S-26
<PAGE>
$3,000,000,000
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES H
UNCONDITIONALLY GUARANTEED BY
[LOGO]
COUNTRYWIDE CREDIT INDUSTRIES, INC.
------------------
PROSPECTUS SUPPLEMENT
, 1998
------------------
COUNTRYWIDE SECURITIES CORPORATION
<PAGE>
Rule 424(b)(3)
File Nos.
PRICING SUPPLEMENT NO. DATED 19
(To Prospectus Dated , 1998, as Supplemented , 1998)
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES H
UNCONDITIONALLY GUARANTEED BY
COUNTRYWIDE CREDIT INDUSTRIES, INC.
FIXED RATE NOTES
------------------
<TABLE>
<S> <C> <C> <C> <C>
Trade Date: Issue Price: Original Issue Date: Stated Maturity Date: Interest Rate:
Book-Entry: [_] Interest Payment Dates: Record Dates:
Certificated: [_]
</TABLE>
Principal Amount:
Net Proceeds:
Minimum Denomination:
Specified Currency:
Exchange Rate Agent:
Agent:
Redemption:
Check box opposite applicable paragraph.
[_] The Notes cannot be redeemed prior to maturity.
[_] The Notes may be redeemed prior to maturity.
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
Repayment:
Check box opposite applicable paragraph.
[_] The Notes cannot be repaid prior to maturity.
[_] The Notes may be repaid prior to maturity.
Optional Repayment Dates:
Additional/Other Terms:
------------------
The Notes to which this Pricing Supplement relates will be unsecured and
unsubordinated indebtedness of CHL and will rank equally with CHL's other
unsecured and unsubordinated indebtedness. As of , 19 , the Guarantor had
$ aggregate principal amount of secured indebtedness outstanding and CHL had
$ aggregate principal amount of secured indebtedness outstanding. As of that
date, CHL had $ aggregate principal amount of unsecured indebtedness
outstanding, which indebtedness ranked equally with CHL's other unsecured and
unsubordinated indebtedness and which indebtedness will rank equally with the
Notes to which this Pricing Supplement relates.
<PAGE>
Rule 424(b)(3)
File Nos.
PRICING SUPPLEMENT NO. DATED 19
(To Prospectus Dated , 1998, as Supplemented , 1998)
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES H
UNCONDITIONALLY GUARANTEED BY
COUNTRYWIDE CREDIT INDUSTRIES, INC.
FLOATING RATE NOTES
----------------
Trade Date: Book-Entry: [_]
Issue Price: Certificated: [_]
Original Issue Date: Principal Amount:
Stated Maturity Date: Net Proceeds:
Specified Currency:
<TABLE>
<S> <C> <C> <C>
Base Rate(s): [_] Commercial Paper Rate [_] LIBOR (See Additional/ [_] Certificate of Deposit Rate
Other Terms)
[_] Treasury Rate [_] Federal Funds Rate [_] Prime Rate
[_] CMT Rate (See Additional/ [_] Eleventh District [_] Other
Other Terms) Cost of Funds Rate
</TABLE>
Exchange Rate Agent:
Minimum Denomination: Fixed Rate Commencement Date:
Initial Interest Rate: Fixed Interest Rate:
Interest Reset Dates:
Interest Payment Dates:
Index Maturity:
Maximum Interest Rate:
Minimum Interest Rate:
Interest Factor Convention:
Spread (plus or minus):
Spread Multiplier:
Agent:
Calculation Agent:
Redemption: Repayment:
Check box opposite applicable paragraph.Check box opposite applicable
paragraph.
[_] The Notes cannot be redeemed prior to maturity.
[_] The Notes cannot be repaid prior
to maturity.
[_] The Notes may be redeemed prior to maturity.
[_] The Notes may be repaid prior to
Initial Redemption Date: maturity.
Optional Repayment Dates:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
Additional/Other Terms:
----------------
The Notes to which this Pricing Supplement relates will be unsecured and
unsubordinated indebtedness of CHL and will rank equally with CHL's other
unsecured and unsubordinated indebtedness. As of , 19 , the Guarantor had
$ aggregate principal amount of secured indebtedness outstanding and CHL
had $ aggregate principal amount of secured indebtedness outstanding. As of
that date, CHL had $ aggregate principal amount of unsecured indebtedness
outstanding, which indebtedness ranked equally with CHL's other unsecured and
unsubordinated indebtedness and which indebtedness will rank equally with the
Notes to which this Pricing Supplement relates.
P-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 834,000
NASD Fee...................................................... 30,500
Blue sky fees and expenses.................................... 15,000
Legal fees and expenses....................................... 60,000
Accounting fees and expenses.................................. 60,000
Printing and engraving expenses............................... 60,000
Trustees' fees and expenses................................... 60,000
Rating agency fees............................................ 1,200,000
Miscellaneous................................................. 10,500
----------
Total..................................................... $2,330,000
==========
</TABLE>
- --------
*Except for the SEC registration fee, all of the foregoing expenses have
been estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides, in substance,
that Delaware corporations shall have the power, under specified circumstances,
to indemnify their directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by a third party or in the
right of the corporation, by reason of the fact that they were or are such
directors, officers, employees or agents, against expenses incurred in any such
action, suit or proceeding. The Delaware General Corporation Law also provides
that Delaware corporations may purchase insurance on behalf of any such
director, officer, employee or agent. Sections 722, 723, 725 and 726 of the New
York Business Corporation Law are substantively equivalent to Section 145 of
the Delaware General Corporation Law.
Article SIXTH of the Certificate of Incorporation of CCI provides that CCI
may indemnify its directors and officers to the full extent permitted by the
laws of the State of Delaware. Article VIII of CCI's Bylaws provides that CCI
shall indemnify its directors and officers, and persons serving as directors
and officers of CHL at the request of CCI, against any threatened, pending or
completed action, suit or proceeding or investigation brought against such
directors and officers by reason of the fact that such persons were such
directors or officers, provided that such persons acted in good faith and in a
manner which they reasonably believed to be in or not opposed to the best
interests of CCI; except that in the case of actions brought by or in the right
of CCI to procure a judgment in its favor, no indemnification is permitted in
respect to any claim, issue or matter as to which any such director or officer
shall have been adjudged to be liable to CCI unless the court in which the
action was brought determines that such person is entitled to indemnification.
CCI's Bylaws further contemplate that the indemnification provisions permitted
thereunder are not exclusive of any other rights to which such directors and
officers are otherwise entitled by means of Bylaw provisions, agreements, vote
of stockholders or disinterested directors or otherwise. CCI has entered into
indemnity agreements with certain of its directors and executive officers
(including the directors and executive officers of CHL), whereby such
individuals are indemnified by CCI up to an aggregate limit of $5,000,000 for
any claims made against such individual based on any act, omission or breach of
duty committed while acting as a director or officer, except, among other
things, cases involving dishonesty or improper personal benefit. CCI also
maintains an insurance policy pursuant to which its directors and officers
(including the directors and executive officers of CHL) are insured against
certain liabilities which might arise out of their relationship with CCI as
directors and officers.
Article SEVENTH of the Certificate of Incorporation provides that a director
of CCI shall have no personal liability to CCI or its stockholders for monetary
damages for breach of his fiduciary duty of care as a director to the full
extent permitted by the Delaware General Corporation Law, as it may be amended
from time to time.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
<C> <S> <C>
1.1 --Form of Selling Agency Agreement
4.1 --Indenture, dated as of January 1, 1992, among CHL, the
Guarantor and The Bank of New York, as trustee (incorpo-
rated by reference to Exhibit 4.1 to the Registration
Statement on Form S-3 of CHL and the Guarantor (File Nos.
33-50661 and 33-50661-01) filed on October 19, 1993)
4.2 --Supplemental Indenture No. 1, dated as of June 15, 1995,
to the Indenture dated as of January 1, 1992, among CHL,
the Guarantor and The Bank of New York, as trustee (in-
corporated by reference to Exhibit 4.9 to the Registra-
tion Statement on Form S-3 of CHL and the Guarantor (File
Nos. 33-59559 and 33-59559-01))
4.3 --Form of Fixed Rate Medium-Term Note
4.4 --Form of Floating Rate Medium-Term Note
5.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson,
counsel to the Company and CHL, as to the legality of the
securities being offered
8.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson,
counsel to the Company and CHL, as to certain tax matters
12.1 --Statement regarding computation of ratio of earnings to
fixed charges (incorporated by reference to Exhibit 12.1
to the Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1998)
23.1 --Consent of Grant Thornton LLP
23.2 --Consent of Fried, Frank, Harris, Shriver & Jacobson (in-
cluded in Exhibit 5.1)
23.3 --Consent of Fried, Frank, Harris, Shriver & Jacobson (in-
cluded in Exhibit 8.1)
24 --Powers of Attorney for CHL and CCI relating to subse-
quent amendments (included on pages II-5 and II-7)
25.1 --Form T-1 Statement of Eligibility Under Trust Indenture
Act of 1939 of The Bank of New York (separately bound)
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned CHL and CCI (the "Registrants") hereby undertake:
(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) To reflect in the prospectus any facts or events arising after
the effective date of this 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 this 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 end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities Act of
1933 if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
II-2
<PAGE>
provided, however, that the undertakings set forth in paragraphs (1) (i)
and (ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrants pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
this Registration Statement.
(2) That, 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 be 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.
(b) Each of the undersigned Registrants hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
CCI's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the provisions permitted under Item 15 above or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted against the
Registrants by such director, officer or controlling person in connection with
the securities being registered hereby, the Registrants will, unless in the
opinion of their counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Countrywide Home
Loans, Inc. 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 Calabasas, State of California, on the 30th day
of October, 1998.
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Angelo R. Mozilo
-------------------------------------
Angelo R. Mozilo
Chairman of the Board of Directors and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David S. Loeb, Angelo R. Mozilo, Stanford L.
Kurland and Carlos M. Garcia, and each of them, his true and lawful attorneys-
in-fact and agents, with full powers of substitution and resubstitution, for
and in his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration
Statement, and any registration statement related to the offering contemplated
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
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/ David S. Loeb Director October 30, 1998
____________________________________
DAVID S. LOEB
/s/ Angelo R. Mozilo Chairman of the Board of October 30, 1998
____________________________________ Directors and Chief
ANGELO R. MOZILO Executive Officer (Principal
Executive Officer); Director
/s/ Stanford L. Kurland President and Chief October 30, 1998
____________________________________ Operating Officer; Director
STANFORD L. KURLAND
/s/ Thomas K. McLaughlin Managing Director and Chief October 30, 1998
____________________________________ Financial Officer (Principal
THOMAS K. MCLAUGHLIN Financial and Accounting
Officer)
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Countrywide
Credit Industries, Inc. 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 Calabasas, State of
California, on the 30th day of October, 1998.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
/s/ David S. Loeb
By: ____________________________________
David S. Loeb
Chairman of the Board of Directors and
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David S. Loeb, Angelo R. Mozilo, Stanford L.
Kurland and Carlos M. Garcia, and each of them, his true and lawful attorneys-
in-fact and agents, with full powers of substitution and resubstitution, for
and in his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration
Statement, and any registration statement related to the offering contemplated
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
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/ David S. Loeb Chairman of the Board of October 30, 1998
____________________________________ Directors and President
DAVID S. LOEB (Principal Executive
Officer); Director
/s/ Angelo R. Mozilo Chief Executive Officer and October 30, 1998
____________________________________ Vice Chairman of the Board
ANGELO R. MOZILO of Directors; Director
/s/ Carlos M. Garcia Managing Director--Finance, October 30, 1998
____________________________________ Chief Financial Officer and
CARLOS M. GARCIA Chief Accounting Officer
(Principal Financial and
Accounting Officer)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Donato Director October 30, 1998
____________________________________
ROBERT J. DONATO
/s/ Ben M. Enis Director October 30, 1998
____________________________________
BEN M. ENIS
/s/ Edwin Heller Director October 30, 1998
____________________________________
EDWIN HELLER
/s/ Harley W. Snyder Director October 30, 1998
____________________________________
HARLEY W. SNYDER
/s/ Jeffrey M. Cunningham Director October 30, 1998
____________________________________
JEFFREY M. CUNNINGHAM
/s/ Michael E. Dougherty Director October 30, 1998
____________________________________
MICHAEL E. DOUGHERTY
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ----------- ---
<C> <S> <C>
1.1 --Form of Selling Agency Agreement
4.1 --Indenture, dated as of January 1, 1992, among CHL, the Guaran-
tor and The Bank of New York, as trustee (incorporated by ref-
erence to Exhibit 4.1 to the Registration Statement on Form S-3
of CHL and the Guarantor (File Nos. 33-50661 and 33-50661-01)
filed on October 19, 1993)
4.2 --Supplemental Indenture No. 1, dated as of June 15, 1995, to
the Indenture dated as of January 1, 1992, among CHL, the Guar-
antor and The Bank of New York, as trustee (incorporated by
reference to Exhibit 4.9 to the Registration Statement on Form
S-3 of CHL and the Guarantor (File Nos. 33-59559 and 33-59559-
01))
4.3 --Form of Fixed Rate Medium-Term Note
4.4 --Form of Floating Rate Medium-Term Note
5.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel
to the Company and CHL, as to the legality of the securities
being offered
8.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel
to the Company and CHL, as to certain tax matters
12.1 --Statement regarding computation of ratio of earnings to fixed
charges (incorporated by reference to Exhibit 12.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
August 31, 1998)
23.1 --Consent of Grant Thornton LLP
23.2 --Consent of Fried, Frank, Harris, Shriver & Jacobson (included
in Exhibit 5.1)
23.3 --Consent of Fried, Frank, Harris, Shriver & Jacobson (included
in Exhibit 8.1)
24 --Powers of Attorney for CHL and CCI relating to subsequent
amendments (included on pages II-5 and II-7)
25.1 --Form T-1 Statement of Eligibility Under Trust Indenture Act of
1939 of The Bank of New York (separately bound)
</TABLE>
<PAGE>
EXHIBIT 1.1
Countrywide Home Loans, Inc.
U.S. $3,000,000,000
Medium-Term Notes, Series H
Due Nine Months or More
From Date of Issue
Payment of Principal, Premium, if any, and Interest
Fully and Unconditionally Guaranteed by
Countrywide Credit Industries, Inc.
SELLING AGENCY AGREEMENT
__, 1998
Lehman Brothers Inc.
3 World Financial Center - 12th Floor
New York, New York 10285-1200
Chase Securities Inc.
270 Park Avenue
New York, New York 10019
Deutsche Bank Securities Inc.
31 W. 52nd Street
New York, New York 10017
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
NationsBanc Montgomery Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
<PAGE>
Salomon Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Countrywide Securities Corporation
4500 Park Granada
Calabasas, California 91302
Ladies and Gentlemen:
Countrywide Home Loans, Inc., a New York corporation (the "Company"),
confirms its agreement with each of you (collectively, the "Agents") with
respect to the issue and sale by the Company of up to U.S. $3,000,000,000
aggregate initial offering price of its Medium-Term Notes, Series H, Due Nine
Months or More from Date of Issue (the "Notes"). The Notes will be fully and
unconditionally guaranteed as to payment of principal, premium, if any, and
interest (the "Guarantees") by Countrywide Credit Industries, Inc. (the
"Guarantor"). The Notes and the Guarantees will be issued under an indenture,
dated as of January 1, 1992, as supplemented by Supplemental Indenture No. 1
thereto, dated as of June 15, 1995 (collectively, the "Indenture"), among the
Company, the Guarantor and The Bank of New York, as trustee (the "Trustee").
Unless otherwise specified in the Pricing Supplement referred to below, the
Notes will be issued in minimum denominations of U.S. $1,000 and in
denominations exceeding such amount by integral multiples of U.S. $1,000, and if
denominated in a currency or currency unit other than U.S. dollars, the
equivalent in such other currency or currency unit (the "Specified Currency") as
determined in accordance with the Indenture, of U.S. $1,000 (rounded down to an
integral multiple of 1,000 units of such Specified Currency) and any larger
amount that is an integral multiple of 1,000 units of such Specified Currency,
will be issued only in fully registered certificated or book-entry form, and
will be issued in the currency or currency units and will have the maturities,
annual interest rates (whether fixed or floating), redemption provisions and
other terms set forth in a pricing supplement (the "Pricing Supplement") to the
Prospectus referred to below. The Notes will be issued, and the terms thereof
established, in accordance with the Indenture and the Medium-Term Note
Administrative Procedures attached hereto as Exhibit A (the "Procedures"). The
Procedures may only be amended by written agreement of the Company and each
Agent after notice to, and in the case of amendments which affect the rights,
duties or obligations of the Trustee, with the approval of, the Trustee.
1. Representations and Warranties. The Company and the Guarantor, jointly and
------------------------------
severally, represent and warrant to, and agree with, each Agent that:
(a) The Company and the Guarantor meet the requirements
for use of Form S-3 under the Securities Act of 1933, as amended
(the "Act") and rules and regulations ("Rules and Regulations")
of the Securities and Exchange Commission (the "Commission")
promulgated thereunder and have filed with the Commission a
registration statement on Form S-3 (File Nos. 333-_____ and 333-
_________) (the "Registration Statement"), and a related
preliminary prospectus for the registration under the Act of
certain securities, including the Notes and the Guarantees
(collectively, the "Securities") and the offering thereof from
time to
2
<PAGE>
time in accordance with Rule 415 of the Rules and Regulations,
which Registration Statement has been declared effective by the
Commission and copies of which have heretofore been delivered to
you. Such Registration Statement, as it may be amended or
supplemented, meets the requirements set forth in Rule
415(a)(1)(x) and (a)(2) of the Rules and Regulations and complies
in all other material respects with said Rule. In connection with
the sale of Notes, the Company and the Guarantor propose to file
with the Commission pursuant to Rule 424 under the Act a
supplement to the form of prospectus included in such
Registration Statement relating to the Notes and the Guarantees
and the plan of distribution thereof and have previously advised
the Agents of all further information (financial and other) with
respect to the Company and the Guarantor to be set forth therein.
Such Registration Statement, in the form in which it was declared
effective, as amended through the date hereof, including all
documents incorporated or deemed to be incorporated by reference
therein, is hereinafter referred to as the "Registration
Statement". Such prospectus, as supplemented through the date
hereof, is hereinafter called the "Prospectus", except that if
any revised prospectus or prospectus supplement shall be provided
to the Agents by the Company for use in connection with the
offering of the Securities which differs from the Prospectus
(whether or not such revised prospectus or prospectus supplement
is required to be filed by the Company pursuant to Rule 424(b) of
the Rules and Regulations), the term "Prospectus" shall refer to
such revised prospectus or prospectus supplement, as the case may
be, from and after the time it is first provided to the Agents
for such use. Any reference herein to the Registration Statement
or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the date of
this Agreement or the date of the Prospectus, as the case may be;
and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement or the
Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act after the date of this
Agreement or the date of the Prospectus, as the case may be,
deemed to be incorporated therein by reference.
(b) As of the date hereof, when any amendment to the
Registration Statement becomes effective (including the filing of
any document incorporated by reference in the Registration
Statement), when any supplement to the Prospectus is filed with
the Commission, as of the date of any Terms Agreement (as defined
by Section 2 hereof) and at the date of delivery by the Company
of any Notes sold hereunder (a "Settlement Date"), (i) the
Registration Statement, as amended as of any such time, and the
Prospectus, as supplemented as of any such time, and the
Indenture complies, or will comply, as the case may be, in all
material respects with the applicable requirements of the Act,
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and the Exchange Act and the respective rules and
regulations thereunder and (ii) neither the Registration
Statement, as amended as of any such time, nor the Prospectus, as
supplemented as of any such time, contains, or will contain, as
the case may be, any untrue statement of a material fact or omit
to state any material fact required to be stated
3
<PAGE>
therein or necessary in order to make the statements therein not
misleading; provided, however, that the representations or
-------- -------
warranties in this subsection shall not apply to (a) that part of
the Registration Statement which shall constitute the Statement
of Eligibility on Form T-1 under the Trust Indenture Act of the
Trustee or (b) the information contained in or omitted from the
Registration Statement or the Prospectus or any amendment thereof
or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company or the Guarantor
by any of you specifically for use in connection with the
preparation of the Registration Statement and the Prospectus or
any amendment thereof or supplement thereto.
(c) Neither the Company nor the Guarantor nor any of their
respective subsidiaries is in violation of its corporate charter
or bylaws or in default under any agreement, indenture or
instrument to which the Company, the Guarantor or any of their
respective subsidiaries is a party, the effect of which violation
or default would be material to the Company or the Guarantor and
its subsidiaries considered as a whole; the execution, delivery
and performance of this Agreement and the Indenture and
consummation of the transactions contemplated hereunder and
thereunder will not conflict with, result in the creation or
imposition of any lien, charge or encumbrance upon any of the
assets of the Company, the Guarantor or any of their respective
subsidiaries pursuant to the terms of, or constitute a default
under, any agreement, indenture or instrument, or result in a
violation of the charter or by-laws of the Company or the
Guarantor or any order, rule or regulation of any court or
governmental agency having jurisdiction over the Company, the
Guarantor or any of their respective subsidiaries; and except as
required by the Act, the Trust Indenture Act, the Exchange Act
and applicable state securities laws, no consent, authorization
or order of, or filing or registration with, any court or
governmental agency is required for the execution, delivery and
performance of this Agreement and the Indenture.
(d) Except as described in or contemplated by the
Registration Statement and the Prospectus, there has not been any
material adverse change in, or any adverse development which
materially affects, the business, properties, financial condition
or results of operations of the Company or the Guarantor and its
subsidiaries considered as a whole since the dates as of which
information is given in the Registration Statement and the
Prospectus.
(e) Grant Thornton LLP, whose reports have been included
in the Prospectus and incorporated by reference or included in
the Guarantor's most recent Annual Report on Form 10-K, which is
incorporated by reference in the Prospectus, are independent
public accountants as required by the Act and the Rules and
Regulations.
(f) (i) The Indenture has been duly authorized, executed
and delivered by the Company and the Guarantor and constitutes
the legally binding obligation of the Company and the Guarantor,
respectively, enforceable in accordance with its terms subject to
bankruptcy, insolvency, reorganization,
4
<PAGE>
fraudulent transfer, fraudulent conveyance, moratorium or other
laws affecting creditors' rights generally and general principles
of equity, (ii) on any Settlement Date, the Notes will have been
duly authorized and, upon payment therefor as provided in this
Agreement, will constitute legally binding obligations of the
Company enforceable in accordance with their terms subject to
bankruptcy, insolvency, reorganization, fraudulent transfer,
fraudulent conveyance, moratorium or other laws affecting
creditors' rights generally and general principles of equity and
the holders of the Notes will be entitled to the benefits of the
Indenture, (iii) on any Settlement Date, the Guarantees will have
been duly authorized and, upon delivery of the related Notes,
will constitute legally binding obligations of the Guarantor
enforceable in accordance with their terms subject to bankruptcy,
insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other laws affecting creditors' rights
generally and general principles of equity and the holders of the
Notes upon which the Guarantees are endorsed will be entitled to
the benefits of the Indenture, and (iv) the Indenture conforms,
and the Notes and related Guarantees will conform, in each case
in all material respects, to the descriptions thereof contained
in the Prospectus.
(g) Each of the Company, the Guarantor and any Significant
Subsidiary of the Company or the Guarantor, as defined in Rule
405 of Regulation C of the Rules and Regulations (individually, a
"Subsidiary" and collectively, the "Subsidiaries"), has been duly
incorporated, is validly existing and in good standing under the
laws of the jurisdiction in which it is chartered or organized,
is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership
of property or the conduct of its business requires such
qualification (except where the failure to be so qualified would
not have a material adverse effect on the business operations or
financial condition of the Company or the Guarantor and its
subsidiaries taken as a whole), and has power and authority
necessary to own or hold its property and to conduct the business
in which it is engaged.
(h) All of the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and
are fully paid and nonassessable, and all outstanding shares of
capital stock of the Subsidiaries are owned by the Company or the
Guarantor, directly or through subsidiaries, free and clear of
any perfected security interest, other security interests,
claims, liens or encumbrances.
(i) Except as described in the Prospectus, there is no
material litigation or governmental proceeding pending or, to the
knowledge of the Company or the Guarantor, threatened against the
Company, the Guarantor or any of their respective subsidiaries
which is reasonably likely to result in any material adverse
change in the financial condition, results of operations,
business or prospects of the Company or the Guarantor and its
subsidiaries considered as a whole or which is required to be
disclosed in the Registration Statement.
5
<PAGE>
(j) The financial statements filed or incorporated as part of
the Registration Statement or included or incorporated in the
Prospectus present fairly, or (in the case of any amendment or
supplement to any such document, or any material incorporated by
reference in any such document, filed with the Commission after the
date as of which this representation is being made) will present
fairly, at all times during the effectiveness of this Agreement, the
financial condition and results of operations of the Guarantor, at the
dates and for the periods indicated, and have been, and (in the case
of any amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will be at all times during the effectiveness of this Agreement,
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except
as otherwise required pursuant to such generally accepted accounting
principles; and the summarized financial information of the Company
included or incorporated by reference in the Registration Statement
and the Prospectus presents fairly the information required to be
stated therein.
(k) The documents incorporated by reference into the Prospectus
have been, and (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such
document, filed with the Commission after the date as of which this
representation is being made) will be at all times during the
effectiveness of this Agreement, prepared in all material respects in
conformity with the applicable requirements of the Act and the Rules
and Regulations and the Exchange Act and the rules and regulations of
the Commission thereunder and such documents have been, or (in the
case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with
the Commission after the date as of which this representation is being
made) will be at all times during the effectiveness of this Agreement
hereof, timely filed as required thereby.
(l) There are no contracts or other documents which are
required to be filed as exhibits to the Registration Statement by the
Act or by the Rules and Regulations, or which were required to be
filed as exhibits to any document incorporated by reference in the
Prospectus by the Exchange Act or the rules and regulations of the
Commission thereunder, which have not been filed as exhibits to the
Registration Statement or to such document or incorporated therein by
reference as permitted by the Rules and Regulations or the rules and
regulations of the Commission under the Exchange Act as required.
(m) The Company, the Guarantor and each subsidiary of the
Guarantor have complied, and will comply, with the provisions of
Florida H.B. 1771, codified as Section 517.075 of the Florida
Statutes, 1987, as amended, and all regulations promulgated thereunder
relating to issuers doing business in Cuba.
2. Appointment of Agents; Solicitations by the Agents of Offers to
---------------------------------------------------------------
Purchase; Sales of Notes to a Purchaser. (a) Subject to the terms and
- ---------------------------------------
conditions set forth herein, and to the
6
<PAGE>
reservation by the Company of the right to sell, solicit, and accept offers to
purchase Notes directly on its own behalf, the Company hereby authorizes each
Agent to act as its agent to solicit offers for the purchase of all or part of
the Notes from the Company.
On the basis of the representations and warranties, and subject to the
terms and conditions set forth herein, each of the Agents agrees, as agent of
the Company, to use its reasonable best efforts to solicit offers to purchase
the Notes from the Company upon the terms and conditions set forth herein and in
the Prospectus as amended or supplemented and in the Procedures.
The Company reserves the right, in its sole discretion, to instruct the
Agents or any one or more of the Agents from time to time to suspend at any
time, for any period of time or permanently, the solicitation of offers to
purchase the Notes. Upon receipt of instructions from the Company, such Agents
will forthwith suspend solicitation of offers to purchase Notes from the Company
until such time as the Company has advised them that such solicitation may be
resumed.
Unless otherwise agreed between the Company and such Agent, the Company
agrees to pay each Agent a commission in U.S. dollars, at the time of settlement
of each sale of Notes by the Company as a result of a solicitation made by such
Agent, in an amount equal to that percentage specified in Schedule I hereto (or,
with respect to Notes in which the stated maturity is in excess of 30 years,
such percentage as shall be agreed upon by the Company and the related Agent at
such time) of the aggregate principal amount of the Notes sold by the Company as
a result of solicitations by such Agent and such commission shall be payable as
specified in the Procedures.
Subject to the provisions of this Section and to the Procedures, offers for
the purchase of Notes may be solicited by each Agent as agent for the Company at
such time and in such amounts as such Agent deems advisable; provided, however,
-------- -------
that so long as this Agreement shall be in effect, the Company shall not solicit
offers to purchase Notes through any agents other than the Agents.
Notwithstanding anything to the contrary contained herein, the Company may
authorize any other person, partnership or corporation (an "Additional Agent")
to act as its agent to solicit offers for the purchase of all or part of the
Notes of the Company and/or accept offers to purchase Notes from any such
Additional Agent, provided that any such Additional Agent shall have entered
--------
into an agreement with the Company upon the same terms and conditions as set
forth in this Agreement.
(b) Subject to the terms and conditions stated herein, the Company
agrees that, whenever the Company determines to sell Notes directly to any
Agent as principal for resale to others, it will enter into a separate
agreement relating to such sale in accordance with the provisions of this
Section 2(b). For the purposes of this Agreement, the term "Agent" shall
refer to each of you acting solely in the capacity as agent for the Company
hereunder and not as principal; the term "Purchaser" shall refer to each of
you acting solely as principal hereunder and not as agent, and the term
"you" shall refer to each of you acting in both such capacities or in
either such capacity.
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Each sale of Notes to a Purchaser shall be made in accordance with the
terms of this Agreement and the Procedures and a supplemental agreement
which will provide for the sale of such Notes to, and the purchase and
reoffering thereof by, a Purchaser. Each such supplemental agreement
(which may be an oral agreement and confirmed in writing between a
Purchaser and the Company) is herein referred to as a "Terms Agreement".
Each such Terms Agreement, whether oral (and confirmed in writing, which
may be by facsimile transmission) or in writing, shall be with respect to
such information (as applicable) as is specified in Exhibit B hereto. A
Purchaser's commitment to purchase Notes shall be deemed to have been made
on the basis of the representations and warranties of the Company and the
Guarantor herein contained and shall be subject to the terms and conditions
herein set forth. Each Terms Agreement shall describe the Notes to be
purchased by the Purchaser pursuant thereto, specify the principal amount
of such Notes, the price to be paid to the Company for such Notes, the
currency or currency unit in which such Notes shall be denominated and be
payable, whether the Notes will be issued in certificated or book-entry
form, whether interest shall be payable at a fixed or floating rate, the
date and time of delivery of payment for such Notes (the "Purchase Date"),
the place of delivery of the Notes and payment therefor, the method of
payment and any requirements for the delivery of the opinions of counsel,
the certificates from the Company, the Guarantor or their officers, or the
letter from Grant Thornton LLP pursuant to Section 6(b). Such Terms
Agreement shall also specify the period of time, if applicable, referred to
in Section 4(l). In connection with the resale of any Notes purchased by a
Purchaser, such Purchaser may engage the services of any other broker or
dealer in connection with such resale and may allow all or any portion of
the discount received to such brokers and dealers.
Delivery of the certificates for Notes sold to a Purchaser pursuant to
any Terms Agreement shall be made as agreed to between the Company and the
Purchaser as set forth in the respective Terms Agreement, not later than
the Purchase Date set forth in such Terms Agreement, against payment of
funds to the Company in the net amount due to the Company for such Notes by
the method and in the form set forth in the respective Terms Agreement.
(c) So long as Countrywide Securities Corporation is an Agent under
the Selling Agency Agreement each Agent agrees that it will comply with the
applicable provisions of Conduct Rule 2720(l) of the Conduct Rules of the
National Association of Securities Dealers, Inc.
3. Offering Procedure. (a) Unless otherwise agreed between the Company
------------------
and each Agent, each Agent shall communicate to the Company, orally or in
writing, each offer to purchase Notes received by such Agent (unless such offer
is rejected by such Agent in accordance herewith) on terms previously
communicated by the Company to such Agent, and unless otherwise agreed between
the Company and each Agent, the Company shall have the sole right to accept such
offers to purchase Notes and may refuse any proposed purchase of Notes in whole
or in part for any reason.
(b) Unless otherwise agreed between the Company and each Agent, each
Agent shall have the right, in its discretion reasonably exercised, to
reject any proposed
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purchase of Notes, as a whole or in part, and any such rejection shall not
be deemed a breach of its agreement contained herein. Each Agent and the
Company agree to perform the respective duties and obligations specifically
provided to be performed by them in the Procedures.
4. Agreements. The Company and the Guarantor, jointly and severally,
----------
agree with each Agent that:
(a) Prior to the termination of the offering of the Notes,
the Company and the Guarantor will not file any amendment of the
Registration Statement or supplement to the Prospectus (except for a
supplement relating to an offering of securities other than the Notes
and related Guarantees) unless the Company or the Guarantor has
furnished to such Agent a copy for its review prior to filing and will
not file any such proposed amendment or supplement to which such Agent
may reasonably object. Subject to the foregoing sentence, the Company
and the Guarantor will cause each supplement to the Prospectus to be
filed (or mailed for filing) with the Commission as required pursuant
to Rule 424. The Company and the Guarantor will promptly advise such
Agent (i) when each supplement to the Prospectus shall have been filed
(or mailed for filing) with the Commission pursuant to Rule 424, (ii)
when any amendment of the Registration Statement shall have become
effective, (iii) of any request by the Commission for any amendment of
the Registration Statement or amendment of or supplement to the
Prospectus or for any additional information, (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt by the Company or
the Guarantor of any notification with respect to the suspension of
the qualification of the Notes and related Guarantees for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company and the Guarantor will use their best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Notes
and related Guarantees is required to be delivered under the Act, any
event occurs as a result of which the Registration Statement, as then
amended, or the Prospectus, as then supplemented, would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, any facts or
events arise which, individually or in the aggregate, would represent
a fundamental change in the information set forth in the Registration
Statement or the Prospectus, or if it shall be necessary to amend the
Registration Statement or to supplement the Prospectus to comply with
the Act or the Exchange Act or the respective rules and regulations
thereunder, the Company and the Guarantor promptly will (i) notify
such Agent to suspend the solicitation of offers to purchase Notes
(and, if so notified, such Agent shall forthwith suspend such
solicitation and cease using the Prospectus as then amended or
supplemented), (ii) prepare and file with the Commission, subject to
the first sentence of paragraph
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(a) of this Section 4, an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will
effect such compliance and (iii) will supply any such amended or
supplemented Prospectus to such Agent in such quantities as such Agent
may reasonably request. If such amendment or supplement, and any
documents, certificates and opinions furnished to such Agent pursuant
to paragraph (f) of this Section 4 in connection with the preparation
or filing of such amendment or supplement are reasonably satisfactory
in all respects to such Agent, such Agent will, upon the filing of
such amendment or supplement with the Commission and upon the
effectiveness of an amendment to the Registration Statement if such an
amendment is required, resume such Agent's obligation to solicit
offers to purchase Notes hereunder.
(c) As soon as practicable, the Guarantor will make generally
available to the security holders of the Guarantor and to such Agent
an earnings statement which will satisfy the provisions of Section
11(a) of the Act and Rule 158 under the Act.
(d) The Company and the Guarantor will furnish to such Agent and
to its counsel, without charge, copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall
become effective and, so long as delivery of a prospectus may be
required by the Act, as many copies of any preliminary prospectus and
the Prospectus and any amendments thereof and supplements thereto as
such Agent may reasonably request.
(e) The Company and the Guarantor will arrange for the
qualification of the Notes and related Guarantees for sale under the
laws of such jurisdictions as such Agent may designate, will maintain
such qualifications in effect so long as required for the distribution
of the Notes and related Guarantees, and will arrange for the
determination of the legality of the Notes and related Guarantees for
purchase by institutional investors.
(f) The Company and the Guarantor shall furnish to such Agent and
counsel for such Agent, such documents, certificates of officers and
opinions of counsel relating to their respective businesses,
operations and affairs, the Registration Statement, any preliminary
prospectus, the Prospectus, and any amendments or supplements thereto,
the Indenture, the Notes, the Guarantees, this Agreement, the
Procedures and the performance by the Company and the Guarantor of
their respective obligations hereunder and thereunder as such Agent
may from time to time and at any time prior to the termination of this
Agreement reasonably request.
(g) The Company and the Guarantor shall, whether or not any sale
of the Notes is consummated, (i) pay all expenses incident to the
performance of their obligations under this Agreement, including the
fees and disbursements of its accountants and counsel, the cost of
printing (or otherwise producing) and delivery of the Registration
Statement, the Prospectus, all amendments thereof and supplements
thereto, the Indenture, this Agreement and all other documents
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<PAGE>
relating to the offering, the cost of preparing, printing, packaging
and delivering the Notes and related Guarantees, the fees and
disbursements, including fees of counsel, incurred in connection with
the qualification of the Notes and related Guarantees for sale and
determination of eligibility for investment of the Notes and related
Guarantees under the securities or blue sky laws of each such
jurisdiction as such Agent may reasonably designate, the fees and
disbursements of the Trustee, the Calculation Agent (as such term is
used in the Prospectus, as supplemented, relating to the Notes and
related Guarantees) and the fees of any agency that rates the Notes,
and (ii) reimburse such Agent on a monthly basis for all out-of-pocket
expenses (including without limitation advertising expenses) incurred
by such Agent and approved by the Company or the Guarantor in advance,
in connection with the offering and the sale of the Notes and related
Guarantees, and (iii) be responsible for the reasonable fees and
disbursements of such Agent's counsel incurred heretofore or hereafter
in connection with the offering and sale of the Notes and related
Guarantees.
(h) Each acceptance by the Company of an offer to purchase Notes
will be deemed to be a reconfirmation to you of the representations
and warranties of the Company and the Guarantor in Section 1(b).
(i) Each time that the Registration Statement or the Prospectus
is amended or supplemented (other than by an amendment or supplement
(i) relating to an offering of securities other than the Notes and
related Guarantees or (ii) providing solely for the specification of
the terms of the Notes (excluding (a) any change in the formula by
which interest rates on the Notes may be determined and (b) any
information relating to Specified Currencies other than U.S. dollars))
or there is filed with the Commission any document incorporated by
reference into the Prospectus, the Company and the Guarantor will each
deliver or cause to be delivered forthwith to such Agent a certificate
of its President, Managing Director or any Vice President and its
principal financial or accounting officer or the Treasurer, dated the
date of the effectiveness of such amendment or the date of filing of
such supplement, in form reasonably satisfactory to such Agent, to the
effect that the statements contained in the certificate that was last
furnished to such Agent pursuant to either Section 5(e) or this
Section 4(i) are true and correct at the time of the effectiveness of
such amendment or the filing of such supplement as though made at and
as of such time (except that (i) the last day of the fiscal quarter
for which financial statements of the Guarantor were last filed with
the Commission shall be substituted for the corresponding date in such
certificate and (ii) such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented
to the time of the effectiveness of such amendment or the filing of
such supplement) or, in lieu of such certificate, a certificate of the
same tenor as the certificate referred to in Section 5(e), but
modified to relate to the last day of the fiscal quarter for which
financial statements of the Guarantor were last filed with the
Commission and to the Registration Statement and the Prospectus as
amended and supplemented to the time of the effectiveness of such
amendment or the filing of such supplement.
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<PAGE>
(j) Each time that the Registration Statement or the Prospectus
is amended or supplemented (other than by an amendment or supplement
(i) relating to an offering of securities other than the Notes and
related Guarantees, (ii) providing solely for the specification of the
terms of the Notes (excluding (a) any change in the formula by which
interest rates on the Notes may be determined and (b) any information
relating to Specified Currencies other than U.S. dollars) or (iii)
setting forth or incorporating by reference financial statements or
other financial information as of and for a fiscal quarter, unless, in
the case of clause (iii) above, in such Agent's reasonable judgment,
such financial statements or other financial information are of such a
nature that an opinion of counsel should be furnished) or there is
filed with the Commission any document incorporated by reference into
the Prospectus, the Company and the Guarantor shall furnish or cause
to be furnished forthwith to such Agent the written opinion of the
General Counsel of the Company and the Guarantor, or such other
counsel satisfactory to such Agent, dated the date of the
effectiveness of such amendment or the date of filing of such
supplement, in form satisfactory to such Agent, covering all of the
matters referred to in the opinions set forth in Sections 5(b) and
5(c) but modified to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of the
effectiveness of such amendment or the filing of such supplement or,
in lieu of such opinion, counsel last furnishing such an opinion to
such Agent may furnish a letter to the effect that such Agent may rely
on such last opinion to the same extent as though it were dated the
date of such letter authorizing reliance (except that statements in
such last opinion will be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time
of the effectiveness of such amendment or the filing of such
supplement); provided, however, that, upon a reasonable request from
-------- -------
such Agent, the Company and the Guarantor shall cause to be furnished
forthwith to such Agent the written opinion of Fried, Frank, Harris,
Shriver & Jacobson, counsel to the Company and the Guarantor, dated
the date of the effectiveness of such amendment or the date of filing
of such supplement, in form satisfactory to such Agent, of the same
tenor as the opinions referred to in Section 5(b) but modified to
relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of the effectiveness of such amendment or the
filing of such supplement.
(k) Each time that the Registration Statement or the Prospectus
is amended or supplemented to set forth amended or supplemental
financial information or such amended or supplemental information is
incorporated by reference in the Registration Statement or the
Prospectus, the Company and the Guarantor shall cause Grant Thornton
LLP, their independent public accountants, forthwith to furnish to
such Agent a letter, dated the date of the effectiveness of such
amendment or the date of filing of such supplement, in form
satisfactory to such Agent, of the same tenor as the letter referred
to in Section 5(f) with such changes as may be necessary to reflect
the amended and supplemental financial information included or
incorporated by reference in the Registration Statement and the
Prospectus, as amended or supplemented to the date of such letter,
provided that if the Registration Statement or the Prospectus is
--------
amended or
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<PAGE>
supplemented solely to include or incorporate by reference financial
information as of and for a fiscal quarter, Grant Thornton LLP may
limit the scope of such letter, which shall be satisfactory in form to
such Agent, to the unaudited financial statements included in such
amendment or supplement, unless any other information included or
incorporated by reference therein of an accounting, financial or
statistical nature is of such a nature that, in such Agent's
reasonable judgment, such letter should cover such other information.
(l) During the period, if any, specified in any Terms Agreement,
the Company and the Guarantor shall not, without the prior consent of
the Purchaser, issue or announce the proposed issuance of any debt
securities of the Company or the Guarantor in a public offering or
register any debt securities of the Company or the Guarantor under the
Act in connection with any secondary distribution of such debt
securities.
5. Conditions to the Obligations of the Agents. The obligations of any
-------------------------------------------
Agent to solicit offers to purchase the Notes shall be subject to the accuracy
of the representations and warranties on the part of the Company and the
Guarantor contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement (including the
filing of any document incorporated by reference therein), as of the date any
supplement to the Prospectus is filed with the Commission and as of each
Settlement Date, to the accuracy of the statements of the Company and the
Guarantor made in any certificates pursuant to the provisions hereof, to the
performance by the Company and the Guarantor of their respective obligations
hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued, and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Company and the Guarantor shall have furnished to the
Agents the opinion or opinions of Fried, Frank, Harris, Shriver &
Jacobson, counsel to the Company and the Guarantor, dated the date
hereof, substantially as set forth below, with such additional
qualifications and exceptions as shall be acceptable to the Agents and
their counsel:
(i) Each of the Company and the Guarantor is a corporation
duly incorporated, validly existing and in good standing under
the laws of the state of its incorporation and has the corporate
power and authority to own its properties and to conduct its
business as described in the Prospectus.
(ii) The Company and the Guarantor have the corporate power
and authority to enter into this Agreement and the Terms
Agreement (if applicable), and this Agreement and the Terms
Agreement (if applicable) have been duly and validly authorized,
executed and delivered by the Company and the Guarantor,
respectively.
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(iii) The form and general terms of the Notes have been
duly and validly authorized and established in conformity with
the provisions of the Indenture by all necessary corporate action
by the Company, and when the particular terms of the Notes have
been duly established in accordance with the provisions of the
Indenture, the Procedures and the resolutions of the Board of
Directors of the Company and such Notes have been duly executed,
authenticated and delivered against payment therefor in
accordance with the provisions of the Indenture, the Procedures
and this Agreement, will constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms and the terms of the Indenture, and
the holders of the Notes will be entitled to the benefits of the
Indenture; and the Indenture has been duly authorized, executed
and delivered by each of the Company and Guarantor, has been
qualified under the Trust Indenture Act, and constitutes a legal,
valid and binding obligation enforceable against each of the
Company and the Guarantor in accordance with its terms.
(iv) The Guarantees, in the forms certified to by an
authorized officer of the Guarantor, have been duly and validly
authorized by all necessary corporate action by the Guarantor
and, upon due issuance, authentication and delivery of the
related Notes and due endorsement of the Guarantees, the
Guarantees will have been duly executed, issued and delivered and
will constitute the legal, valid and binding obligations of the
Guarantor enforceable against the Guarantor in accordance with
their terms and the terms of the Indenture, and the holders of
the Notes upon which the Guarantees are endorsed will be entitled
to the benefits of the Indenture.
(v) The Registration Statement has become effective under
the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened
and the Registration Statement and the Prospectus (other than (i)
the financial statements and other financial and statistical
information contained therein and (ii) the Statement of
Eligibility on Form T-1 filed as an exhibit thereto, as to which
such counsel need express no opinion), as of their respective
effective or issue dates, as the case may be, appear on their
face to be responsive as to form in all material respects with
the applicable requirements of the Act and the Rules and
Regulations and the Trust Indenture Act and the rules and
regulations of the Commission thereunder.
(vi) No consent, approval, authorization or order of any
United States federal or New York, California or (with respect to
matters arising under the Delaware General Corporation Law)
Delaware court or
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<PAGE>
governmental agency or body is required for the consummation of
the transactions contemplated by this Agreement or the Indenture,
except such as have been obtained under the Act and such as may
be required under the securities and blue sky laws, rules or
regulations of any jurisdiction in connection with the purchase
and distribution of the Notes and related Guarantees by the
Agents and such other approvals as have been obtained.
(vii) Neither the issue and sale of the Notes (in the forms
certified to by an authorized officer of the Company), the
compliance by the Company and the Guarantor with all the
provisions of this Agreement, the Indenture, the Notes or the
Guarantees (in the form certified to by an authorized officer of
the Guarantor), the consummation of the transactions herein or
therein contemplated nor the fulfillment of the terms hereof or
thereof will conflict with, result in a breach of, or constitute
a default under the charter or bylaws of the Company or the
Guarantor or the terms of any indenture or other agreement or
instrument filed with the Commission and to which the Company or
the Guarantor or any of the Guarantor's subsidiaries is a party
or bound, or any order, decree, judgment or regulation (other
than any federal or state securities or blue sky laws, rules or
regulations) known to such counsel to be applicable to the
Company or the Guarantor or any of the Guarantor's subsidiaries
of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the
Company or the Guarantor or any of the Guarantor's subsidiaries.
(viii) To the best knowledge of such counsel, no holders of
securities of the Company or the Guarantor have rights to the
registration of such securities under the Registration Statement.
(ix) Such counsel confirms (i) that the statements in the
Prospectus under the caption "Federal Income Tax Consequences",
insofar as such statements constitute a summary of the legal
matters referred to therein, fairly present the information
disclosed therein in all material respects, (ii) the conformity
in all material respects of the Notes (in the forms certified to
by an authorized officer of the Company) to the statements
relating thereto in the Prospectus, and (iii) the conformity in
all material respects of the Indenture and the Guarantees to the
statements relating thereto in the Prospectus under the captions
"Description of Notes" and "Description of Debt Securities and
Guarantees".
Such counsel shall also state that, in the course of their engagement
to represent or advise the Company and the Guarantor professionally, they
have not become aware of any pending legal proceeding before any court or
administrative agency or authority or any arbitration tribunal, nor have
they devoted substantive attention in the form of legal representation as
to any current overtly threatened litigation against or directly affecting
the Company or its subsidiaries or the Guarantor or its subsidiaries, in
each case that is required to be described in the Registration Statement or
the Prospectus and is not so
15
<PAGE>
described. In making the foregoing statement, they shall endeavor, to the
extent they believe necessary, to determine from lawyers currently in their
firm who have performed substantive legal services for the Company or the
Guarantor, whether such services involved substantive attention in the form
of legal representation concerning pending legal proceedings or overtly
threatened litigation of the nature referred to above. Beyond that, they
need not make any review, search or investigation of public files or
records or files or records of the Company or the Guarantor, or of their
respective transactions, or any other investigation or inquiry with respect
to the foregoing statement.
Such counsel shall also state that in the course of the preparation by
the Company, the Guarantor and their counsel of the Registration Statement
and Prospectus (other than the Incorporated Documents (as defined below)),
such counsel attended conferences with certain of the officers of, and the
independent public accountants for, the Company and the Guarantor, at which
the Registration Statement and Prospectus were discussed. Given the
limitations inherent in the independent verification of factual matters and
the character of determinations involved in the registration process, such
counsel need not pass upon and need not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus including the Incorporated Documents,
except as specifically described in the opinion set forth in paragraph (ix)
above. Subject to the foregoing and on the basis of the information such
counsel gained in the performance of the services referred to above,
including information obtained from officers and other representatives of
the Company and Guarantor, such counsel shall state that no facts have come
to such counsel's attention that have caused it to believe that the
Registration Statement, at the time it became effective, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus, at its date or at the date hereof,
included or includes, as the case may be, any untrue statement of material
fact or omitted or omits, as the case may be, to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that such counsel need
not express a view or belief with respect to (i) the financial statements,
the related notes and schedules thereto or other financial and statistical
data included or incorporated by reference in the Registration Statement
and Prospectus or (ii) any part of the Registration Statement which shall
constitute a Statement of Eligibility on Form T-1 under the Trust Indenture
Act. References to the Prospectus in this Section 5(b) include any
amendments or supplements thereto at the date hereof.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of California, the State of New York, the State of Delaware (but only with
respect to the Delaware General Corporation Law) or the United States, to
the extent they deem proper and specified in such opinion, upon the opinion
of other counsel of good standing whom they believe to be reliable and who
are satisfactory to counsel for the Agents and (B) as to matters of fact,
to the extent they deem proper, on certificates and oral or written
statements and other information of or from public officials and officers
and representatives of the Company, the Guarantor, their respective
subsidiaries and others.
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In rendering the opinions set forth in paragraphs (iii) and (iv), such
counsel may state that such opinions are subject to the following: (i)
bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other laws now or hereafter in effect affecting
creditors' rights generally; and (ii) general principles of equity
(including, without limitation, standards of materiality, good faith, fair
dealing and reasonableness) whether such principles are considered in a
proceeding in equity or at law.
In rendering the opinions set forth above, such counsel need not
express an opinion as to the legality, validity, binding effect or
enforceability of any provision of the Notes, the Indenture or the
Guarantees providing for payments thereunder in a currency other than
currency of the United States of America to the extent that a court of
competent jurisdiction will under applicable law convert any judgment
rendered in such other currency into currency of the United States of
America or to the extent that payment in a currency other than currency of
the United States of America is contrary to applicable law.
In rendering the opinions set forth above, such counsel may state that
it has assumed, with the permission of the Agents, that the amount of Notes
to be issued from time to time will not violate any provision in any such
agreement referred to in paragraph (vii) which imposes limits on the amount
of debt of the Company, the Guarantor or any of the Guarantor's
subsidiaries which may be outstanding at any one time (whether directly or
indirectly, through satisfaction of financial ratios or otherwise).
(c) The Company and the Guarantor shall have furnished to the Agents
the opinion or opinions of Sandor E. Samuels, General Counsel of the
Company and the Guarantor, dated the date hereof, substantially as set
forth below, with such additional qualifications and exceptions as shall be
acceptable to the Agents and their counsel:
(i) Each Subsidiary, if any, is a corporation, duly
incorporated, validly existing and in good standing under the laws of
the state of its incorporation, with the corporate power and authority
to own its properties and to conduct its business as described in the
Prospectus.
(ii) Each of the Company, the Guarantor and the Subsidiaries is
duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or
conducts material business other than jurisdictions in which the
failure to so qualify, when considered in the aggregate and not
individually, would not have a material adverse effect on the Company
or the Guarantor and its Subsidiaries considered as one enterprise.
(iii) All the outstanding shares of capital stock of the Company
and each Subsidiary have been duly and validly authorized and issued
and are fully paid and nonassessable, and, except as otherwise set
forth in the Prospectus, all outstanding shares of capital stock of
the Company and the Subsidiaries are owned by the Guarantor either
directly or through wholly owned subsidiaries free
17
<PAGE>
and clear of any perfected security interest and, to the knowledge of
such counsel, after due inquiry, any other security interests, claims,
liens or encumbrances.
(iv) The outstanding shares of common stock of the Guarantor
have been duly and validly authorized and issued and are fully paid
and nonassessable.
(v) Neither the issue and sale of the Notes, the compliance by
the Company and the Guarantor with all the provisions of this
Agreement, the Indenture, the Notes or the Guarantees, the
consummation of any other of the transactions herein or therein
contemplated nor the fulfillment of the terms hereof or thereof will
conflict with, result in a breach of, or constitute a default under
the charter or by-laws of the Company or the Guarantor or, to the
knowledge of such counsel, the terms of any indenture or other
agreement or instrument to which the Company or the Guarantor or any
of the Guarantor's subsidiaries is a party or bound, or any order,
decree, law, judgment, rule or regulation known to such counsel to be
applicable to the Company or the Guarantor or any of the Guarantor's
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or the Guarantor or any of the Guarantor's subsidiaries.
(vi) The documents (the "Incorporated Documents") incorporated
by reference in the Registration Statement and Prospectus (except for
the financial statements and other financial or statistical data, as
to which no opinion need be expressed), as of the dates they were
filed with the Commission, complied as to form in all material
respects to the requirements of the Act and the Rules and Regulations
and the Exchange Act and the rules and regulations of the Commission
thereunder.
(vii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement or the Indenture, except
such as have been obtained under the Act and such as may be required
under the securities and blue sky laws, rules and regulations of any
jurisdiction in connection with the purchase and distribution of the
Notes and related Guarantees by the Agents and such other approvals as
have been obtained.
In rendering the opinions set forth above, such counsel may state that
it has assumed, with the permission of the Agents, that the amount of Notes
to be issued from time to time will not violate any provision in any such
agreement referred to in paragraph (v) which imposes limits on the amount
of debt of the Company, the Guarantor or any of the Guarantor's
subsidiaries which may be outstanding at any one time (whether directly or
indirectly, through satisfaction of financial ratios or otherwise).
(d) Such Agent shall have received from Brown & Wood LLP, counsel for
the Agents, such opinion or opinions, dated the date hereof, with respect
to the issuance and sale of the Notes and related Guarantees, this
Agreement, the Indenture, the Registration Statement, the Prospectus and
other related matters as such Agent may reasonably
18
<PAGE>
require, and the Company and the Guarantor shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(e) The Company and the Guarantor shall have each furnished to such
Agent a certificate of its President, a Managing Director or a Vice
President and its Treasurer or an Assistant Treasurer, dated the date
hereof, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company or the
Guarantor, as the case may be, in this Agreement are true and correct
in all material respects on and as of the date hereof with the same
effect as if made on the date hereof, and the Company or the
Guarantor, as the case may be, has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied as a condition to the obligation of such Agent to solicit
offers to purchase the Notes;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the Company or
the Guarantor, as the case may be, threatened; and
(iii) since the date of the most recent financial statements
included or incorporated in the Prospectus, there has been no material
adverse change in the condition (financial or otherwise), earnings,
business or properties of the Company or the Guarantor and its
subsidiaries considered as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectus.
(f) On the date hereof, Grant Thornton LLP shall have furnished to
such Agent a letter or letters (which may refer to letters previously
delivered to such Agent), dated as of the date hereof, in form and
substance satisfactory to such Agent, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and the
respective applicable published rules and regulations thereunder and
stating in effect that:
(i) in their opinion the audited consolidated financial
statements and financial statement schedules included or incorporated
in the Registration Statement and the Prospectus and reported on by
them comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
consolidated financial statements made available to them; carrying out
certain specified procedures (which shall include, without limitation,
the procedures specified by the American Institute of Certified Public
Accountants for a review of interim financial information as described
in SAS No. 71, Interim Financial Information, with
19
<PAGE>
respect to such unaudited consolidated financial statements included
or incorporated by reference in the Registration Statement or the
Prospectus); a reading of the minutes of the meetings of the
stockholders, directors and standing committees thereof; and inquiries
of certain officials who have responsibility for financial and
accounting matters as to transactions and events subsequent to the
date of the most recent audited financial statements included or
incorporated in the Prospectus, nothing came to their attention which
caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the
Prospectus do not comply as to form in all material
respects with applicable accounting requirements of the
Exchange Act as they apply to quarterly reports on Form
10-Q or that any material modifications should be made to
said unaudited financial statements for them to be in
conformity with generally accepted accounting principles;
(2) with respect to the period subsequent to the
date of the most recent financial statements (other than
any capsule information), audited or unaudited, in or
incorporated in the Registration Statement and the
Prospectus, there was any change, at a specified date not
more than three business days prior to the date of the
letter, in the capital stock or long and intermediate term
debt of the Company or the Guarantor and its subsidiaries
taken as a whole or any decreases in the shareholders'
equity or consolidated net assets as compared with the
amounts shown on the most recent consolidated balance
sheet included or incorporated in the Registration
Statement and the Prospectus, or for the period from the
date of the most recent financial statements included or
incorporated in the Registration Statement and the
Prospectus to such specified date there were any
decreases, as compared with the corresponding period in
the preceding year in consolidated revenues (net of
interest charges), earnings before income taxes or net
earnings of the Company or the Guarantor and its
subsidiaries, except in all instances for changes or
decreases set forth in such letter; or
(3) the amounts included in any unaudited "capsule"
information included or incorporated in the Registration
Statement and the Prospectus do not agree with the amounts
set forth in the unaudited financial statements for the
same periods or were not determined on a basis
substantially consistent with that of the corresponding
amounts in the audited financial statements included or
incorporated in the Registration Statement and the
Prospectus;
(iii) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Registration Statement and the Prospectus and in
20
<PAGE>
Exhibit 12 to the Registration Statement, the information included or
incorporated in Items 1, 2, 6, 7 and 11 of the Guarantor's Annual
Report on Form 10-K (and, if filed, the Company's Annual Report on
Form 10-K), incorporated in the Registration Statement and the
Prospectus and the information included in the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated in the Company's or the
Guarantor's Quarterly Reports on Form 10-Q incorporated in the
Registration Statement and the Prospectus, agrees with the accounting
records of the Company, the Guarantor and their respective
subsidiaries, excluding any questions of legal interpretation; and
(iv) if pro forma financial statements are included or
incorporated in the Registration Statement and the Prospectus, on the
basis of a reading of the unaudited pro forma financial statements,
carrying out certain specified procedures, inquiries of certain
officials of the Company or the Guarantor, as the case may be, who
have responsibility for financial and accounting matters, and proving
the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the pro forma financial
statements, nothing came to their attention which caused them to
believe that the pro forma financial statements do not comply in form
in all material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma adjustments have
not been properly applied to the historical amounts in the compilation
of such statements.
References to the Registration Statement and the Prospectus in this
paragraph (f) are to such documents as amended and supplemented at the date
of the letter.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (as amended or
supplemented, in the case of a Terms Agreement) there shall not have been
(i) any change or decrease specified in the letter or letters referred to
in paragraph (f) of this Section 5 or (ii) any change, or any development
involving a prospective change, in or affecting the business or properties
of the Company, the Guarantor and their respective subsidiaries the effect
of which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of such Agent, so material and adverse as to make it impractical
or inadvisable to proceed with the soliciting of offers to purchase the
Notes as contemplated by the Registration Statement and the Prospectus (or,
in the case of a Terms Agreement, to proceed with the offering or the
delivery of the Notes to be purchased as contemplated by the Terms
Agreement).
(h) Prior to the date hereof, the Company and the Guarantor shall
have furnished to such Agent such further information, certificates and
documents as such Agent may reasonably request.
(i) Prior to the date hereof, the Notes shall have been rated, and on
the date hereof the Notes shall be rated, at least BBB- by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.
("S&P") and Baa3 by Moody's Investors Service, Inc. ("Moody's").
21
<PAGE>
If any of the conditions specified in this Section 5 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to such Agent and its counsel, this Agreement and all obligations
of such Agent hereunder may be canceled at any time by such Agent. Notice of
such cancellation shall be given to the Company and the Guarantor in writing or
by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 5 shall be delivered
to the office of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza,
New York, New York 10004, or such other location as shall be mutually agreed
upon, on the date hereof.
6. Conditions to the Obligations of a Purchaser. The obligations of a
--------------------------------------------
Purchaser to purchase Notes pursuant to any Terms Agreement will be subject to
the accuracy of the representations and warranties on the part of the Company
and the Guarantor herein as of the date of the respective Terms Agreement and as
of the Purchase Date thereunder, to the performance and observance by the
Company and the Guarantor of all covenants and agreements herein contained on
its part to be performed and observed and to the following additional conditions
precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) Except to the extent modified by the respective Terms Agreement,
the Purchaser shall have received, appropriately updated in a manner
consistent with Section 5 hereof, (i) certificates of the Company and the
Guarantor, dated as of the Purchase Date, to the effect set forth in
Section 5(e), (ii) the opinion or opinions of Fried, Frank, Harris, Shriver
& Jacobson, counsel to the Company and the Guarantor, dated as of the
Purchase Date, to the effect set forth in Section 5(b), (iii) the opinion
or opinions of Sandor E. Samuels, General Counsel to the Company and the
Guarantor, dated as of the Purchase Date, to the effect set forth in
Section 5(c), (iv) the opinion or opinions of Brown & Wood LLP, counsel for
the Purchaser, dated as of the Purchase Date, to the effect set forth in
Section 5(d) and (v) letter of Grant Thornton LLP, dated as of the Purchase
Date, to the effect set forth in Section 5(f).
(c) The conditions set forth in Section 5(g) shall have been
satisfied.
(d) Prior to the Purchase Date, the Company and the Guarantor shall
have furnished to the Purchaser such further information, certificates and
documents as the Purchaser may reasonably request.
(e) Prior to and at the Purchase Date, the Notes shall have been
rated at least BBB- by S&P and Baa3 by Moody's.
(f) Subsequent to the execution of any Terms Agreement and prior to
the Purchase Date pursuant to such Terms Agreement, the rating assigned by
S&P or Moody's to any debt securities of the Company or the Guarantor has
not been lowered
22
<PAGE>
and neither S&P nor Moody's has publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any debt securities of the Company or the Guarantor.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchaser and its counsel, this Agreement and all
obligations of the Purchaser hereunder may be canceled at, or at any time prior
to, the respective Purchase Date by the Purchaser. Notice of such cancellation
shall be given to the Company or the Guarantor in writing or by telephone or
telegraph confirmed in writing.
7. Reimbursement of the Agent's Expenses. If any condition to the
-------------------------------------
obligations or any Agent set forth in Section 5 hereof is not satisfied, if any
condition to the obligations of a Purchaser set forth in Section 6 hereof is not
satisfied, if any termination pursuant to Section 9 hereof shall occur or in the
case of any refusal, inability or failure on the part of the Company or the
Guarantor to perform any agreement herein or comply with any provision hereof
other than by reason of a default by an Agent, the Company and the Guarantor
will reimburse such Agent upon demand for all expenses that shall have been
incurred by such Agent pursuant to Section 4(g) hereof in connection with this
Agreement.
8. Indemnification and Contribution. (a) The Company and the Guarantor,
--------------------------------
jointly and severally, agree to indemnify and hold harmless each Agent and each
person who controls such Agent within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which such Agent or any of them may become subject under the Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement for the registration of the Notes as originally filed or
in any amendment thereof, or in the Prospectus or any preliminary Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
--------
however, that (i) the Company and the Guarantor will not be liable in any such
- -------
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company or the Guarantor by or on
behalf of such Agent specifically for use in connection with the preparation
thereof, and (ii) such indemnity with respect to any preliminary Prospectus or
any Prospectus as supplemented or amended shall not inure to the benefit of any
Agent (or any person controlling such Agent) from whom the person asserting any
such loss, claim, damage or liability purchased the Notes which are the subject
thereof if such Agent (or any person controlling such Agent) received a copy of
such Prospectus (or such Prospectus as so amended or supplemented) and such
person did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented) excluding documents incorporated therein by reference at or prior
to the
23
<PAGE>
confirmation of the sale of such Notes to such person in any case where such
delivery is required by the Act and the untrue statement or omission or the
alleged untrue statement or omission was corrected in the Prospectus (or the
Prospectus as amended or supplemented). This indemnity agreement will be in
addition to any liability which the Company or the Guarantor may otherwise have.
(b) Each Agent agrees to indemnify and hold harmless the Company and the
Guarantor, their respective directors, each of their officers who sign the
Registration Statement, and each person who controls the Company or the
Guarantor within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company and the Guarantor to such
Agent, but only with reference to written information relating to such Agent
furnished to the Company or the Guarantor by or on behalf of such Agent
specifically for use in the preparation of the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which such Agent may otherwise have. The Company and the Guarantor
acknowledge that the statements set forth in the last paragraph of the cover
page and under the heading "Plan of Distribution of Notes" in any preliminary
Prospectus and the Prospectus constitute the only information furnished in
writing by or on behalf of such Agent for inclusion in the documents referred to
in the foregoing indemnity, and you confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
--------
however, that if the defendants in any such action include both the indemnified
- -------
party and the indemnifying party, and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Agents in the case of paragraph
(a) of this Section 8, representing the indemnified parties under such paragraph
(a) who are parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
24
<PAGE>
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable to such indemnified party as a result
of such losses, claims, damages, or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantor on the one hand and each Agent on the other
from the offering of the Notes to which such loss, claim, damage or liability
(or action in respect thereof) relates. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Guarantor on the one hand and each Agent on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantor on the one hand and each Agent on the other shall be deemed to be in
the same proportion as the total net proceeds from such offering (before
deducting expenses) received by the Company bear to the total commissions
received by each Agent. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Guarantor on the one hand or any
Agent on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Guarantor and each Agent agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Agents were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, or liabilities (or actions in respect thereof) referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Agent shall be required to contribute any amount in excess of
the amount by which the total price at which Notes sold by it exceeds the amount
of any damages which such Agent has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Agents in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations with respect to such Notes and not joint.
9. Termination. This Agreement will continue in effect until terminated
-----------
as provided in this Section 9.
25
<PAGE>
(a) This Agreement may be terminated by either the Company or any
Agent giving written notice of such termination to the other party hereto.
This Agreement shall so terminate at the close of business on the first
business day following the receipt of such notice by the party to whom such
notice is given. This Agreement may be terminated as to one or more of the
Agents, and to the extent not terminated with respect to any Agent, this
Agreement shall remain in full force and effect as between the Company and
any such Agent. In the event of such termination, no party shall have any
liability to the other party hereto, except as provided in the fourth
paragraph of Section 2(a), Section 4(g), Section 7, Section 8 and Section
10.
(b) Each Terms Agreement shall be subject to termination in the
absolute discretion of the Purchaser, by notice given to the Company and
the Guarantor prior to delivery of and payment for Notes to be purchased
thereunder, if prior to such time (i) trading in securities generally, or
in the securities of the Guarantor, on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been
established on such exchange, (ii) a banking moratorium shall have been
declared by either federal or New York State authorities or, in the case of
Notes denominated in other than U.S. dollars, by the authorities of the
country of the currency in which such Notes are so denominated or (iii)
there shall have occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States or in the country or countries of
origin of any foreign currency or currency unit in which the Notes are
denominated, indexed or payable is such as to make it, in the judgment of
the Purchaser, impracticable to market such Notes.
10. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company, the Guarantor or any of their officers and of each Agent set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of such Agent or the
Company, the Guarantor or any of their officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Notes. The provisions of Sections 7 and 8 hereof shall survive
the termination or cancellation of this Agreement.
11. Right of Person Who Agreed to Purchase to Refuse to Purchase. The
------------------------------------------------------------
Company and the Guarantor agree that any person who has agreed to purchase and
pay for any Note, including a Purchaser and any person who purchases pursuant to
a solicitation by any of the Agents, shall have the right to refuse to purchase
such Note if, at the Settlement Date therefor, either (a) any condition set
forth in Section 5 or 6, as applicable, shall not be satisfied or (b) subsequent
to the agreement to purchase such Note, any change, or any development involving
a prospective change, in or affecting the business or properties of the Company
or the Guarantor and its subsidiaries shall have occurred the effect of which
is, in the reasonable judgment of the Purchaser or the Agent which presented the
offer to purchase such Note, as applicable, so material and adverse as to make
it impractical or inadvisable to proceed with the delivery of such Note.
12. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to an Agent, will be mailed, delivered
or telegraphed and confirmed to such
26
<PAGE>
Agent, at the address specified in Schedule 1 hereto; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at 4500
Park Granada, Calabasas, California 91302, Attention: General Counsel.
13. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York applicable to agreements made
and to be performed in said State.
27
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and the acceptance by each of you shall represent a binding agreement
among the Company, the Guarantor and each of you.
Very truly yours,
COUNTRYWIDE HOME LOANS, INC.
By:__________________________________
Name:
Title:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:__________________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof.
LEHMAN BROTHERS INC.
By:______________________________
Title:
CHASE SECURITIES INC.
By:______________________________
Title:
DEUTSCHE BANK SECURITIES INC.
By:_____________________________
Title:
_________________________________
Goldman, Sachs & Co.
28
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:______________________________
Title:
J.P. MORGAN SECURITIES INC.
By:______________________________
Title:
29
<PAGE>
NATIONSBANC MONTGOMERY SECURITIES LLC
By:______________________________
Title:
SALOMON SMITH BARNEY INC.
By:______________________________
Title:
COUNTRYWIDE SECURITIES CORPORATION
By:______________________________
Title:
30
<PAGE>
SCHEDULE 1
Selling Agency Agreement dated _______ __, 1998
Unless otherwise agreed between the Company and such Agent, the Company
agrees to pay any Agent a commission equal to the following percentage of the
principal amount of each Note sold by such Agent:
<TABLE>
<CAPTION>
Term Commission Rate(a)
---- ------------------
<S> <C>
From 9 months to less than 1 year......................... 0.125%
From 1 year to less than 18 months........................ 0.150%
From 18 months to less than 2 years....................... 0.200%
From 2 years to less than 3 years......................... 0.250%
From 3 years to less than 4 years......................... 0.350%
From 4 years to less than 5 years......................... 0.450%
From 5 years to less than 6 years......................... 0.500%
From 6 years to less than 7 years......................... 0.550%
From 7 years to less than 10 years........................ 0.600%
From 10 years to less than 15 years....................... 0.625%
From 15 years to less than 20 years....................... 0.650%
From 20 years up to and including 30 years(b)............. 0.750%
</TABLE>
_____________
(a) With respect to each Note that is an Original Issue Discount Note (as
defined in the Indenture), the commission payable to each Agent with
respect to each such Note sold as a result of a solicitation made by such
Agent shall be based on the purchase price of such Note, rather than on the
principal amount of such Note.
(b) Commissions for Notes with terms in excess of 30 years will be agreed upon
by the Company and the related Agent at the time of sale.
31
<PAGE>
Addresses for Notices to Agents:
Notices to Lehman Brothers Inc. shall be directed to it at 3 World
Financial Center, 12th Floor, New York, New York 10285-1200, Attention: Medium-
Term Note Department.
Notices to Chase Securities Inc. shall be directed to it at 270 Park
Avenue, 8th Floor, New York, New York 10017, Attention: Medium-Term Note Desk.
Notices to Deutsche Bank Securities Inc. shall be directed to it at 31 W.
52nd Street, New York, New York 10019, Attention: Pam Kendall.
Notices to Goldman, Sachs & Co. shall be directed to it at 85 Broad Street,
New York, New York 10004, Attention: Karen Robertson.
Notices to Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be
directed to it at World Financial Center, North Tower - 10th Floor, New York,
New York 10281-1310, Attention: MTN Product Management.
Notices to J.P. Morgan Securities Inc. shall be directed to it at 60 Wall
Street, 3rd Floor, New York, New York, 10260, Attention: Medium-Term Note
Trading Desk.
Notices to NationsBanc Montgomery Securities LLC shall be directed to it at
100 North Tryon Street, Charlotte, NC 28255, NC1-007-07-01, Attention: Product
Management.
Notices to Salomon Smith Barney Inc. shall be directed to it at Seven World
Trade Center, New York, New York 10048, Attention: Medium-Term Note Department.
Notices to Countrywide Securities Corporation, 4500 Park Granada,
Calabasas, California 91302, Attention: Jules St. James.
32
<PAGE>
EXHIBIT A
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTE
ADMINISTRATIVE PROCEDURES
__, 1998
Medium-Term Notes, Series H, Due Nine Months or More From Date of Issue
(the "Notes") are to be offered on a continuing basis by Countrywide Home Loans,
Inc. (the "Company"). Lehman Brothers Inc., Chase Securities Inc., Deutsche Bank
Securities Inc., Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., NationsBanc
Montgomery Securities LLC, Salomon Smith Barney Inc. and Countrywide Securities
Corporation (each individually, an "Agent", and collectively, the "Agents"),
have agreed to solicit purchases of the Notes. The Agents will not be obligated
to purchase Notes as principal. The Notes are being sold pursuant to a Selling
Agency Agreement among the Company, Countrywide Credit Industries, Inc. (the
"Guarantor") and the Agents dated __, 1998 (the "Agency Agreement"). The
Notes will be fully and unconditionally guaranteed as to payment of principal,
premium, if any, and interest by the Guarantor (the "Guarantees"). The Notes
will rank equally with all other unsecured and unsubordinated debt of the
Company and have been registered with the Securities and Exchange Commission
(the "Commission"). Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Indenture referred to below.
Each Note and related Guarantee will be issued under an Indenture dated as
of January 1, 1992, as supplemented by Supplemental Indenture No. 1 thereto
dated as of June 15, 1995 (collectively, the "Indenture"), among the Company,
the Guarantor and The Bank of New York, as trustee (the "Trustee"). The Notes
will bear interest at either fixed rates ("Fixed Rate Notes") or floating rates
("Floating Rate Notes"). Each Note will be represented by either a certificate
delivered to the Holder thereof or a Person designated by such Holder (a
"Certificated Note") or a Global Security (as defined hereinafter) delivered to
the Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in
the book-entry system maintained by DTC (a "Book-Entry Note"). An owner of a
Book-Entry Note will not be entitled to receive a certificate representing such
Note except in the limited circumstances described in the Prospectus (as defined
in the Agency Agreement).
The procedures to be followed during, and the specific terms of, the
solicitation of offers by the Agents and the sale as a result thereof by the
Company are explained below. Certificated Notes will be issued in accordance
with the administrative procedures set forth in Part I hereof and Book-Entry
Notes will be issued in accordance with the administrative procedures set forth
in Part II hereof. The Company will advise each Agent and the Trustee in writing
of those persons handling administrative responsibilities with whom the Agents
and the Trustee are to communicate regarding offers to purchase Notes and the
details of their delivery.
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<PAGE>
Administrative procedures and specific terms of the offering are explained
below. To the extent the procedures set forth below conflict with the provisions
of the Notes, the Indenture or the Agency Agreement, the relevant provisions of
the Notes, the Indenture and the Agency Agreement shall control.
PART I: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
Maturities: Each Certificated Note will mature on a date (the
- ----------
"Stated Maturity Date") nine months or more after
the date of delivery by the Company of such
Certificated Note (the "Settlement Date"), subject
to any applicable provisions relating to
redemption or repayment or the extension of
maturity.
Price to Public: Each Certificated Note will be issued at the
- ---------------
percentage of principal amount specified in the
Prospectus.
Currencies: The Certificated Notes will be denominated in U.S.
- ----------
dollars or in such other currency or currency unit
as is specified in the Prospectus (the "Specified
Currency").
Denominations: Except as set forth in the Certificated Note, the
- -------------
denomination of any Certificated Note will be a
minimum of U.S. $1,000 or any amount in excess
thereof which is an integral multiple of U.S.
$1,000 or, in a Specified Currency other than U.S.
dollars, of the equivalent of U.S. $1,000 and any
amount in excess thereof which is an integral
multiple of the equivalent of U.S. $1,000, as
determined pursuant to the provisions of the
Indenture.
Registration: Certificated Notes will be issued only in fully
- ------------
registered form.
Interest Payments: Except as set forth in the Certificated Note, each
- -----------------
Certificated Note which is a Fixed Rate Note will
bear interest from the Settlement Date of such
Certificated Note at the annual rate stated on the
face thereof, payable semiannually on January 15
and July 15 of each year (each, an "Interest
Payment Date") and on the Stated Maturity Date or
date of earlier redemption or repayment (such date
is herein referred to as the "Maturity Date" with
respect to the principal repayable on such date),
and each Certificated Note which is a Floating
Rate Note will bear interest as determined in the
manner set forth on the face thereof, payable on
the dates set forth on the face thereof. Unless
34
<PAGE>
otherwise specified on the face thereof, interest
(including payments for partial periods) on Fixed
Rate Notes will be calculated on the basis of a
360-day year of twelve 30-day months. Interest on
Floating Rate Notes will be determined in the
manner agreed upon by the Company and the
purchaser thereof in accordance with the
provisions of the Prospectus. Except as set forth
in the Certificated Note, the "Record Date" with
respect to any Interest Payment Date for Floating
Rate Notes shall be the date 15 calendar days
immediately preceding such Interest Payment Date,
and for Fixed Rate Notes shall be the December 31
or June 30 next preceding such Interest Payment
Date, whether or not such date shall be a Business
Day, as defined in the Prospectus. The first
payment of interest on any Certificated Note
originally issued between a Record Date and an
Interest Payment Date will be made on the Interest
Payment Date following the next Record Date to the
Holder on such next succeeding Record Date.
Notwithstanding the record date provisions above,
interest payable on the Maturity Date will be
payable to the person to whom principal shall be
payable. Interest on the Certificated Notes will
be paid in the Specified Currency by mailing a
check (from an account at a bank located outside
of the United States if such check is payable in a
Specified Currency other than U.S. dollars) to the
Holder at the address of such Holder appearing on
the Security Register on the applicable Record
Date; provided, however, that a Holder of U.S.
-------- -------
$10,000,000 (or the equivalent thereof in a
Specified Currency other than U.S. dollars) or
more in aggregate principal amount of Notes
(whether or not having identical terms and
provisions) shall be entitled: (i) if the
Specified Currency is U.S. dollars, to receive
U.S. dollar payments by wire transfer of
immediately available funds to an account
maintained by the payee with a bank located in the
United States, but only if appropriate wire
transfer instructions have been received in
writing by the Trustee not later than the Record
Date immediately preceding the applicable Interest
Payment Date, and (ii) if the Specified Currency
is other than U.S. dollars, to receive by wire
transfer of immediately available funds to an
account maintained by the payee with a bank
located in a jurisdiction in which payment in such
Specified Currency is then lawful. Within ten days
following each Record Date, the Trustee will
inform the Company of the total amount of the
interest
35
<PAGE>
payments to be made by the Company on the next
succeeding Interest Payment Date and the
currencies or currency units in which such
interest payments are to be made. The Trustee will
provide monthly to the Company a list of the
principal and interest to be paid on Certificated
Notes maturing in the next succeeding month.
Procedure for Rate Setting
- --------------------------
and Posting:
- ------------
The Company and the Agents will discuss from time
to time the aggregate principal amount of, the
issuance price of, and the interest rates to be
borne by, Certificated Notes that may be sold as a
result of the solicitation or offers by the
Agents. If the Company decides to establish prices
of (including the currency of issuance), and rates
borne by, any Certificated Notes to be sold (the
establishment of such prices and rates to be
referred to herein as "posting") or if the Company
decides to change prices or rates previously
posted by it, it will promptly advise the Agents
of the prices and rates to be posted.
Acceptance of Offers:
- --------------------
Unless otherwise agreed between the Company and
such Agent, any Agent which receives an offer to
purchase Certificated Notes will promptly advise
the Company of each such offer other than offers
rejected by such Agent as provided below. The
Company will have the sole right to accept any
such offer to purchase Certificated Notes. The
Company may reject any such offer in whole or in
part.
Unless otherwise agreed between the Company and
any Agent, each Agent may, in its discretion
reasonably exercised, reject any offer to purchase
Certificated Notes received by it in whole or in
part.
Preparation of Pricing
- ----------------------
Supplement:
- -----------
If any offer to purchase a Certificated Note is
accepted by or on behalf of the Company, the
Company and the Guarantor, with the approval of
the Agents, will prepare a Pricing Supplement
reflecting the terms of such Certificated Note and
will arrange to have requisite copies of such
Pricing Supplement filed with the Commission, in
each case no later than the second Business Day
after the earlier of the determination of the
offering price or the date it is first used and
will supply at least ten copies thereof (or
36
<PAGE>
additional copies if requested) to the Agents and
one copy to the Trustee no later than 11:00 A.M.,
New York City time, on the Business Day following
the date of acceptance at the following applicable
address (unless otherwise specified in the
applicable trading confirmation): if to Lehman
Brothers Inc., to Lehman Brothers Inc., Prospectus
Department, 3 World Financial Center, 9th Floor,
New York, New York 10285-0900, attention of
Brunnie Vazquez, telephone no. (212)526-8400,
telecopier no. (212) 528-7035; if to Chase
Securities Inc., to Chase Securities Inc., 270
Park Avenue, 8th floor, New York, New York 10017,
Attention: Medium-Term Note Desk, telephone no.
(212) 834-4421, telecopier no. (212) 834-6081; if
to Deutsche Bank Securities Inc. to Deutsche Bank
Securities Inc., attention of Pam Kendall,
telephone no. (212) 469-7288, telecopier no. (212)
469-8173; with a copy to Deutshe Bank Securities
Inc., c/o ADP Prospectus, 536 Broadhollow Road,
Melville, NY 11747, attention of Krisra Zeoli,
telephone no. (516) 254-7107, telecopier no. (516)
254-7134; if to Goldman, Sachs & Co., to Goldman,
Sachs & Co., 85 Broad Street, New York, New York
10004, attention of Karen Robertson; if to Merrill
Lynch & Co., to Merrill Lynch & Co. -Tritech
Services, 44B Colonial Drive, Piscataway, New
Jersey 08854, attention of Final Prospectus
Unit/Nachman Kimmerling, telephone no. (732) 885-
2768, telecopier no. (732) 885-2774, with a copy
to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, World Financial Center, North Tower,
10th Floor, New York, New York 10281-1310,
attention of MTN Product Management, telephone no.
(212) 449-7476, telecopier no. (212) 449-2234; if
to J.P. Morgan Securities Inc., to J.P. Morgan
Securities Inc. 60 Wall Street, 3rd Floor, New
York, New York 10260, attention of Dan Benton,
telephone no. (212) 648-0591, telecopier no. (212)
648-5909; if to NationsBanc Montgomery Securities
LLC to Bank of New York, One Wall Street, 3rd
Floor, Dealers Clearance, Window B, A/C
NationsBanc Montgomery Securities LLC; if to
Salomon Smith Barney Inc. to Salomon Smith Barney,
Brookyn Army Terminal, 140 58th Street, 8th Floor,
Brooklyn, NY 11220, attention of Alex Valentin,
telephone no. (718) 921-8460, telecopier no. (718)
921-8472; if to Countrywide Securities
Corporation, to Countrywide Securities
Corporation, 4500 Park Granada, Calabasas,
California 91302, attention of Jules St. James,
telephone no. (818) 225-3201, telecopier no. (818)
225-4014 ; and if to the Trustee, to The Bank of
New York, 101 Barclay Street, New York, New York
10286, attention of Corporate Trust Office. Such
Agent will cause a Pricing Supplement to be
delivered to the purchaser of the Certificated
Note. In all respects, the Company and the
Guarantor will prepare and
37
<PAGE>
file each such Pricing Supplement in accordance
with Rule 424 under the Act.
In each instance that a Pricing Supplement is
prepared, each Agent will affix the Pricing
Supplement to Prospectuses prior to their use;
provided, however, that pursuant to Rule 434
("Rule 434") under the Securities Act of 1933, as
amended, the Pricing Supplement may be delivered
separately from the Prospectuses. Outdated Pricing
Supplements, and the Prospectuses to which they
are attached or relate (other than those retained
for files), will be destroyed.
Suspension of Solicitation;
- --------------------------
Amendment or Supplement:
- -----------------------
The Company reserves the right, in its sole
discretion, to instruct the Agents to suspens at
any time, for any period of time or permanently,
the solicitation of offers to purchase
Certificated Notes. As soon as practicable, but in
no event later than one Business Day after receipt
of instructions from the Company, the Agents will
suspend solicitation of offers to purchase
Certificated Notes from the Company until such
time as the Company has advised them that such
solicitation may be resumed.
If the Company or the Guarantor decides to amend
or supplement the Registration Statement or the
Prospectus relating to the Notes (except in the
case of a Pricing Supplement to the Prospectus),
the Company or the Guarantor, as the case may be,
will promptly advise the Agents and the Trustee
and will furnish the Agents and the Trustee with
the proposed amendment or supplement in accordance
with the terms of the Agency Agreement. The
Company or the Guarantor will mail or transmit to
the Commission for filing therewith any supplement
to the Prospectus relating to the Notes, provide
the Agents with copies of any supplement, and
confirm to the Agents that such supplement has
been filed with the Commission.
In the event that at the time the Company suspends
solicitation of offers to purchase Certificated
Notes there shall be any outstanding offers to
purchase Certificated Notes that have been
accepted by the Company but for which settlement
has not yet occurred, the Company will promptly
advise the Agents and the Trustee whether such
38
<PAGE>
sales may be settled and whether copies of the
Prospectus as supplemented to the time of the
suspension may be delivered in connection with the
settlement of such sales. The Company will have
the sole responsibility for such decision and for
any arrangements which may be made in the event
that the Company determines that such sales may
not be settled or that copies of such Prospectus
may not be so delivered.
Delivery of Prospectus:
- ----------------------
Each Agent shall, for each offer to purchase a
Certificated Note that is solicited by such Agent
and accepted by the Company, deliver a copy of the
Prospectus as most recently amended or
supplemented (including the applicable Pricing
Supplement which, pursuant to Rule 434, may be
delivered separately from the Prospectus) with the
earlier of the delivery of the confirmation of
sale or the Certificated Note to the purchaser
thereof or such purchaser's agent.
Confirmation: For each offer to purchase a Certificated Note
- ------------
solicited by any Agent and accepted by the
Company, such Agent will issue a confirmation to
the purchaser, with a copy to the Company, setting
forth the details set forth above and delivery and
payment instructions.
Settlement: The Settlement Date with respect to any offer to
- ----------
purchase Certificated Notes accepted by or on
behalf of the Company will be a date on or before
the third Business Day next succeeding the date of
acceptance unless otherwise agreed by the
purchaser and the Company and shall be specified
upon acceptance of such offer. The Company will
instruct the Trustee to effect delivery of each
Certificated Note no later than 1:00 p.m., New
York City time, on the Settlement Date to such
Agent for delivery to the purchaser.
Details for Settlement:
- ----------------------
For each offer to purchase a Certificated Note
received by any Agent and accepted pursuant to the
terms of the Agency Agreement, such Agent will
provide (unless provided by the purchaser directly
to the Company) by telephone the following
information (to the extent applicable) to the
Company:
39
<PAGE>
1. Exact name of Holder.
2. Exact address of Holder and address for
payment of principal, premium, if any, and
interest.
3. Taxpayer identification number of Holder
(if available).
4. Principal amount of the Note.
5. Specified Currency.
6. Interest rate or interest rate basis.
7. Base Rate(s), Index Maturity, Initial
Interest Rate, Maximum Interest Rate, Minimum
Interest Rate, Interest Reset Dates, Interest
Payment Dates, Calculation Dates, Interest
Reset Dates and Spread and/or Spread
Multiplier (as each such term is defined in
the Prospectus).
8. Issue price of Note and proceeds to
Company.
9. Settlement Date.
10. Stated Maturity Date.
11. Redemption and/or repayment provisions,
if any.
12. Agent's commission to be paid in the
form of a discount upon settlement.
13. Other relevant terms, including any
reset and/or extension provisions.
Such Agent will advise the Company of the
foregoing information (unless provided by the
purchaser directly to the Company) for each offer
to purchase a Certificated Note solicited by such
Agent and accepted by the Company in time for the
Trustee to prepare and authenticate the required
Certificated Note. Before accepting any offer to
purchase a Certificated Note to be settled in less
than three Business Days, the Company shall verify
that the Trustee will have adequate time to
prepare and authenticate such Certificated Note.
After receiving from such Agent the details for
each offer to purchase a Certificated Note, the
Company will, after recording the details and any
necessary calculations, provide appropriate
documentation to the Trustee, including the
information provided by such Agent necessary for
the preparation and authentication of such
Certificated Note. Prior to preparing the
Certificated Note for delivery (but in any case no
later than 11:00 a.m., New
40
<PAGE>
York City time, on the Business Day next preceding
the Settlement Date therefor), the Trustee will
confirm the details of such issue with such Agent
by telephone.
Note Deliveries and Cash
- ------------------------
Payment:
- --------
Upon receipt of appropriate documentation and
instructions, the Company will cause the Trustee
to prepare and authenticate the pre-printed 4-ply
Certificated Note packet containing the following
documents in forms approved by the Company, the
Agents and the Trustee:
1. Certificated Note with customer confirmation.
2. Stub 1--For the applicable Agent.
3. Stub 2--For the Company.
4. Stub 3--For the Trustee.
Each Certificated Note shall be authenticated on
or before the Settlement Date therefor. The
Trustee will authenticate each Certificated Note
and deliver it to such Agent (and deliver the
stubs as indicated above), all in accordance with
written instructions (which may be in the form of
facsimile transmission) from the Company. Delivery
by the Trustee of each Certificated Note will be
made against receipt by the Company by 1:00 p.m.,
New York City time, on the Settlement Date in
immediately available funds of an amount equal to
the issue price of such Certificated Note or the
U.S. dollar equivalent of the issue price of such
Note as agreed between the Company and such Agent,
unless otherwise agreed between the Company and
such Agent, less such Agent's commission.
Upon verification by such Agent that a Note has
been prepared and properly authenticated by the
Trustee and registered in the name of the
purchaser in the proper principal amount and that
the related Guarantee has been duly endorsed
thereon, payment will be made to the Company by
such Agent the same day in immediately available
funds in the Specified Currency. Such payment
shall be made only upon prior receipt by such
Agent of immediately available funds from or on
behalf of the purchaser in the Specified Currency
unless such Agent decides, at its option, to
advance its own funds for such payment against
subsequent receipt of funds from the purchaser.
41
<PAGE>
Upon delivery of a Certificated Note to such
Agent, such Agent shall promptly deliver such
Certificated Note to the purchaser.
In the event any Certificated Note is incorrectly
prepared, the Trustee shall promptly issue a
replacement Certificated Note in exchange for the
incorrectly prepared Certificated Note.
Failure to Settle: If any Agent, at its own option, has advanced its
- -----------------
own funds for payment against subsequent receipt
of funds from the purchaser, and if the purchaser
shall fail to make payment for the Certificated
Note on the Settlement Date therefor, such Agent
will promptly notify the Trustee and the Company
by tele- phone, promptly confirmed in writing (but
no later than the next Business Day). In such
event, the Company shall promptly provide the
Trustee with appropriate documentation and
instructions consistent with these procedures for
the return of the Certificated Note to the Trustee
and such Agent will promptly return the
Certificated Note to the Trustee. Upon
confirmation (i) from the Trustee in writing
(which may be given by telex or telecopy) that the
Trustee has received the Certificated Note and
(ii) from such Agent in writing (which may be
given by telex or telecopy) that such Agent has
not received payment from the purchaser (the
matters referred to in clauses (i) and (ii) are
referred to hereinafter as the "Confirmations"),
the Company will promptly pay to such Agent an
amount in immediately available funds equal to the
amount previously paid by such Agent in respect of
such Certificated Note. Assuming receipt of the
Certificated Note by the Trustee and of the
Confirmations by the Company, such payment will be
made on the Settlement Date, if reasonably
practicable, and in any event not later than the
Business Day following the date of receipt of the
Certificated Note and Confirmations. If a
purchaser shall fail to make payment for the
Certificated Note for any reason other than the
failure of such Agent to provide the necessary
information to the Company as described above for
settlement or to provide a confirmation to the
purchaser within a reasonable period of time as
described above or otherwise to satisfy its
obligation hereunder or in the Agency Agreement,
and if such Agent shall have otherwise complied
with its obligations hereunder and in the Agency
Agreement, the Company will
42
<PAGE>
reimburse such Agent on an equitable basis for its loss
of the use of funds during the period when they were
credited to the account of the Company.
Immediately upon receipt of the Certificated Note in
respect of which the failure occurred, the Trustee will
void said Certificated Note, make appropriate entries
in its records and destroy the Certificated Note; and
upon such action, the Certificated Note will be deemed
not to have been issued, authenticated and delivered.
Trustee Not to Nothing herein shall be deemed to require the Trustee
- --------------
Risk Funds: to risk or expend its own funds in connection with any
- ----------
any payment to the Company, or any Agent or the
purchaser, it being understood by all parties that
payments made by the Trustee to either the Company or
any Agent shall be made only to the extent that funds
are provided to the Trustee for such purpose.
Authenticity of
- ---------------
Signatures:
- ----------
The Company will cause the Trustee and the Guarantor to
furnish each Agent from time to time with the specimen
signatures of the officers, employees or agents who
have been authorized to authenticate Certificated Notes
or execute the related Guarantee, as the case may be,
but each Agent will have no obligation or liability to
the Company, the Guarantor or the Trustee in respect of
the authenticity of the signature of any officer,
employee or agent of the Company, the Guarantor or the
Trustee on any Certificated Note.
Payment of Expenses:
- -------------------
Each Agent shall forward to the Company and the
Guarantor, from time to time (but not more often than
monthly), a statement of the out-of-pocket expenses
incurred by such Agent during the related period which
are reimbursable to it pursuant to the terms of the
Agency Agreement. The Company and the Guarantor will
promptly remit payment to such Agent.
Advertising The Company will determine with each Agent the amount
- -----------
Costs: of advertising that may be appropriate in soliciting
- -----
offers to purchase the Notes. Advertising expenses will
be paid by the Company and the Guarantor.
43
<PAGE>
PART II: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of Book-Entry Notes for eligibility in
the book-entry system maintained by DTC, the Trustee will perform the custodial,
document control and administrative functions described below, in accordance
with its respective obligations under a Letter of Representations from the
Company, the Guarantor and the Trustee to The Depository Trust Company ("DTC")
of even date herewith and a Medium-Term Note Certificate Agreement between the
Trustee and DTC, dated April 14, 1989 and its obligations as a participant in
DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: On any Settlement Date (as defined under "Settlement"
- --------
below) for one or more Fixed Rate Book-Entry Notes, the
Company will issue a single global security in fully
registered form without coupons (a "Global Security")
representing up to U.S. $200,000,000 principal amount
of all of such Notes that have the same Issue Date,
Specified Currency, Interest Rate, Stated Maturity
Date, redemption and/or repayment provisions and
Interest Payment Dates. Similarly, on any Settlement
Date for one or more Floating Rate Book-Entry Notes,
the Company will issue a single Global Security
representing up to U.S. $200,000,000 principal amount
of all of such Notes that have the same Issue Date,
Specified Currency, Base Rate(s), Index Maturity,
Interest Reset Dates, Spread and/or Spread Multiplier
(if any), Initial Interest Rate, Interest Payment
Dates, Minimum Interest Rate (if any), Maximum Interest
Rate (if any), Stated Maturity Date and redemption
and/or repayment provisions. Each Global Security will
be dated and issued as of the date of its
authentication by the Trustee. Each Global Security
will bear an "Interest Accrual Date", which will be (i)
with respect to an original Global Security (or any
portion thereof), its original issuance date and (ii)
with respect to any Global Security (or portion
thereof) issued subsequently upon exchange of a Global
Security or in lieu of a destroyed, lost or stolen
Global Security, the most recent Interest Payment Date
to which interest has been paid or duly provided for on
the predecessor Global Security or Securities (or if no
such payment or provision has been made, the original
issuance date of the predecessor Global Security),
regardless of the date of authentication of such
subsequently issued Global Security. No Global Security
will represent any Certificated Note.
Price to Public: Each Book-Entry Note will be issued at the percentage
- ---------------
of principal amount specified in the Prospectus.
44
<PAGE>
Identification Numbers:
- -----------------------
The Company will arrange, on or prior to commencement
of a program for the offering of Book-Entry Notes, with
the CUSIP Service Bureau of Standard & Poor's Ratings
Group (the "CUSIP Service Bureau") for the reservation
of a series of CUSIP numbers (including tranche
numbers), consisting of approximately 900 CUSIP numbers
and relating to Global Securities representing the
Book-Entry Notes. The Trustee has or will obtain from
the CUSIP Service Bureau a written list of such series
of reserved CUSIP numbers and will deliver to the
Company and DTC such written list of 900 CUSIP numbers
of such series. The Company will assign CUSIP numbers
to Global Securities as described below under
Settlement Procedure "B". DTC will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that
the Company has assigned to Global Securities. The
Trustee will notify the Company at any time when fewer
than 100 of the reserved CUSIP numbers remain
unassigned to Global Securities, and if it deems
necessary, the Company will reserve additional CUSIP
numbers for assignment to Global Securities
representing Book-Entry Notes. Upon obtaining such
additional CUSIP numbers, the Trustee shall deliver
such additional CUSIP numbers to the Company and DTC.
Registration: Each Global Security will be registered in the name of
- ------------
CEDE & CO., as nominee for DTC, on the Securities
Register maintained under the Indenture governing such
Global Security. The beneficial owner of a Book-Entry
Note (or one or more indirect participants in DTC
designated by such owner) will designate one or more
participants in DTC (with respect to such Note, the
"Participants") to act as agent or agents for such
owner in connection with the book-entry system
maintained by DTC, and DTC will record in book-entry
form, in accordance with instructions provided by such
Participants, a credit balance with respect to such
Note in the account of such Participants. The ownership
interest of such beneficial owner in such Note will be
recorded through the records of such Participants or
through the separate records of such Participants and
one or more indirect participants in DTC.
Transfers: Transfer of a Book-Entry Note will be accomplished by
- ---------
book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect
participants in
45
<PAGE>
DTC) acting on behalf of beneficial transferors
and transferees of such Note.
Consolidation and Exchange: The Trustee may deliver to DTC and the
- ---------------------------
CUSIP Service Bureau at any time a written
notice of consolidation specifying (i) the CUSIP
numbers of two or more outstanding Global
Securities that represent (A) Fixed Rate
Book-Entry Notes having the same Issue Date,
Specified Currency, Interest Rate, Stated
Maturity Date, redemption and/or repayment
provisions (if any) and Interest Payment Dates
and with respect to which interest has been paid
to the same date or (B) Floating Rate Book-Entry
Notes having the same Issue Date, Specified
Currency, Base Rate, Index Maturity, Interest
Reset Dates, Spread and/or Spread Multiplier (if
any), Initial Interest Rate, Interest Payment
Dates, Minimum Interest Rate (if any), Maximum
Interest Rate (if any), redemption and/or
repayment provisions (if any) and Stated
Maturity Date and with respect to which interest
has been paid to the same date, (ii) a date,
occurring at least thirty days after such
written notice is delivered and at least thirty
days before the next Interest Payment Date for
such Book-Entry Notes, on which such Global
Securities shall be exchanged for a single
replacement Global Security and (iii) a new
CUSIP number, obtained from the Company, to be
assigned to such replacement Global Security.
Upon receipt of such a notice, DTC will send to
its Participants (including the Trustee) a
written reorganization notice to the effect that
such exchange will occur on such date. Prior to
the specified exchange date, the Trustee will
deliver to the CUSIP Service Bureau a written
notice setting forth such exchange date and the
new CUSIP number and stating that, as of such
exchange date, the CUSIP numbers of the Global
Securities to be exchanged will no longer be
valid. On the specified exchange date, the
Trustee will exchange such Global Securities for
a single Global Security bearing the new CUSIP
number and a new Interest Accrual Date, and the
CUSIP numbers of the exchanged Global Securities
will, in accordance with CUSIP Service Bureau
procedures, be cancelled and not immediately
reassigned. Notwithstanding the foregoing, if
the Global Securities to be exchanged exceed
U.S. $200,000,000 in aggregate principal amount,
one Global Security will be authenticated and
issued to represent each U.S. $200,000,000 of
principal amount of the exchanged Global
Securities and an additional Global Security
will be authenticated and issued
46
<PAGE>
to represent any remaining principal amount of
such Global Securities (see "Denominations"
below).
Maturities: Each Book-Entry Note will mature on a date nine
- ----------
months or more after the Settlement Date for
such Note.
Notice of Redemption Date: The Trustee will notify DTC not more
- --------------------------
than 60 but not less than 30 days prior to each
redemption date, if any, with respect to a Book-
Entry Note, of the CUSIP number of such Note,
the redemption date, the redemption price and
the principal amount of such Book-Entry Note to
be redeemed.
Denominations: Book-Entry Notes will be issued in principal
- -------------
amounts of U.S. $1,000 or any amount in excess
thereof that is an integral multiple of U.S.
$1,000. Global Securities will be denominated in
principal amounts not in excess of U.S.
$200,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess
of U.S. $200,000,000 would, but for the
preceding sentence, be represented by a single
Global Security, then one Global Security will
be issued to represent each U.S. $200,000,000
principal amount of such Book-Entry Note or
Notes and an additional Global Security will be
issued to represent any remaining principal
amount of such Book-Entry Note or Notes. In such
a case, each of the Global Securities
representing such Book-Entry Note or Notes shall
be assigned the same CUSIP number.
Interest: General. Interest on each Book-Entry Note will
- -------- -------
accrue from the Interest Accrual Date of the
Global Security representing such Note. Except
as set forth in the underlying Global Security,
each Book-Entry Note which is a Fixed Rate Note
will bear interest at the annual rate stated in
such Global Security, payable semiannually on
January 15 and July 15 of each year (each, an
"Interest Payment Date") and on the Maturity
Date, and each Book-Entry Note which is a
Floating Rate Note will bear interest as
determined in the manner set forth in such
Global Security, payable on the dates set forth
on such Global Security. Except as set forth in
the underlying Global Security, interest
(including payments for partial periods) on
Fixed Rate Notes will be calculated on the basis
of a 360-day year of twelve 30-day months.
Except as set forth in the underlying Global
Security, interest on Book-Entry Notes which are
Floating Rate Notes will be determined in the
manner agreed upon by the Company and the
purchaser
47
<PAGE>
thereof in accordance with the provisions of the
Prospectus. Except as set forth in the
underlying Global Security, the "Record Date"
with respect to any Interest Payment Date for
Book-Entry Notes which are Floating Rate Notes
shall be the date 15 calendar days immediately
preceding such Interest Payment Date, and for
Fixed Rate Notes shall be the December 31 or
June 30 next preceding such Interest Payment
Date, whether or not such date shall be a
Business Day. The first payment of interest on
any Book-Entry Note originally issued between a
Record Date and an Interest Payment Date will be
made on the Interest Payment Date following the
next succeeding Record Date to the Holder on
such next succeeding Record Date.
Notwithstanding the record date provisions
above, interest payable on the Maturity Date
will be payable to the person to whom principal
shall be payable.
Standard & Poor's Ratings Group will use the
information received in the pending deposit
message described under Settlement Procedure "C"
below in order to include the amount of any
interest payable and certain other information
regarding the related Global Security in the
appropriate weekly bond report published by
Standard & Poor's Ratings Group.
On the first Business Day of January, April,
July and October of each year, the Trustee will
deliver to the Company and DTC a written list of
Record Dates and Interest Payment Dates that
will occur with respect to Floating Rate Book-
Entry Notes during the six-month period
beginning on such first Business Day. Promptly
after each Interest Determination Date (as
defined in the Prospectus) for Floating Rate
Notes, the Company will notify the Trustee, and
the Trustee in turn will notify Standard &
Poor's Ratings Group, of the interest rates
determined on such Interest Determination Date.
Payments of Principal and
- -------------------------
Interest:
- ---------
Payments of Interest Only. Promptly after each
-------------------------
Record Date, the Trustee will deliver to the
Company and DTC a written notice specifying by
CUSIP number the amount of interest to be paid
on each Global Security on the following
Interest Payment Date (other than an Interest
Payment Date coinciding with a Maturity Date)
and the total of such amounts. DTC will confirm
the amount payable on each Global Security on
such Interest Payment Date by reference
48
<PAGE>
to the daily bond reports published by Standard
& Poor's Corporation. The Company will pay to
the Trustee, as paying agent, the total amount
of interest due on such Interest Payment Date
(other than on the Maturity Date), and the
Trustee will pay such amount to DTC at the times
and in the manner set forth below under "Manner
of Payment".
Payments at Maturity. On or about the first
--------------------
Business Day of each month, the Trustee will
deliver to the Company and DTC a written list of
principal and interest to be paid on each Global
Security with a Maturity Date in the following
month. The Company, the Trustee and DTC will
confirm the amounts of such principal and
interest payments with respect to each such
Global Security on or about the fifth Business
Day preceding the Maturity Date of such Global
Security. The Company will pay to the Trustee,
as the paying agent, the principal amount of
such Global Security, together with interest due
on such Maturity Date. The Trustee will pay such
amount to DTC at the time and in the manner set
forth below under "Manner of Payment".
Promptly after payment to DTC of the principal
and interest due on the Maturity Date of such
Global Security, the Trustee will cancel such
Global Security and deliver it to the Company
with an appropriate debit advice. On the first
Business Day of each month, the Trustee will
prepare a written statement indicating the total
principal amount of outstanding Global
Securities for which it serves as trustee as of
the immediately preceding Business Day.
Manner of Payment. The total amount of any
-----------------
principal and interest due on Global Securities
on any Interest Payment Date or on the Maturity
Date shall be paid by the Company to the Trustee
in funds available for use by the Trustee as of
9:30 A.M. (New York City time) on such date. The
Company will make such payment on such Global
Securities by instructing the Trustee to
withdraw funds from an account maintained by the
Company at the Trustee. For maturity,
redemption, repayment or any other principal
payments: prior to 10:00 A.M. (New York City
time) on such date or as soon as possible
thereafter, the Trustee will make such payments
to DTC in same day funds in accordance with
DTC's Same Day Funds Settlement Paying Agent
Operating Procedures. For interest payments: the
Trustee will make such payments to DTC in
accordance with existing arrangements between
DTC and the Trustee.
49
<PAGE>
DTC will allocate such payments to its
participants in accordance with its existing
operating procedures. Neither the Company
(either as Issuer or as Paying Agent), the
Trustee or any Agent shall have any direct
responsibility or liability for the payment by
DTC to such Participants of the principal of and
interest on the Book-Entry Notes.
Withholding Taxes. The amount of any taxes
-----------------
required under applicable law to be withheld
from any interest payment on a Book-Entry Note
will be determined and withheld by the
Participant, indirect participant in DTC or
other Person responsible for forwarding payments
and materials directly to the beneficial owner
of such Note.
Procedure for Rate Setting
- --------------------------
and Posting:
- -----------
The Company and the Agents will discuss from
time to time the aggregate principal amount of,
the issuance price of, and the interest rates to
be borne by, Book-Entry Notes that may be sold
as a result of the solicitation or offers by the
Agents. If the Company decides to establish
prices of (including the currency of issuance),
and rates borne by, any Book-Entry Notes to be
sold (the establishment of such prices and rates
to be referred to herein as "posting") or if the
Company decides to change prices or rates
previously posted by it, it will promptly advise
the Agents of the prices and rates to be posted.
Acceptance Unless otherwise agreed between the Company and
- ----------
of Offers: such Agent, any Agent which receives an offer to
- ---------
purchase Book-Entry Notes will promptly advise
the Company of each such offer other than offers
rejected by such Agent as provided below. The
Company will have the sole right to accept any
such offer to purchase Book-Entry Notes. The
Company may reject any such offer in whole or in
part.
Unless otherwise agreed between the Company and
any Agent, each Agent may, in its discretion
reasonably exercised, reject any offer to
purchase Book-Entry Notes received by it in
whole or in part.
Preparation of Pricing
- ----------------------
Supplement:
- ----------
If any offer to purchase a Book-Entry Note is
accepted by or on behalf of the Company, the
Company and the Guarantor, with the approval of
the Agents, will prepare a Pricing Supplement
reflecting the terms of such
50
<PAGE>
Book-Entry Note and will arrange to have requisite
copies of such Pricing Supplement filed with the
Commission, in each case no later than the second
Business Day after the earlier of the
determination of the offering price or the date it
is first used and will supply at least ten copies
thereof (or additional copies if requested) to the
Agents and one copy to the Trustee no later than
11:00 A.M., New York City time, on the Business
Day following the date of acceptance at the
following applicable address (unless otherwise
specified in the applicable trading confirmation):
if to Lehman Brothers Inc., to Lehman Brothers
Inc., Prospectus Department, 3 World Financial
Center, 9th Floor, New York, New York 10285-0900,
attention of Brunnie Vazquez, telecopier no. (212)
528-7035; if to Chase Securities, Inc., if to
Chase Securities Inc., to Chase Securities Inc.,
270 Park Avenue,8th floor, New York, New York
10017, Attention: Medium-Term Note Desk, telephone
no. (212) 834-4421, telecopier no. (212) 834-6081;
if to Deutsche Bank Securities Inc. to Deutsche
Bank Securities Inc., attention of Pam Kendall,
telephone no. (212) 469-7288, telecopier no. (212)
469-8173; with a copy to Deutshe Bank Securities
Inc., c/o ADP Prospectus, 536 Broadhollow Road,
Melville, NY 11747, attention of Krisra Zeoli,
telephone no. (516) 254-7107, telecopier no. (516)
254-7134; if to Goldman, Sachs & Co., to Goldman,
Sachs & Co., 85 Broad Street, 27th Floor, New
York, New York 10004, attention of Karen
Robertson; if to Merrill Lynch & Co., to Merrill
Lynch & Co. - Tritech Services, 44B Colonial
Drive, Piscataway, New Jersey 08854, attention of
Nachman Kimmerling/Final Prospectus Unit,
telephone no. (732) 885-2768, telecopier no. (732)
885-2774, with a copy to Merrill Lynch, Pierce,
Fenner & Smith Incorporated, World Financial
Center, North Tower, 10th Floor, New York, New
York 10281-1310, attention of MTN Product
Management, telephone no. (212) 449-7476,
telecopier no. (212)449-2234; if to J.P. Morgan
Securities Inc. to J.P. Morgan Securities Inc., 60
Wall Street, 3rd Floor, New York, New York 10260,
attention of Dan Benton, telephone no. (212) 648-
0591, telecopier no. (212) 648-5909; if to
NationsBanc Montgomery Securities LLC, to
NationsBanc Montgomery Securities LLC, 100 North
Tryon Street, Charlotte, NC 28255, NC1-007-07-01,
attention of Jim Trobert, MTN Trading, telecopier
no. (704) 388-9212; if to Salomon Smith Barney
Inc. to Salomon Smith Barney, Brookyn Army
Terminal, 140 58th Street, 8th Floor, Brooklyn, NY
11220, attention of Alex Valentin, telephone no.
(718) 921-8460, telecopier no. (718) 921-8472 ; if
to Countrywide Securities Corporation, to
Countrywide Securities Corporation, 4500 Park
Granada, Calabasas, California 91302, attention of
Jules St. James, telephone no. (818) 225-3201,
telecopier no. (818) 225-4014; and if to the
51
<PAGE>
Trustee, to The Bank of New York, 101 Barclay
Street, New York, New York 10286, attention of
Corporate Trust Office. Such Agent will cause a
Pricing Supplement to be delivered to the
purchaser of the Book-Entry Note. In all
respects, the Company and the Guarantor will
prepare and file each such Pricing Supplement in
accordance with Rule 424 under the Act.
In each instance that a Pricing Supplement is
prepared, each Agent will affix the Pricing
Supplement to Prospectuses prior to their use;
provided, however, that pursuant to Rule 434,
the Pricing Supplement may be delivered
separately from the Prospectuses. Outdated
Pricing Supplements, and the Prospectuses to
which they are attached or relate (other than
those retained for files), will be destroyed.
Suspension of Solicitation;
- ---------------------------
Amendment or Supplement:
- ------------------------
The Company reserves the right, in its sole
discretion, to instruct the Agents to suspend at
any time, for any period of time or permanently,
the solicitation of offers to purchase Book-
Entry Notes. As soon as practicable, but in no
event later than one Business Day after receipt
of instructions from the Company, the Agents
will suspend solicitation of offers to purchase
Book-Entry Notes from the Company until such
time as the Company has advised them that such
solicitation may be resumed.
If the Company or the Guarantor decides to amend
or supplement the Registration Statement or the
Prospectus relating to the Notes (except in the
case of a Pricing Supplement to the Prospectus),
the Company or the Guarantor, as the case may
be, will promptly advise the Agents and the
Trustee and will furnish the Agents and the
Trustee with the proposed amendment or
supplement in accordance with the terms of the
Agency Agreement. The Company or the Guarantor
will mail or transmit to the Commission for
filing therewith any supplement to the
Prospectus relating to the Notes, provide the
Agents with copies of any supplement, and
confirm to the Agents that such supplement has
been filed with the Commission.
In the event that at the time the Company
suspends solicitation of offers to purchase
Book-Entry Notes there shall be any outstanding
offers to purchase Book-Entry Notes that have
been accepted by the Company but for which
settlement has not yet occurred, the Company
will
52
<PAGE>
promptly advise the Agents and the Trustee
whether such sales may be settled and whether
copies of the Prospectus as supplemented to the
time of the suspension may be delivered in
connection with the settlement of such sales.
The Company will have the sole responsibility
for such decision and for any arrangements which
may be made in the event that the Company
determines that such sales may not be settled or
that copies of such Prospectus may not be so
delivered.
Delivery of Each Agent shall, for each offer to
- -----------
Prospectus: purchase a Book-Entry Note that is solicited by
- ----------
such Agent and accepted by the Company, deliver
a copy of the Prospectus as most recently
amended or supplemented (including the
applicable Pricing Supplement which, pursuant to
Rule 434, may be delivered separately from the
Prospectus) with the earlier of the delivery of
the confirmation of sale or the Book-Entry Note
to the purchaser thereof or such purchaser's
agent.
Confirmation: Such Agent will confirm the purchase of such
- ------------
Note to the purchaser either by transmitting to
the Participants with respect to such Note a
confirmation order or orders through DTC's
institutional delivery system or by mailing a
written confirmation to such purchaser .
Settlement: The receipt by the Company of immediately
- ----------
available funds in payment for a Book-Entry Note
and the authentication and issuance of the
Global Security representing such Note shall
constitute "settlement" with respect to such
Note. The "Settlement Date" with respect to any
offer to purchase Book-Entry Notes accepted by
or on behalf of the Company will be a date on or
before the third Business Day next succeeding
the date of acceptance unless otherwise agreed
by the purchaser and the Company and shall be
specified upon acceptance of such offer.
Settlement Settlement Procedures with regard to
- ----------
Procedures: each Book-Entry Note sold by the Company through
- ----------
an Agent, as agent, shall be as follows:
A. Such Agent will advise the Company by
telephone of the following settlement
information :
1. Principal amount.
2. Specified Currency.
3. Stated Maturity Date.
53
<PAGE>
4. In the case of a Fixed Rate Book-Entry Note,
the interest rate, or, in the case of a Floating
Rate Book-Entry Note, Base Rate, Index Maturity,
Initial Interest Rate, Maximum Interest Rate,
Minimum Interest Rate, Interest Reset Dates,
Interest Payment Dates, Calculation Dates,
Interest Reset Dates and Spread and/or Spread
Multiplier.
5. Settlement Date.
6. Redemption and/or repayment provisions, if
any.
7. Agent's commission, determined as provided
in the Agency Agreement between the Company and
such Agent.
8. The DTC Participant account number of such
Agent.
9. Taxpayer identification number of
beneficial owner (if available).
10. Issue price of Book-Entry Note and
proceeds to the Company.
B. The Trustee will assign a CUSIP number to
the Global Security representing such Book-Entry
Note and will then advise the Company of such
CUSIP number. The Company will then advise the
Trustee by electronic transmission (confirmed by
telephone) of the information set forth in
Settlement Procedure "A" above and the name of
such Agent. Each such communication by the
Company shall constitute a representation and
warranty by the Company to the Trustee and each
Agent that (i) such Note is then, and at the
time of issuance and sale thereof will be, duly
authorized for issuance and sale by the Company,
(ii) such Note, and the Global Security
representing such Note, will conform with the
terms of the Indenture pursuant to which such
Note and Global Security are issued and (iii)
upon authentication and delivery of such Global
Security, the aggregate initial offering price
of all Notes issued under the Indenture will not
exceed $3,000,000,000 (except for Book-Entry
Notes represented by Global Securities
authenticated and delivered in exchange for or
in lieu of Global Securities pursuant to the
Indenture and except for Certificated Notes
authenticated and delivered upon registration of
transfer of, in
54
<PAGE>
exchange for, or in lieu of Certificated Notes
pursuant to the Indenture).
C. The Trustee will enter a pending deposit
message through DTC's Participant Terminal
System, providing the following settlement
information to DTC, such Agent, Standard &
Poor's Ratings Group and, upon request, the
Trustee under the Indenture pursuant to which
such Note is to be issued:
1. The information set forth in
Settlement Procedure " A".
2. Identification as a Fixed Rate
Book-Entry Note or a Floating Rate
Book-Entry Note.
3. Initial Interest Payment Date for
such Note and amount of interest payable on
such Interest Payment Date.
4. Frequency of interest payments
(monthly, semiannually, quarterly, etc.).
5. CUSIP number of Global Security
representing such Note.
6. Whether such Global Security will
represent any other Book-Entry Note (to the
extent known at such time).
D. The Trustee will complete the Global
Security, the form of which was previously
approved by the Company, the Agents and the
Trustee.
E. The Trustee, as Trustee, will authenticate
the Global Security representing such Note.
F. DTC will credit such Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS deliver
order through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
55
<PAGE>
Trustee's participant account and credit such
Note to such Agent's participant account and
(ii) debit such Agent's settlement account and
credit the Trustee's settlement account for an
amount equal to the price of such Note less such
Agent's commission. The entry of such a deliver
order shall constitute a representation and
warranty by the Trustee to DTC that (i) the
Global Security representing such Book-Entry
Note has been issued and authenticated and (ii)
the Trustee is holding such Global Security
pursuant to the Certificate Agreement.
H. Such Agent will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to such
Agent's participant account and credit such Note
to the participant accounts of the Participants
with respect to such Note and (ii) to debit the
settlement accounts of such Participants and
credit the settlement account of such Agent for
an amount equal to the price of such Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in
effect on the Settlement Date .
J. The Trustee will credit to an account of the
Company maintained at the Trustee funds
available for immediate use in the amount
transferred to the Trustee in accordance with
Settlement Procedure "G".
K. The Trustee will hold the Global Security
pursuant to the Certificate Agreement and will
send a photocopy of such Global Security to the
Company by first-class mail. Upon written
request the Trustee will deliver a photocopy of
such Global Security to such Agent.
Periodically, the Trustee will send to the
Company a statement setting forth the principal
amount of Notes Outstanding as of that date and
setting forth a brief description of any sales
of which the Company has advised the Trustee but
which have not yet been settled.
56
<PAGE>
L. As set forth in "Delivery of Prospectus"
above, such Agent will deliver to the purchaser
a copy of the most recent Prospectus applicable
to the Book-Entry Note with or prior to any
written offer of Book-Entry Notes and the
confirmation and payment by the purchaser of
such Note.
Such Agent will confirm the purchase of such Note to
the purchaser either by transmitting to the
Participants with respect to such Note a confirmation
order or orders through DTC's institutional delivery
system or by mailing a written confirmation to such
purchaser.
Settlement Procedures
- ---------------------
Timetable:
- ----------
For offers to purchase Book-Entry Notes solicited by an
Agent, as agent,and accepted by the Company for
settlement on the first Business Day after the sale
date, Settlement Procedures "A" through "L" set forth
above shall be completed as soon as possible but not
later than the respective times (New York City time)
set forth below: Settlement
Procedure Time
--------- ----
A-B 11:00 A.M. on the sale date
C 2:00 P.M. on the sale date
D 3:00 P.M. on day before Settlement Date
E 9:00 A.M. on Settlement Date
F 10:00 A.M. on Settlement Date
G-H 2:00 P.M. on Settlement Date
I 4:45 P.M. on Settlement Date
J-L 5:00 P.M. on Settlement Date
If a sale is to be settled more than one Business Day
after the sale date, Settlement Procedures "A", "B" and
"C" shall be completed as soon as practicable but no
later than 11:00 A.M. and 2:00 P.M., as the case may
be, on the first Business Day after the sale date. If
the initial interest rate for a Floating Rate Book-
Entry Note has not been determined at the time that
Settlement Procedure "A" is completed, Settlement
Procedures "B" and "C" shall be completed as soon as
such rate has been determined but no later than 11:00
A.M. and 12:00 Noon, respectively, on the
57
<PAGE>
second Business Day before the Settlement Date.
Settlement Procedure "I" is subject to extension in
accordance with any extension of Fedwire closing
deadlines and in the other events specified in the SDFS
operating procedures in effect on the Settlement Date.
Failure to Settle: If the Trustee fails to enter an SDFS deliver order
- -----------------
with respect to a Book-Entry Note pursuant to
Settlement Procedure "G", the Trustee may deliver to
DTC, through DTC's Participant Terminal System, as soon
as practicable a withdrawal message instructing DTC to
debit such Note to the Trustee's participant account.
DTC will process the withdrawal message, provided that
the Trustee's participant account contains a principal
amount of the Global Security representing such Note
that is at least equal to the principal amount to be
debited. If a withdrawal message is processed with
respect to all the Book-Entry Notes represented by a
Global Security, the Trustee will mark such Global
Security "canceled", make appropriate entries in the
Trustee's records and send such canceled Global
Security to the Company. The CUSIP number assigned to
such Global Security shall, in accordance with CUSIP
Service Bureau procedures, be canceled and not
immediately reassigned. If a withdrawal message is
processed with respect to one or more, but not all, of
the Book-Entry Notes represented by a Global Security,
the Trustee will exchange such Global Security for two
Global Securities, one of which shall represent such
Book-Entry Note or Notes and shall be canceled
immediately after issuance and other Book-Entry Notes
previously represented by the surrendered Global
Security and shall bear the CUSIP number of the
surrendered Global Security.
If the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such
Note by the beneficial purchaser thereof (or a Person,
including an indirect participant in DTC, acting on
behalf of such purchaser), such Participants and, in
turn, the Agent for such Note may enter SDFS deliver
orders through DTC's Participant Terminal System
reversing the orders entered pursuant to Settlement
Procedures "H" and "G", respectively. Thereafter, the
Trustee will deliver the withdrawal message and take
the related actions described in the preceding
paragraph.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
any
58
<PAGE>
actions in accordance with its SDFS operating
procedures then in effect. In the event of a failure to
settle with respect to one or more, but not all, of the
Book-Entry Notes to have been represented by a Global
Security, the Trustee will provide, in accordance with
Settlement Procedures "D" and "E", for the
authentication and issuance of a Global Security
representing the other Book-Entry Notes to have been
represented by such Global Security and will make
appropriate entries in its records.
Trustee Not to Nothing herein shall be deemed to require the Trustee
- --------------
Risk Funds: to risk or expend its own funds in connection with any
- ----------
payment to the Company, or any Agent or the purchaser,
it being understood by all parties that payments made
by the Trustee to either the Company or any Agent shall
be made only to the extent that funds are provided to
the Trustee for such purpose.
Authenticity of
- ---------------
Signatures: The Company will cause the Trustee and the Guarantor to
- ----------
furnish each Agent from time to time with the specimen
signatures of the officers, employees or agents who
have been authorized to authenticate Notes or execute
the related Guarantee, but each Agent will have no
obligation or liability to the Company, the Guarantor
or the Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the
Company, the Guarantor or the Trustee on any Note.
Payment of Expenses:
- --------------------
Each Agent shall forward to the Company and the
Guarantor, from time to time (but not more often than
monthly), a statement of the out-of-pocket expenses
incurred by such Agent during the related period which
are reimbursable to it pursuant to the terms of the
Agency Agreement. The Company and the Guarantor will
promptly remit payment to such Agent.
Advertising Costs:
- ------------------
The Company will determine with each Agent the amount
of advertising that maybe appropriate in soliciting
offers to purchase the Notes. Advertising expenses will
be paid by the Company and the Guarantor.
59
<PAGE>
EXHIBIT B
Countrywide Home Loans, Inc. U.S. $3,000,000,000
Medium-Term Notes, Series H Due Nine Months or
More From Date of Issue Payment of Principal,
Premium, if any, and Interest Fully and
Unconditionally Guaranteed by Countrywide Credit
Industries, Inc.
TERMS AGREEMENT
___________,19__
Countrywide Home Loans, Inc.
155 North Lake Avenue
Pasadena, California 91101
Attention: Corporate Counsel
Subject in all respects to the terms and conditions of the Selling Agency
Agreement dated _______, 1998 among Lehman Brothers, Inc. Chase Securities Inc.,
Deutsche Bank Securities Inc.., Goldman, Sachs & Co., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc.,
NationsBanc Montgomery Securities LLC, Salomon Smith Barney Inc. and Countrywide
Securities Corporation and you (the "Agreement"), the undersigned agrees to
purchase the following Medium-Term Notes, Series H (the "Notes"), of Countrywide
Home Loans, Inc.:
Aggregate Principal Amount:
Currency or Currency Unit:
Interest Rate or Base Rate(s):
Spread:
Spread Multiplier:
Stated Maturity Date:
Interest Payment Dates:
Record Dates:
Purchase Price: % of Principal Amount [plus accrued interest, if any, from
_______________, 19 __]
Purchase Date and Time:
60
<PAGE>
Certificated or Book-Entry Form:
Place for Delivery of Notes
and Payment Therefor:
Method of Payment:
Modification, if any, in
the requirements to
deliver the documents
specified in Section 6(b)
of the Agreement:
Period during which additional
Notes may not be sold pursuant to
Section 4(l) of the Agreement:
Default provisions, if any:
Other terms:
LEHMAN BROTHERS INC.
By: _______________________________
CHASE SECURITIES INC.
By:_______________________________
DEUTSCHE BANK SECURITIES INC.
By:_______________________________
__________________________________
Goldman, Sachs & Co.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _______________________________
61
<PAGE>
J.P. MORGAN SECURITIES INC.
By: _______________________________
NATIONSBANC MONTGOMERY SECURITIES LLC
By: _______________________________
SALOMON SMITH BARNEY INC.
By: _______________________________
COUNTRYWIDE SECURITIES CORPORATION
By: _______________________________
Accepted:
COUNTRYWIDE HOME LOANS, INC.
By: ______________________________
Title:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: ______________________________
Title:
62
<PAGE>
EXHIBIT 4.3
COUNTRYWIDE HOME LOANS, INC.
(CUSIP No. )
REGISTERED PRINCIPAL AMOUNT
No. FX- $
MEDIUM-TERM NOTE, SERIES H
(FIXED RATE)
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
PAYMENT OF THE PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST ON THIS NOTE IS UNCONDITIONALLY
GUARANTEED BY COUNTRYWIDE CREDIT INDUSTRIES, INC.
IF THE HOLDER OF THIS NOTE IS THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY, THIS NOTE IS
A GLOBAL NOTE AND THE FOLLOWING LEGEND APPLIES:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH
NOTE IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE>
ISSUE PRICE: INTEREST RATE:
ORIGINAL ISSUE DATE: STATED MATURITY DATE:
PRINCIPAL AMOUNT: INTEREST PAYMENT DATES
(IF OTHER THAN JANUARY 15 AND JULY 15):
SPECIFIED CURRENCY: RECORD DATES (IF OTHER THAN
DECEMBER 31 AND JUNE 30):
MINIMUM DENOMINATION:
EXCHANGE RATE AGENT: OTHER/ADDITIONAL TERMS:
OPTION TO RECEIVE PAYMENT
IN U.S. DOLLARS:
[_]NO
[_]YES
REDEMPTION:
[_]NO
[_]YES
INITIAL REDEMPTION
DATE:
INITIAL REDEMPTION
PERCENTAGE:
ANNUAL REDEMPTION
PERCENTAGE REDUCTION:
REPAYMENT:
[_]NO
[_]YES
OPTIONAL REPAYMENT
DATE(S):
2
<PAGE>
COUNTRYWIDE HOME LOANS, INC., a New York corporation (the "Company"),
for value received, hereby promises to pay to ____________________________, or
registered assignees, the principal sum of _____________________________________
($_____________) on the Stated Maturity Date specified above (except to the
extent redeemed or repaid prior to the Stated Maturity Date) at the office or
agency of the Company in the Borough of Manhattan, The City of New York, State
of New York, and such other place or places as may be provided for pursuant to
the Indenture referred to below, and to pay interest semi-annually in arrears on
January 15 and July 15 of each year or such other Interest Payment Dates
specified above (each, an "Interest Payment Date"), commencing on the Interest
Payment Date next succeeding the Original Issue Date specified above and on the
Stated Maturity Date or, if applicable, any date of earlier redemption (the
"Redemption Date") or repayment (the "Repayment Date") (the earliest of the
Stated Maturity Date, the Redemption Date and the Repayment Date is hereinafter
referred to as the "Maturity Date" with respect to the principal repayable on
such date) on said principal sum at the Interest Rate specified above from and
including the most recent Interest Payment Date to which interest has been paid
or duly provided for, or, if no interest has been paid or duly provided for,
from and including the Original Issue Date, until the principal hereof becomes
due and payable; provided, however, that any payment of principal, premium, if
-------- -------
any, and/or interest to be made on an Interest Payment Date or on the Maturity
Date which is not a Business Day shall be made on the next Business Day with the
same force and effect as if made on such Interest Payment Date or the Maturity
Date, as the case may be, and no interest on such payment shall accrue to the
next Business Day. For purposes of this Note, "Business Day" means any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions are authorized or required by law, regulation or
executive order to close in New York, New York or Los Angeles, California;
provided, however, if the Specified Currency specified above is other than U.S.
- -------- -------
dollars, such day is also not a day on which banking institutions 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 ("Euro"), such day is also not a
day on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer (TARGET) System is closed). "Principal Financial Center" means the
capital city of the country issuing such Specified Currency (or, in the case of
Euro, Luxembourg), except that with respect to U.S. dollars, Australian dollars,
Canadian dollars, Deutsche marks, Dutch guilders, Italian lire and Swiss francs,
the "Principal Financial Center" shall be The City of New York, Sydney, Toronto,
Frankfurt, Amsterdam, Milan and Zurich, respectively.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be to the person (the "Holder") in whose name
this Note (or one or more predecessor Notes) is registered at the close of
business on the December 31 or June 30 or such other Record Dates specified
above (whether or not a Business Day)
3
<PAGE>
(each, a "Record Date") immediately preceding such Interest Payment Date;
provided, however, that interest payable on the Maturity Date will be payable to
- -------- -------
the person to whom principal is payable. Unless otherwise specified above, if
this Note is originally issued between a Record Date and an Interest Payment
Date, the first payment of interest on this Note will be made on the Interest
Payment Date following the next Record Date to the Holder hereof on such next
Record Date.
Unless otherwise specified above, payment of the principal of, and
premium, if any, and interest on, this Note due on the Maturity Date will be
made in immediately available funds in the Specified Currency, upon presentation
and surrender of this Note at the Corporate Trust Office of the Trustee. If the
Specified Currency is other than U.S. dollars, this Note must be presented and
surrendered to the Trustee referred to below in time for the Trustee to make
such payment in accordance with its normal procedures.
Unless otherwise specified above, payment of interest on this Note due
on any Interest Payment Date other than the Maturity Date will be made by
mailing a check in the Specified Currency (from an account at a bank located
outside the United States if such check is payable in a Specified Currency other
than U.S. dollars) to the address of the Holder hereof as such address shall
appear in the Security Register (as defined in the Indenture) on the applicable
Record Date. Notwithstanding the foregoing, on any Interest Payment Date other
than the Maturity Date, each Holder of U.S. $10,000,000 (or the equivalent
thereof in a Specified Currency other than U.S. dollars) or more in aggregate
principal amount of Notes (whether or not having identical terms and provisions)
shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive
such payment by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the United States, but only if
appropriate wire transfer instructions have been received in writing by the
Trustee not later than the Record Date immediately preceding such Interest
Payment Date and (ii) if the Specified Currency is other than U.S. dollars, to
receive such payment by wire transfer of immediately available funds to an
account maintained by the payee with a bank located in a jurisdiction in which
payment in such Specified Currency is then lawful. The Company shall pay any
administrative costs imposed by banks in connection with making payments by wire
transfer; provided, however, that any tax, assessment or other governmental
-------- -------
charge imposed upon payments shall be borne by the Holder hereof in respect of
which payments are made.
All payments of principal, premium, if any, and interest in respect of
this Note will be made by the Company in the Specified Currency; provided,
--------
however, that if the Specified Currency specified above is other than U.S.
- -------
dollars, the Holder hereof may, if indicated above under "Option to Receive
Payment in U.S. Dollars," elect to receive all payments of principal, premium,
if any, and/or interest in respect of this Note in U.S. dollars by delivering a
written request to the Trustee not later than the close of business
4
<PAGE>
on the Record Date immediately preceding the Interest Payment Date or the
fifteenth day immediately preceding the Maturity Date, as the case may be. Upon
such election by the Holder hereof, the Company shall tender payment in U.S.
dollars at the Exchange Rate (as defined below), and any costs associated with
the conversion of the Specified Currency into U.S. dollars shall be borne by the
Holder hereof through deductions from such payments. The Holder's election to
receive payments in U.S. dollars will remain in effect until revoked by written
notice from the Holder to the Trustee, provided that any such revocation must be
received by the Trustee not later than the close of business on the Record Date
immediately preceding the Interest Payment Date or the fifteenth day immediately
preceding the Maturity Date, as the case may be.
Unless otherwise specified above or elsewhere herein, "Exchange Rate"
means, with respect to a Specified Currency, the noon dollar buying rate for
such Specified Currency for cable transfers quoted by the Exchange Rate Agent
specified above in The City of New York on the Record Date or Special Record
Date (as defined below) or the fifteenth day immediately preceding the Maturity
Date or such other date provided herein or in the Indenture, as the case may be,
as certified for customs purposes by the Federal Reserve Bank of New York.
If any payment of principal of, premium, if any, or interest on this
Note is to be made in a Specified Currency other than U.S. dollars and such
Specified Currency is not available to the Company for making such payment due
to the imposition of exchange controls or other circumstances beyond the control
of the Company, the Company will be entitled to satisfy its obligations to the
Holder hereof by making such payment in U.S. dollars on the basis of the
Exchange Rate referred to below two Business Days prior to the Interest Payment
Date or the Maturity Date, as the case may be (or, if no rate is quoted for such
Specified Currency on such date, the last date such Exchange Rate is quoted).
Any payment made under such circumstances in U.S. dollars where the required
payment is in a Specified Currency other than U.S. dollars will not constitute
an Event of Default under the Indenture. For purposes of this paragraph and the
immediately succeeding paragraph, the "Exchange Rate" for a foreign currency
will be the noon dollar selling rate for that currency for cable transfers
quoted by the Exchange Rate Agent in The City of New York, as certified for
customs purposes by the Federal Reserve Bank of New York.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion (except to the extent expressly provided that
any determination is subject to approval) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder of this Note and
the Exchange Rate Agent shall have no liability therefor.
5
<PAGE>
Any interest not punctually paid or duly provided for with respect to
this Note ("Defaulted Interest") will forthwith cease to be payable to the
Holder of this Note on the applicable Record Date and may either be paid to the
person in whose name this Note is registered at the close of business on a
special record date (the "Special Record Date") for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
the Holder of this Note not less than ten days prior to such Special Record
Date, or may be paid at any time in any other lawful manner, all as more
completely described in the Indenture.
Unless otherwise specified above, interest will be computed on the
basis of a 360-day year of twelve 30-day months.
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (collectively, the "Debt
Securities"), of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture, dated as of January 1, 1992, as amended,
supplemented or modified from time to time, including Supplemental Indenture No.
1 thereto dated as of June 15, 1995 (collectively, the "Indenture"), among the
Company, the Guarantor (as defined below), and The Bank of New York, as trustee
(the "Trustee," which term includes any successor trustee under the Indenture),
to which Indenture reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company, the Guarantor and the Holders of the Notes. The Debt
Securities may be issued in one or more series, which different series (and
which Debt Securities issued within each series) may be issued in various
aggregate principal amounts, may mature at different times, may bear interest,
if any, at different rates or formulas, may be subject to different redemption
or repayment provisions, if any, may be subject to different sinking, purchase
or analogous funds, if any, and may otherwise vary as provided in the Indenture.
This Note is one of a series designated as "Medium-Term Notes, Series H, Due
Nine Months or More From Date of Issue" of the Company (collectively, the
"Notes"), limited in aggregate offering price to U.S.$3,000,000,000, or the
equivalent thereof in one or more Specified Currencies other than U.S. dollars.
If an Event of Default, as defined in the Indenture, with respect to
the Notes shall have occurred and be continuing, the principal hereof (or, if
this Note is an Original Issue Discount Security (as defined below), the
Amortized Face Amount (as defined below)) and accrued but unpaid interest (or,
if this Note is an Original Issue Discount Security, any accrued but unpaid
interest but only to the extent such interest would constitute qualified stated
interest within the meaning of Treasury Regulation Section 1.1273-1(c) under the
Internal Revenue Code of 1986, as amended (the "Code"), as in effect on _______,
1998) hereon, may be declared, and upon such declaration shall
6
<PAGE>
become, due and payable in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions permitting the Company, the
Guarantor and the Trustee, with the consent of the Holders of a majority in
aggregate principal amount of the Debt Securities at the time outstanding of
each series to be affected, evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or modifying in any manner
the rights of the Holders of the Debt Securities; provided, however, that no
-------- -------
such supplemental indenture shall, without the consent of the Holder of each
outstanding Debt Security affected thereby: (i) except as otherwise permitted
in the Indenture in connection with Debt Securities for which the Stated
Maturity is extendible, change the Stated Maturity of the principal of, or any
installment of interest on, any such Debt Security; (ii) reduce the principal
amount of any such Debt Security or, except as otherwise permitted in the
Indenture in connection with Debt Securities for which the interest rate may be
reset, the interest thereon or any premium payable upon the redemption or
repayment thereof; (iii) reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof; (iv) adversely affect any right of
repayment at the option of the Holder of any such Debt Security; (v) reduce the
amount of, or postpone the date fixed for, any payment under any sinking fund or
analogous provisions for any Debt Security; (vi) change any Place of Payment, or
the currency or currency unit of the payment of the principal of, premium, if
any, or interest on any Debt Security; (vii) change or eliminate certain rights
of Holders to receive payment in a designated currency; (viii) impair the right
to institute suit for the enforcement of any required payment on or with respect
to any Debt Security; (ix) reduce the percentage in aggregate principal amount
of the Outstanding Debt Securities of any series, the consent of whose Holders
is required for any such supplemental indenture, or the consent of whose Holders
is required for any waiver (of compliance with certain provisions of the
Indenture or certain defaults thereunder and their consequences) provided for in
the Indenture; (x) modify certain other provisions of the Indenture; or (xi)
modify or affect in any manner adverse to the Holders the terms and conditions
of the obligations of the Guarantor in respect of the due and punctual payment
of principal of, or premium, if any, or interest on, the Debt Securities. It is
also provided in the Indenture that, with respect to certain defaults or Events
of Default regarding the Debt Securities of any series, the Holders of a
majority in aggregate principal amount of the Debt Securities of such series at
the time outstanding may on behalf of the Holders of all of the Debt Securities
of such series waive any past default or Event of Default and its consequences,
except a default in the payment of the principal of, or premium, if any, or
interest on, any Debt Security of such series or in respect of certain other
covenants or provisions of the Indenture. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon
7
<PAGE>
such Holder and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not any notation of such consent or waiver is made upon this Note or
such other Notes.
The Guarantor, or a Subsidiary thereof, may directly assume, by a
supplemental indenture, the due and punctual payment of the principal of, and
premium, if any, and interest on, all the Debt Securities, in which case the
Company shall be released from its liability as obligor on the Debt Securities.
No reference herein to the Indenture and no reference to any provision
of this Note shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and premium, if any, and
interest on, this Note at the places, at the respective times, at the rate and
in the currency herein prescribed.
The Notes are issuable in registered form without coupons in the
minimum denomination of U.S.$1,000, or the equivalent thereof in the Specified
Currency (if other than U.S. dollars), and in integral multiples of U.S.$1,000
in excess thereof, or the equivalent thereof in such Specified Currency, or such
other minimum denomination as specified on the face hereof. Notes may be
exchanged by the Holder hereof, without charge except for any tax, assessment or
other governmental charge imposed in connection therewith, for a like aggregate
principal amount of Notes of other authorized denominations in the manner and
subject to the limitations provided in the Indenture at the Corporate Trust
Office of the Trustee.
If this Note is subject to Optional Redemption as specified above, the
Company may at its option redeem this Note in whole or, from time to time, in
part in increments of U.S. $1,000 (provided that any remaining principal amount
hereof shall be not less than the minimum denomination, as described above) on
or after the Initial Redemption Date specified above at the sum of (i) 100% of
the unpaid principal amount hereof or the portion thereof redeemed (or, if this
Note is an Original Issue Discount Security, 100% of the Amortized Face Amount,
or portion thereof redeemed, determined as of the Redemption Date as provided
below), plus (ii) the Initial Redemption Percentage specified above (as adjusted
for the Annual Redemption Percentage Reduction, if applicable) multiplied by the
unpaid principal amount or the portion thereof redeemed (or, if this Note is an
Original Issue Discount Security, the Issue Price specified above, net of any
portion of such Issue Price which has been deemed paid prior to redemption (by
reason of any payments, other than a payment of qualified stated interest, in
excess of the original issue discount accrued to the date of such payment), or
the portion of such Issue Price (or such net amount) proportionate to the
portion of the unpaid principal amount of the Note redeemed), plus (iii) accrued
but unpaid interest to the Redemption Date (or, if this Note is an Original
Issue Discount Security, any accrued but unpaid interest to the Redemption Date
but only to the extent such interest would constitute
8
<PAGE>
qualified stated interest within the meaning of Treasury Regulation Section
1.1273-1(c) under the Code). Such Initial Redemption Percentage shall decline at
each anniversary of the Initial Redemption Date by an amount equal to the Annual
Redemption Percentage Reduction, if any, specified above, until the Initial
Redemption Percentage equals zero percent. The Company may exercise such option
by causing the Trustee to mail a notice of such redemption to the Holder hereof
not less than 30 but not more than 60 days prior to the Redemption Date. In the
event of redemption of this Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof. If less than all of the Notes with like tenor and terms
to this Note are to be redeemed, the Notes to be redeemed shall be selected by
the Trustee by such method as the Trustee shall deem fair and appropriate.
An "Original Issue Discount Security" means any Note that has been
issued at an Issue Price lower, by an amount that equals or exceeds a de minimis
-- -------
amount (as determined under United States Federal income tax rules applicable to
original issue discount instruments), than the principal amount thereof. If
this Note is an Original Issue Discount Note, the "Amortized Face Amount" of
this Note shall be the amount equal to the sum of (a) the Issue Price plus (b)
the aggregate of the portions of the original issue discount (the excess of the
amounts considered as part of the "stated redemption price at maturity" of this
Note within the meaning of Section 1273(a)(2) of the Code, whether denominated
as principal or interest, over the Issue Price of this Note) which shall
theretofore have accrued pursuant to Section 1272 of the Code (without regard to
Section 1272(a)(7) of the Code) from the Original Issue Date of this Note to the
date of determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of such Note which has been paid on this Note from
the Original Issue Date to the date of determination. If this Note is an
Original Discount Security, the amount payable in the event of acceleration of
the maturity hereof shall be the Amortized Face Amount, plus accrued but unpaid
qualified stated interest as defined in clause (iii) of the first sentence of
the preceding paragraph.
If this Note is subject to Optional Repayment as specified above, the
Holder hereof may at its option require the Company to repay this Note in whole
or from time to time in part in increments of U.S.$1,000 or the minimum
denomination specified above (provided that any remaining principal amount
hereof shall not be less than the minimum denomination, as described above) on
any Optional Repayment Date specified above at the sum of (i) 100% of the unpaid
principal amount hereof or the portion thereof to be repaid (or if this Note is
an Original Issue Discount Security, 100% of the Amortized Face Amount, or
portion thereof to be repaid, determined as of the Repayment Date), plus (ii)
accrued but unpaid interest to the Repayment Date (or, if this Note is an
Original Issue Discount Security, any accrued but unpaid interest to the
Repayment Date but only to the extent such interest would constitute qualified
stated interest within the meaning of Treasury Regulation Section 1.1273-1(c)
under the Code). In order for this Note to be
9
<PAGE>
repaid, this Note must be received, together with the form entitled "Option to
Elect Repayment" duly completed, by the Trustee at its Corporate Trust Office
(or such other address of which the Company shall from time to time notify the
Holders of the Notes) not more than 60 nor less than 30 days prior to the
Repayment Date. Exercise of such repayment option by the Holder hereof shall be
irrevocable, except as otherwise provided above.
Prior to due presentment of this Note for registration of transfer,
the Company, the Guarantor, the Trustee and any agent of the Company, the
Guarantor, or the Trustee may treat the Holder hereof as the owner of this Note
for the purpose of receiving payment of the principal hereof and premium, if
any, and interest hereon and for all other purposes whatsoever, whether or not
such Note be overdue, and neither the Company, the Guarantor, the Trustee nor
any such agent of the Company, the Guarantor or the Trustee shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of, or
premium, if any, or interest on, this Note, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture against
any incorporator, stockholder, officer, director or employee, as such, past,
present or future, of the Company or the Guarantor or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
All terms used but not defined in this Note shall have the meanings
assigned to them in the Indenture.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by or on behalf of the Trustee under the Indenture.
10
<PAGE>
IN WITNESS WHEREOF, Countrywide Home Loans, Inc. has caused this
instrument to be signed in its name by the facsimile signatures of its duly
authorized officers, and has caused a facsimile of its corporate seal to be
affixed hereunto or imprinted hereon.
Date: COUNTRYWIDE HOME LOANS, INC.
[SEAL]
By:____________________________________
President
Attest:__________________________________
Secretary
11
<PAGE>
GUARANTEE
OF
COUNTRYWIDE CREDIT INDUSTRIES, INC.
For value received, Countrywide Credit Industries, Inc., a corporation
duly organized and existing under the laws of Delaware (the "Guarantor"), hereby
unconditionally guarantees to the Holder of the Note upon which this Guarantee
is endorsed the due and punctual payment of the principal of, and premium, if
any, and interest on, and sinking fund payments, if any, required with respect
to said Note, when and as the same shall become due and payable, whether on the
Stated Maturity Date, by acceleration, redemption or repayment or otherwise,
according to the terms thereof and of the Indenture referred to therein. In
case of the failure of Countrywide Home Loans, Inc. (the "Company") punctually
to pay any such principal, premium, interest, or sinking fund payment, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether on the Stated Maturity Date,
by acceleration, redemption or repayment or otherwise, and as if such payment
were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of said Note or said Indenture, any failure to
enforce the provisions of said Note or said Indenture, or any waiver,
modification, consent or indulgence granted to the Company with respect thereto,
by the Holder of said Note or the Trustee under said Indenture, the recovery of
any judgment against the Company or any action to enforce the same, or any other
circumstances which may otherwise constitute a legal or equitable discharge of a
surety or guarantor. The Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of merger, insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest or notice with respect to said Note or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that this Guarantee
will not be discharged except by payment in full of the principal of, and
premium, if any, and interest on, or any sinking fund payment required with
respect to, said Note and the complete performance of all other obligations
contained in said Note.
The Guarantor shall be subrogated to all rights of the Holder of said
Note against the Company in respect of any amounts paid to such Holder by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
-------- -------
the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation until the principal of,
and premium, if any, and interest on, and any
12
<PAGE>
sinking fund payments required with respect to, all Notes of this series issued
under said Indenture shall have been paid in full and its other obligations
under said Indenture completed.
The Guarantor hereby certifies and warrants that all acts, conditions
and things required to be done and performed and to have happened precedent to
the creation and issuance of this Guarantee and to constitute the valid
obligation of the Guarantor have been done and performed and have happened in
due compliance with all applicable laws.
This Guarantee as endorsed on said Note shall not be entitled to any
benefit under said Indenture or become valid or obligatory for any purpose until
the certificate of authentication on said Note shall have been signed manually
by or on behalf of the Trustee under said Indenture.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York.
13
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed in facsimile by its duly authorized officer under its corporate seal.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:
----------------------------------
Vice Chairman and
Chief Executive Officer
Attest:
----------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
Date: By:
---------------------------------------
Authorized Signatory
14
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company
to repay this Note, or portion thereof specified below, in accordance with the
terms of this Note at a price equal to the principal amount hereof, or portion
thereof to be repaid (or, if this Note is an Original Issue Discount Security,
the Amortized Face Amount, or portion thereof to be repaid, determined as of the
Repayment Date), together with accrued but unpaid interest to the Repayment Date
(or, if this Note is an Original Issue Discount Security, any accrued but unpaid
interest to the Repayment Date but only to the extent such interest would
constitute qualified stated interest within the meaning of Treasury Regulation
Section 1.1273-1(c) under the Code), by payment to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address, including zip code, of
the undersigned).
In order for this Note to be repaid, the Trustee must receive at its
Corporate Trust Office at 101 Barclay Street, New York, New York 10286, or at
such other place or places of which the Company shall from time to time notify
the Holders of the Notes, not more than 60 nor less than 30 days prior to the
Repayment Date, this Note with this Option to Elect Repayment form duly
completed.
If less than the entire principal amount, or Amortized Face Amount, as
applicable, of this Note is to be repaid, specify the portion thereof (which
shall be in increments of U.S.$1,000 or other increments specified above) to be
repaid: ______________.
If less than the entire principal amount, or Amortized Face Amount, as
applicable, of this Note is to be repaid, specify the denomination(s) of the
Note(s) to be issued for the unpaid amount (which shall be U.S.$1,000 or
increments of U.S.$1,000 in excess thereof, or such other minimum denomination
specified above):______________.
Date:
______________________________________
Note: The signature on this Option to Elect
Repayment must correspond with the name as written
upon the face of the within instrument in every
particular, without alteration or enlargement, or
any change whatsoever.
15
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please Print or Typewrite Name and Address Including Zip Code of Assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- --------------------------------------------------------------------------------
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: _____________ Signature: _________________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement, or any change whatsoever.
16
<PAGE>
EXHIBIT 4.4
COUNTRYWIDE HOME LOANS, INC.
(CUSIP NO. )
REGISTERED PRINCIPAL AMOUNT
No. FL- $
MEDIUM-TERM NOTE, SERIES H
(Floating Rate)
Due Nine Months or More
From Date of Issue
Payment of the Principal, Premium, if any, and
Interest on this Note is Unconditionally Guaranteed
by Countrywide Credit Industries, Inc.
IF THE HOLDER OF THIS NOTE IS THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY, THIS NOTE IS
A GLOBAL NOTE AND THE FOLLOWING LEGEND APPLIES:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH
NOTE IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE>
ISSUE PRICE: REDEMPTION:
[_] NO
ORIGINAL ISSUE DATE: [_] YES
INITIAL REDEMPTION DATE:
PRINCIPAL AMOUNT:
INITIAL REDEMPTION
PERCENTAGE:
SPECIFIED CURRENCY:
ANNUAL REDEMPTION
MINIMUM DENOMINATION: PERCENTAGE REDUCTION:
EXCHANGE RATE AGENT: REPAYMENT:
BASE RATE(S): [_] NO
[_] YES
OPTIONAL REPAYMENT
IF CMT RATE, DATE(S):
DESIGNATED CMT TELERATE PAGE:
STATED MATURITY DATE:
DESIGNATED CMT MATURITY INDEX:
INITIAL INTEREST RATE:
INDEX MATURITY:
INTEREST RESET DATES:
INTEREST FACTOR CONVENTION:
INTEREST PAYMENT DATES:
SPREAD (plus or minus):
FIXED RATE COMMENCEMENT DATE:
SPREAD MULTIPLIER:
FIXED INTEREST RATE:
MAXIMUM INTEREST RATE:
CALCULATION AGENT:
MINIMUM INTEREST RATE:
OTHER/ADDITIONAL TERMS:
OPTION TO RECEIVE PAYMENT IN U.S.
DOLLARS:
[_] NO
[_] YES
-2-
<PAGE>
COUNTRYWIDE HOME LOANS, INC., a New York corporation (the "Company"),
for value received, hereby promises to pay to ____________________________, or
registered assignees, the principal sum of _______________________________
($_____________) on the Stated Maturity Date specified above (except to the
extent redeemed or repaid prior to the Stated Maturity Date) at the office or
agency of the Company in the Borough of Manhattan, The City of New York, State
of New York, and such other place or places as may be provided for pursuant to
the Indenture referred to below, and to pay interest in arrears at a rate per
annum equal to the Initial Interest Rate specified above from the Original Issue
Date specified above until the first Interest Reset Date specified above
following the Original Issue Date and thereafter, except as specified herein, at
a rate determined in accordance with the provisions below under the heading
"Determination of Commercial Paper Rate," "Determination of LIBOR,"
"Determination of Certificate of Deposit Rate," "Determination of Federal Funds
Rate," "Determination of Prime Rate," "Determination of Treasury Rate,"
"Determination of CMT Rate" or "Determination of 11th District Cost of Funds
Rate" depending upon whether an applicable Base Rate specified above is the
Commercial Paper Rate, LIBOR, the Certificate of Deposit Rate, the Federal Funds
Rate, the Prime Rate, the Treasury Rate, the CMT Rate or the 11th District Cost
of Funds Rate, respectively, until the principal hereof becomes due and payable.
The Company will pay interest on the Interest Payment Dates specified above
(each, an "Interest Payment Date"), commencing with the Interest Payment Date
next succeeding the Original Issue Date, and on the Stated Maturity Date or, if
applicable, any date of earlier redemption (the "Redemption Date") or repayment
(the "Repayment Date") (the earliest of the Stated Maturity Date, the Redemption
Date and the Repayment Date is hereinafter referred to as the "Maturity Date"
with respect to the principal repayable on such date); provided, however, that
-------- -------
if an Interest Payment Date other than the Maturity Date would fall on a day
that is not a Business Day (as defined below), such Interest Payment Date shall
be postponed to the next Business Day, except that if interest hereon is
determined by reference to LIBOR and such next Business Day falls in the next
calendar month, such Interest Payment Date shall be the immediately preceding
Business Day; provided, further, that if the Maturity Date falls on a day that
-------- -------
is not a Business Day, payment of principal, premium, if any, and/or interest to
be made on the Maturity Date shall be made on the next Business Day with the
same force and effect as if made on the Maturity Date, and no interest on such
payment shall accrue to the next Business Day. For purposes of this Note,
"Business Day" means (A) any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law, regulation or executive order to close in New York, New
York or Los Angeles, California; provided, however if the Specified Currency
-------- -------
specified above is other than U.S. dollars, such day is also not a day on which
banking institutions are authorized or required by law, regulation or executive
order to close in the Principal Financial Center (as defined below) of the
country issuing such Specified Currency (or if the Specified Currency is Euro
("Euro"), such day is also not a day on which the Trans-European Automated Real-
Time Gross Settlement
-3-
<PAGE>
Express Transfer (TARGET) System is closed), and (B) if interest hereon
is determined by reference to LIBOR, such day is also a London Banking Day (as
defined below). "Principal Financial Center" means the capital city of the
country issuing the Specified Currency (or, in the case of Euro, Luxembourg),
except that with respect to U.S. dollars, Australian dollars, Canadian dollars,
Deutsche marks, Dutch guilders, Italian lire and Swiss francs, the "Principal
Financial Center" shall be The City of New York, Sydney, Toronto, Frankfurt,
Amsterdam, Milan and Zurich, respectively. "London Banking Day" means any day
on which dealings in deposits in U.S. dollars are transacted in the London
interbank market.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be paid to the person (the "Holder") in whose
name this Note (or one or more predecessor Notes) is registered at the close of
business on the fifteenth day (whether or not a Business Day) immediately
preceding such Interest Payment Date (each, a "Record Date"); provided, however,
-------- -------
that interest payable on the Maturity Date will be payable to the person to whom
principal is payable. Unless otherwise specified above, if this Note is
originally issued between a Record Date and an Interest Payment Date, the first
payment of interest on this Note will be made on the Interest Payment Date
following the next Record Date to the Holder hereof on such next Record Date.
Unless otherwise specified above, payment of the principal of,
premium, if any, and interest on, this Note due on the Maturity Date will be
made in immediately available funds in the Specified Currency, upon presentation
and surrender of this Note at the Corporate Trust Office of the Trustee. If the
Specified Currency is other than U.S. dollars, this Note must be presented and
surrendered to the Trustee referred to below in time for the Trustee to make
such payment in accordance with its normal procedures.
Unless otherwise specified above, payment of interest on this Note due
on any Interest Payment Date other than the Maturity Date will be made by
mailing a check in the Specified Currency (from an account at a bank located
outside the United States if such check is payable in a Specified Currency other
than U.S. dollars) to the address of the Holder hereof as such address shall
appear in the Security Register (as defined in the Indenture) on the applicable
Record Date. Notwithstanding the foregoing, on any Interest Payment Date other
than the Maturity Date, each Holder of U.S.$10,000,000 (or the equivalent
thereof in a Specified Currency other than U.S. dollars) or more in aggregate
principal amount of Notes (whether or not having identical terms and provisions)
shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive
such payment by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the United States, but only if
appropriate wire transfer instructions have been received in writing by the
Trustee not later than the Record Date immediately preceding such Interest
Payment Date and (ii) if the Specified Currency is other than U.S. dollars, to
receive such payment by wire transfer of immediately available funds to an
-4-
<PAGE>
account maintained by the payee with a bank located in a jurisdiction in which
payment in such Specified Currency is then lawful. The Company shall pay any
administrative costs imposed by banks in connection with making payments by wire
transfer; provided, however, that any tax, assessment or other governmental
-------- -------
charge imposed upon payments shall be borne by the Holder hereby in respect of
which payments are made.
All payments of principal, premium, if any, and interest, in respect
of this Note will be made by the Company in the Specified Currency; provided,
--------
however, that if the Specified Currency specified above is other than U.S.
- -------
dollars, the Holder hereof may, if indicated above under "Option to Receive
Payment in U.S. Dollars," elect to receive all payments of principal, premium,
if any, and/or interest in respect of this Note in U.S. dollars by delivering a
written request to the Trustee not later than the close of business on the
Record Date immediately preceding the Interest Payment Date or the fifteenth day
immediately preceding the Maturity Date, as the case may be. Upon such election
by the Holder hereof, the Company shall tender payment in U.S. dollars at the
Exchange Rate (as defined below), and any costs associated with the conversion
of the Specified Currency into U.S. dollars shall be borne by the Holder hereof
through deductions from such payments. The Holder's election to receive
payments in U.S. dollars will remain in effect until revoked by written notice
from the Holder to the Trustee, provided that any such revocation must be
received by the Trustee not later than the close of business on the Record Date
immediately preceding the Interest Payment Date or the fifteenth day immediately
preceding the Maturity Date, as the case may be.
Unless otherwise specified above or elsewhere herein, "Exchange Rate"
means, with respect to a Specified Currency, the noon dollar buying rate for
such Specified Currency for cable transfers quoted by the Exchange Rate Agent
specified above in The City of New York on the Record Date or Special Record
Date (as defined below) or the fifteenth day immediately preceding the Maturity
Date or such other date provided herein or in the Indenture, as the case may be,
as certified for customs purposes by the Federal Reserve Bank of New York.
If any payment of principal of, premium, if any, or interest on this
Note is to be made in a Specified Currency other than U.S. dollars and such
Specified Currency is not available to the Company for making such payment due
to the imposition of exchange controls or other circumstances beyond the control
of the Company, the Company will be entitled to satisfy its obligations to the
Holder hereof by making such payment in U.S. dollars on the basis of the
Exchange Rate referred to below two Business Days prior to the Interest Payment
Date or the Maturity Date, as the case may be (or, if no rate is quoted for such
Specified Currency on such date, the last date such Exchange Rate is quoted).
Any payment made under such circumstances in U.S. dollars where the required
payment is in a Specified Currency other than U.S. dollars will not constitute
an Event of Default under the Indenture. For purposes of this paragraph and the
immediately
-5-
<PAGE>
succeeding paragraph, the "Exchange Rate" for a foreign currency will be the
noon dollar selling rate for that foreign currency for cable transfers quoted by
the Exchange Rate Agent in The City of New York, as certified for customs
purposes by the Federal Reserve Bank of New York.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion (except to the extent expressly provided that
any determination is subject to approval) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder of this Note and
the Exchange Rate Agent shall have no liability therefor.
Any interest not punctually paid or duly provided for with respect to
this Note ("Defaulted Interest") will forthwith cease to be payable to the
Holder of this Note on the applicable Record Date and may either be paid to the
person in whose name this Note is registered at the close of business on a
special record date (the "Special Record Date") for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
the Holder of this Note not less than ten days prior to such Special Record
Date, or may be paid at any time in any other lawful manner, all as more
completely provided in the Indenture.
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (collectively, the "Debt
Securities"), of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture, dated as of January 1, 1992, as amended,
supplemented or modified from time to time, including Supplemental Indenture No.
1 thereto, dated as of June 15, 1995 (collectively, the "Indenture"), among the
Company, the Guarantor (as defined below), and The Bank of New York, as trustee
(the "Trustee," which term includes any successor trustee under the Indenture),
to which Indenture reference is hereby made for a description of the respective
rights, limitation of rights, obligations, duties and immunities thereunder of
the Trustee, the Company, the Guarantor and the Holders of the Notes. The Debt
Securities may be issued in one or more series, which different series (and
which Debt Securities issued within each series) may be issued in various
aggregate principal amounts, may mature at different times, may bear interest,
if any, at different rates or formulas, may be subject to different redemption
or repayment provisions, if any, may be subject to different sinking, purchase
or analogous funds, if any, and may otherwise vary as provided in the Indenture.
This Note is one of a series designated as "Medium-Term Notes, Series H, Due
Nine Months or More From Date of Issue" of the Company (collectively, the
"Notes"), limited in aggregate issue amount to U.S.$3,000,000,000 or the
equivalent thereof in one or more Specified Currencies other than U.S. dollars.
The interest payable hereon on each Interest Payment Date will include
interest accrued from and including the most recent Interest Payment Date to
which
-6-
<PAGE>
interest has been paid or duly provided for, or, if no interest has been paid or
duly provided for, from and including the Original Issue Date, as the case may
be, to, but excluding, the applicable Interest Payment Date or the Maturity
Date, as the case may be (each, an "Interest Period"). Accrued interest will be
calculated by multiplying the principal amount hereof by an accrued interest
factor. Such accrued interest factor shall be computed by adding the interest
factor calculated for each day in the Interest Period for which accrued interest
is being calculated. The interest factor for each such day shall be computed by
dividing the interest rate applicable to such day by 360 if an applicable Base
Rate is the Commercial Paper Rate, LIBOR, Certificate of Deposit Rate, Federal
Funds Rate, Prime Rate or 11th District Cost of Funds Rate or by the actual
number of days in the year if an applicable Base Rate is the Treasury Rate or
CMT Rate. If more than one Base Rate is applicable to this Note, the interest
factor will be calculated in the same manner as if only the Base Rate specified
above under "Interest Factor Convention" applied.
This Note will bear interest at the rate determined in accordance with
the provisions set forth below by reference to the applicable Base Rate, or the
lowest, highest or average of two or more Base Rates, as specified above, based
on the Index Maturity, if any, specified above (i) plus or minus the Spread, if
any, and/or (ii) multiplied by the Spread Multiplier, if any, in each case
specified above. Commencing with the first Interest Reset Date specified above,
the rate at which interest on this Note is payable shall be reset as of each
Interest Reset Date; provided, however, that (i) the interest rate in effect for
-------- -------
the period, if any, from the Original Issue Date to the first Interest Reset
Date will be the Initial Interest Rate and (ii) if a Fixed Rate Commencement
Date is specified above, the interest rate in effect for the period commencing
on the Fixed Rate Commencement Date to the Maturity Date shall be the Fixed
Interest Rate specified above or, if no Fixed Interest Rate is specified above,
the interest rate in effect on the day immediately preceding the Fixed Rate
Commencement Date.
Except as set forth in the immediately preceding paragraph, the
interest rate in effect on each day shall be (i) if such 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 (ii) if
such 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. If any Interest Reset Date would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be postponed to the next Business
Day, except that if interest hereon is determined by reference to LIBOR and such
next Business Day falls in the next calendar month, such Interest Reset Date
shall be the immediately preceding Business Day.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any,
-7-
<PAGE>
specified above. In addition, the interest rate hereon shall in no event be
higher than the maximum rate permitted by New York law as the same may be
modified by United States law of general application.
Subject to applicable provisions of law and except as specified
herein, on each applicable Interest Reset Date the rate of interest will be
calculated by the Calculation Agent specified below in accordance with the
provisions of the applicable heading below.
Unless otherwise specified above, all percentages resulting from any
calculation of the rate of interest on this Note will be rounded, if necessary,
to the nearest one hundred-thousandth of a percentage point, with five one-
millionths of a percentage point rounded upward, and all amounts used in or
resulting from such calculation on this Note will be rounded, in the case of
U.S. dollars, to the nearest cent (with one-half cent being rounded upward) or,
in the case of a Specified Currency other than U.S. dollars, to the nearest unit
(with one-half unit being rounded upward).
Determination of Commercial Paper Rate. If an applicable Base Rate is
--------------------------------------
the Commercial Paper Rate, the "Commercial Paper Rate" for each applicable
Interest Reset Date will be determined by the Calculation Agent as of the second
Business Day prior to such Interest Reset Date (a "Commercial Paper Rate
Determination Date") and shall be the Money Market Yield (as defined below) on
such date of the rate for commercial paper having the Index Maturity specified
above as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication ("H.15(519)"), under the caption "Commercial Paper -- Nonfinancial."
In the event that such rate is not published prior to 3:00 P.M., New York City
time, on the relevant Calculation Date (as defined below) pertaining to such
Commercial Paper Interest Determination Date, then the Commercial Paper Rate
shall be the Money Market Yield on such Commercial Paper Rate Determination Date
of the rate for commercial paper of the specified Index Maturity as published by
the Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" ("Composite Quotations")
under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on
such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the Commercial Paper Rate shall be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York
City time, on such Commercial Paper Rate Determination Date of three leading
dealers of commercial paper in The City of New York selected by the Calculation
Agent for commercial paper of the specified Index Maturity, placed for a non-
financial entity whose bond rating is "Aa", or the equivalent, from a nationally
recognized rating agency; provided, however, that if the dealers selected as
-------- -------
aforesaid by the Calculation Agent are not quoting offered rates as mentioned in
this sentence, the
-8-
<PAGE>
Commercial Paper Rate for such Interest Reset Date will be the Commercial Paper
Rate in effect on such Commercial Paper Rate Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
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 corresponding to the Index Maturity specified above.
Determination of LIBOR. If an applicable Base Rate is LIBOR, "LIBOR"
----------------------
for each applicable Interest Reset Date will be determined by the Calculation
Agent as follows:
(i) If "LIBOR Reuters" is specified above, on the second London
Banking Day prior to the applicable Interest Reset Date (a "LIBOR Determination
Date"), the Calculation Agent will determine LIBOR as the arithmetic mean of the
offered rates for deposits in U.S. dollars for the period of the Index Maturity
specified above which appear on the "Reuters Screen LIBO Page" at approximately
11:00 A.M., London time, on such LIBOR Determination Date. "Reuters Screen LIBO
Page" means the display designated as page "LIBO" on the Reuter Monitor Money
Rates Service (or such other page as may replace the LIBO Page on that service
for the purpose of displaying London interbank offered rates of major banks).
If "LIBOR Telerate" is specified above or if no other method for
determining LIBOR is provided for, on the LIBOR Determination Date, the
Calculation Agent will determine LIBOR as the rate for deposits in U.S. dollars
for the period of the Index Maturity specified above which appears on "Telerate
Page 3750" at approximately 11:00 A.M., London time, on such LIBOR Determination
Date. "Telerate Page 3750" means the display page so designated on Bridge
Telerate, Inc. (or such other page as may replace such page on that service for
the purpose of displaying London interbank offered rates of major banks).
(ii) If LIBOR Reuters is specified on the face hereof and if fewer
than two offered rates for the applicable Index Maturity appear on the Reuters
Screen LIBO Page or if LIBOR Telerate is applicable for determining LIBOR and no
rate appears on Telerate Page 3750, the Calculation Agent will request the
principal London offices of each of four major banks in the London interbank
market, as selected by the Calculation Agent, to provide the Calculation Agent
with its offered quotation for deposits in U.S.
-9-
<PAGE>
dollars for the period of the Index Maturity specified above commencing on the
second London Banking Day following such LIBOR Determination Date to prime banks
in the London interbank market at approximately 11:00 A.M., London time, on such
LIBOR Determination Date and in a principal amount equal to an amount of not
less than U.S.$1,000,000 that is representative of a single transaction in such
market at such time. If at least two such quotations are provided, LIBOR will be
the arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR in respect of that LIBOR Determination Date will be the
arithmetic mean of rates quoted by three major banks in The City of New York
selected by the Calculation Agent at approximately 11:00 A.M., New York City
time, on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks, for the period of the Index Maturity specified above commencing
on the second London Banking Day following such LIBOR Determination Date and in
the principal amount equal to an amount of not less than U.S.$1,000,000 that is
representative for a single transaction in such market at such time; provided,
however, that if fewer than three banks selected as aforesaid by the Calculation
Agent are quoting rates as mentioned in this sentence, LIBOR in effect for such
Interest Reset Date will be LIBOR in effect on such LIBOR Determination Date.
Determination of Certificate of Deposit Rate. If an applicable Base
--------------------------------------------
Rate is the Certificate of Deposit Rate, the "Certificate of Deposit Rate" for
each applicable Interest Reset Date shall be determined by the Calculation Agent
as of the second Business Day prior to such Interest Reset Date (a "CD Rate
Determination Date") and will be the rate for negotiable certificates of deposit
having the Index Maturity specified above, as published in H.15(519) under the
caption "CDs (Secondary Market)." In the event that such rate is not published
prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to
such CD Rate Determination Date, then the Certificate of Deposit Rate will be
the rate on such CD Rate Determination Date for negotiable U.S. dollar
certificates of deposit of the Index Maturity specified above as published in
Composite Quotations under the caption "Certificates of Deposit." If by 3:00
P.M., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the Certificate of
Deposit Rate will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York
City time, on such CD Rate Determination Date of three leading non-bank dealers
in negotiable U.S. dollar certificates of deposit in The City of New York
selected by the Calculation Agent for negotiable certificates of deposit of
major United States money center banks (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index Maturity
specified above in a denomination of U.S.$5,000,000; provided, however, that if
-------- -------
the dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the Certificate of Deposit Rate for
such Interest Reset
-10-
<PAGE>
Date will be the Certificate of Deposit Rate in effect on such CD Rate
Determination Date.
Determination of Federal Funds Rate. If an applicable Base Rate is
-----------------------------------
the Federal Funds Rate, the "Federal Funds Rate" for each applicable Interest
Reset Date will be determined by the Calculation Agent as of the second Business
Day prior to such Interest Reset Date (a "Federal Funds Rate Determination
Date") and shall be the rate on such Federal Funds Rate Determination Date for
Federal Funds as published in H.15(519) under the caption "Federal Funds
(Effective)." In the event that such rate is not published prior to 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Federal Funds
Rate Determination Date, the Federal Funds Rate shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the Federal Funds Rate will be
calculated by the Calculation Agent and will be the arithmetic mean of the rates
for transactions in overnight U.S. dollar federal funds arranged by three
leading brokers of U.S. dollar federal funds transactions in The City of New
York selected by the Calculation Agent as of 9:00 A.M., New York City time, on
such Federal Funds Rate Determination Date; provided, however, that if the three
-------- -------
brokers selected as aforesaid by the Calculation Agent are not quoting rates as
mentioned in this sentence, the Federal Funds Rate for such Interest Reset Date
will be the Federal Funds Rate in effect on such Federal Funds Rate
Determination Date.
Determination of Prime Rate. If an applicable Base Rate is the Prime
---------------------------
Rate, the "Prime Rate" for each applicable Interest Reset Date will be
determined by the Calculation Agent as of the second Business Day prior to such
Interest Reset Date (a "Prime Rate Determination Date") and shall be the rate on
such date as such rate is published in H.15(519) under the heading "Bank Prime
Loan." If such rate is not published prior to 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Prime Rate Determination Date, then the
Calculation Agent shall determine the Prime Rate as the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the "Reuters
Screen USPRIME1 Page" as such bank's prime rate or base lending rate as in
effect for such Prime Rate Determination Date. "Reuters Screen USPRIME1 Page"
means the display designated as page "USPRIME1" on the Reuter Monitor Money
Rates Service (or such other page as may replace the USPRIME1 Page on that
service for the purpose of displaying prime rates or base lending rates of major
United States banks). If fewer than four such rates but more than one such rate
appear on the Reuters Screen USPRIME1 Page for such Prime Rate Determination
Date, the Calculation Agent shall determine the Prime Rate as the arithmetic
mean of the prime 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 in The City of New
York on such Prime Rate Determination Date by three major money center banks in
The City of New York selected
-11-
<PAGE>
by the Calculation Agent. If fewer than two such rates appear on the Reuters
Screen USPRIME1 Page, the Calculation Agent will determine the Prime Rate as the
arithmetic mean on the basis of the prime rates quoted as of the close of
business in The City of New York on such Prime Rate Determination Date by three
substitute banks or trust companies that are organized and doing business under
the laws of the United States or any state thereof, have total equity capital of
at least U.S.$500,000,000 and are subject to supervision or examination by
Federal or state authorities; provided, however, that if fewer than three such
-------- -------
substitute banks or trust companies are quoting prime rates as mentioned in this
sentence, the Prime Rate for such Interest Reset Date will be the Prime Rate in
effect on such Prime Rate Determination Date.
Determination of Treasury Rate. If an applicable Base Rate is the
------------------------------
Treasury Rate, the "Treasury Rate" with respect to any Treasury Rate
Determination Date (as defined below) will be the rate for the auction held on
such Treasury Rate Determination Date of direct obligations of the United States
("Treasury bills") having the Index Maturity specified above as published under
the caption "AVGE INVEST YIELD" on the display on Bridge Telerate, Inc. (or any
successor service) on page 56 or page 57 or, if not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the auction average rate of
such Treasury Bills (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. In the event that
the results of the auction of Treasury bills having the Index Maturity specified
above are not published or reported as provided above by 3:00 P.M., New York
City time, on such Calculation Date or if no such auction is held on such
Treasury Rate Determination Date, then the Treasury Rate shall be the rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Rate Interest
Determination Date of Treasury Bills having the Index Maturity specified above
as published in H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market" or, if not yet published by 3:00 P.M., New York City
time, on such Calculation Date, the rate on such Treasury Rate Interest
Determination Date of such Treasury Bills as published in H.15 Daily Update, or
such other recognized electronic source used for the purpose of displaying such
rate, under the caption "U.S. Government Securities/Treasury Bills/Secondary
Market." If such rate is not yet published in H.15(519), H.15 Daily Update or
another recognized electronic source, then the Treasury Rate shall be calculated
by the Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates as of
approximately 3:30 P.M., New York City time, on such Treasury Rate 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 above, provided,
--------
-12-
<PAGE>
however, that if the dealers selected as aforesaid by the Calculation Agent are
- -------
not quoting bid rates as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the Treasury Rate in effect on such Treasury Rate
Determination Date.
The "Treasury Rate Determination Date" shall be the day of the week in
which the applicable Interest Reset Date falls on which Treasury bills would
normally be 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; provided, however, that if such auction
-------- -------
is held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Date occurring in the next
week; and, provided further, that if an auction falls on an Interest Reset Date,
-------- -------
then such Interest Reset Date will be the first Business Day following such
auction.
Determination of CMT Rate. If an applicable Base Rate is the CMT
-------------------------
Rate, the "CMT Rate" for each applicable Interest Reset Date will be determined
by the Calculation Agent as of the second Business Day prior to such Interest
Reset Date (the "CMT Rate Determination Date") and will be the rate displayed on
the Designated CMT Telerate Page (as defined below) 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 (as defined below) for (i) if the Designated CMT Telerate Page is
7055, the rate on such CMT Rate Determination Date and (ii) if the Designated
CMT Telerate Page is 7052, the week or the month, as applicable, ended
immediately preceding the week or month, as applicable, in which the applicable
CMT Rate Determination Date occurs. If such rate is no longer displayed on the
relevant page, or if not displayed by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CMT Rate Determination Date, then the CMT
Rate for such CMT Rate Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published in the relevant H.15(519), or if
not published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such CMT Rate Determination Date, then the CMT Rate for such CMT
Rate Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Determination Date with respect
to such 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 the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such CMT Rate Determination
Date, then the CMT Rate for such CMT Rate Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity, based on the
arithmetic mean of the secondary market closing offer side
-13-
<PAGE>
prices as of approximately 3:30 P.M., New York City time, on such CMT Rate
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a "Reference
Dealer") in The City of New York selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and 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
such Designated CMT Maturity Index minus one year. If the Calculation Agent
cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT
Rate Determination Date will be calculated by the Calculation Agent and will be
a yield to maturity based on the arithmetic mean of the secondary market offer
side prices as of approximately 3:30 P.M., New York City time, on such CMT Rate
Determination Date of three Reference Dealers in The City of New York (from five
such Reference Dealers selected by the Calculation Agent and 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
U.S.$1,000,000. If three or four (and not five) of such Reference Dealers are
quoting as described above, then the CMT Rate will be based on the arithmetic
mean of the offer prices obtained and neither the highest nor the lowest of such
quotes will be eliminated; provided, however, that if fewer than three Reference
-------- -------
Dealers selected by the Calculation Agent are quoting as described herein, the
CMT Rate for such Interest Reset Date will be the CMT Rate in effect on such CMT
Rate Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Markets Limited (or any successor service) on the page specified above (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as published in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as published in H.15(519).
If no such page is specified above, the Designated CMT Telerate Page shall be
7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity
of the Treasury Notes (either one, two, three, five, seven, ten, twenty or
thirty years) specified above with respect to which the CMT Rate will be
calculated. If no such maturity is specified above, the Designated CMT Maturity
Index shall be two years.
-14-
<PAGE>
Determination of 11th District Cost of Funds Rate. If an applicable
-------------------------------------------------
Base Rate is the 11th District Cost of Funds Rate, the "11th District Cost of
Funds Rate" for each applicable Interest Reset Date will be determined by the
Calculation Agent as of the last Business Day of the month prior to such
Interest Reset Date (the "11th District Rate Determination Date") and will be
the rate equal to the monthly weighted average cost of funds for the calendar
month preceding such 11th District Rate Determination Date as set forth under
the caption "11th District" on Telerate Page 7058 as of 11:00 A.M., San
Francisco time, on such 11th District Rate Determination Date. If such rate
does not appear on Telerate Page 7058 on any related 11th District Rate
Determination Date, the 11th District Cost of Funds Rate for such 11th District
Rate Determination Date shall be the monthly weighted average cost of funds paid
by member institutions of the Eleventh Federal Home Loan Bank District that was
most recently announced by the Federal Home Loan Bank ("FHLB") of San Francisco
as such cost of funds for the calendar month preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for the
calendar month immediately preceding such 11th District Rate Determination Date,
then the 11th District Cost of Funds Rate for such Interest Reset Date will be
the 11th District Cost of Funds Rate in effect on such 11th District Rate
Determination Date.
The "Interest Determination Date" means the Commercial Paper Rate
Determination Date, the LIBOR Determination Date, the CD Rate Determination
Date, the Federal Funds Rate Determination Date, the Prime Rate Determination
Date, the Treasury Rate Determination Date, the CMT Rate Determination Date or
the 11th District Rate Determination Date, as the case may be. If interest
hereon is determined by reference to two or more Base Rates, the "Interest
Determination Date" means the most recent Business Day which is at least two
Business Days prior to the applicable Interest Reset Date on which each Base
Rate shall be determinable. Each Base Rate shall be determined and compared as
of such date, and the applicable interest rate shall take effect on the related
Interest Reset Date.
The Bank of New York shall be the Calculation Agent, unless a
different Calculation Agent is specified above. At the request of the Holder
hereof, the Calculation Agent will provide the interest rate then in effect and,
if determined, the interest rate which will become effective on the next
Interest Reset Date.
The "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the 10th calendar day after such
Interest Determination Date or, if such day is not a Business Day, the next
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or the Maturity Date, as the case may be.
-15-
<PAGE>
If an Event of Default, as defined in the Indenture, with respect to
the Notes shall have occurred and be continuing, the principal hereof (or, if
this Note is an Original Issue Discount Security (as defined below), the
Amortized Face Amount (as defined below)) and accrued but unpaid interest (or,
if this Note is an Original Issue Discount Security, any accrued but unpaid
interest but only to the extent such interest would constitute qualified stated
interest within the meaning of Treasury Regulation Section 1.1273-1(c) under the
Internal Revenue Code of 1986, as amended (the "Code"), as in effect on
________, 1998) hereon, may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Company, the
Guarantor and the Trustee, with the consent of the Holders of a majority in
aggregate principal amount of the Debt Securities at the time outstanding of
each series to be affected, evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or modifying in any manner
the rights of the Holders of the Debt Securities; provided, however, that no
-------- -------
such supplemental indenture shall, without the consent of the Holder of each
outstanding Debt Security affected thereby: (i) except as otherwise permitted in
the Indenture in connection with Debt Securities for which the Stated Maturity
is extendible, change the Stated Maturity of the principal of, or any
installment of interest on, any such Debt Security; (ii) reduce the principal
amount of any such Debt Security or, except as otherwise permitted in the
Indenture in connection with Debt Securities for which the interest rate may be
reset, the interest thereon or any premium payable upon the redemption or
repayment thereof; (iii) reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof; (iv) adversely affect any right of
repayment at the option of the Holder of any such Debt Security; (v) reduce the
amount of, or postpone the date fixed for, any payment under any sinking fund or
analogous provisions for any Debt Security; (vi) change any Place of Payment, or
the currency or currency unit of the payment of the principal of, premium, if
any, or interest on any Debt Security; (vii) change or eliminate certain rights
of Holders to receive payment in a designated currency; (viii) impair the right
to institute suit for the enforcement of any required payment on or with respect
to any Debt Security; (ix) reduce the percentage in aggregate principal amount
of the Outstanding Debt Securities of any series, the consent of whose Holders
is required for any such supplemental indenture, or the consent of whose Holders
is required for any waiver (of compliance with certain provisions of the
Indenture or certain defaults thereunder and their consequences) provided for in
the Indenture; (x) modify certain other provisions of the Indenture; or (xi)
modify or affect in any manner adverse to the Holders the terms and the
conditions of the obligations of the Guarantor in respect of the due and
punctual payment of principal of, or premium, if any,
-16-
<PAGE>
or interest on, the Debt Securities. It is also provided in the Indenture that,
with respect to certain defaults or Events of Default regarding the Debt
Securities of any series, the Holders of a majority in aggregate principal
amount of the Debt Securities of such series at the time outstanding may on
behalf of the Holders of all of the Debt Securities of such series waive any
past default or Event of Default and its consequences, except a default in the
payment of the principal of, or premium, if any, or interest on, any Debt
Security of such series or in respect of certain other covenants or provisions
of the Indenture. Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not any notation of such consent or waiver
is made upon this Note or such other Notes.
The Guarantor, or a Subsidiary thereof, may directly assume, by a
supplemental indenture, the due and punctual payment of the principal of, and
premium, if any, and interest on, all the Debt Securities, in which case the
Company shall be released from its liability as obligor on the Debt Securities.
No reference herein to the Indenture and no reference to any provision
of this Note shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and premium, if any, and
interest on, this Note at the places, at the respective times, at the rate and
in the currency herein prescribed.
The Notes are issuable in registered form without coupons in the
minimum denomination of U.S.$1,000, or the equivalent thereof in the Specified
Currency (if other than U.S. dollars), and in integral multiples of U.S.$1,000
in excess thereof, or the equivalent thereof in such Specified Currency, or such
other Minimum Denomination as specified on the face hereof. Notes may be
exchanged by the Holder hereof, without charge except for any tax, assessment or
other governmental charge imposed in connection therewith, for a like aggregate
principal amount of Notes of other authorized denominations in the manner and
subject to the limitations provided in the Indenture at the Corporate Trust
Office of the Trustee.
If this Note is subject to Optional Redemption as specified above, the
Company may at its option, redeem this Note in whole or, from time to time, in
part in increments of U.S.$1,000 (provided that any remaining principal amount
hereof shall be not less than the minimum denomination, as described above) on
or after the Initial Redemption Date specified above at the sum of (i) 100% of
the unpaid principal amount hereof or the portion thereof redeemed (or, if this
Note is an Original Issue Discount Security, 100% of the Amortized Face Amount,
or portion thereof redeemed, determined as of the Redemption Date as provided
below), plus (ii) the Initial Redemption Percentage specified above (as adjusted
for the Annual Redemption Percentage Reduction, if applicable) multiplied by the
unpaid principal amount or the portion thereof redeemed
-17-
<PAGE>
(or, if this Note is an Original Issue Discount Security, the Issue Price
specified above, net of any portion of such Issue Price which has been deemed
paid prior to redemption (by reason of any payments, other than a payment of
qualified stated interest, in excess of the original issue discount accrued to
the date of such payment), or the portion of such Issue Price (or such net
amount) proportionate to the portion of the unpaid principal amount of the Note
redeemed), plus (iii) accrued but unpaid interest to the Redemption Date (or, if
this Note is an Original Issue Discount Security, any accrued but unpaid
interest to the Redemption Date but only to the extent such interest would
constitute qualified stated interest within the meaning of Treasury Regulation
Section 1.1273-1(c) under the Code). Such Initial Redemption Percentage shall
decline at each anniversary of the Initial Redemption Date by an amount equal to
the Annual Redemption Percentage Reduction, if any, specified above, until the
Initial Redemption Percentage equals zero percent. The Company may exercise such
option by causing the Trustee to mail a notice of such redemption to the Holder
hereof not less than 30 but not more than 60 days prior to the Redemption Date.
In the event of redemption of this Note in part only, a new Note or Notes for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof. If less than all of the Notes with like tenor and
terms to this Note are to be redeemed, the Notes to be redeemed shall be
selected by the Trustee by such method as the Trustee shall deem fair and
appropriate.
An "Original Issue Discount Security" means any Note that has been
issued at an Issue Price lower, by an amount that equals or exceeds a de minimis
-- -------
amount (as determined under United States Federal income tax rules applicable to
original issue discount instruments), than the principal amount thereof. If
this Note is an Original Issue Discount Note, the "Amortized Face Amount" of
this Note shall be the amount equal to the sum of (a) the Issue Price plus (b)
the aggregate of the portions of the original issue discount (the excess of the
amounts considered as part of the "stated redemption price at maturity" of this
Note within the meaning of Section 1273(a)(2) of the Code, whether denominated
as principal or interest, over the Issue Price of this Note) which shall
theretofore have accrued pursuant to Section 1272 of the Code (without regard to
Section 1272(a)(7) of the Code) from the Original Issue Date of this Note to the
date of determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of this Note which has been paid on this Note from
the Original Issue Date to the date of determination. If this Note is an
Original Discount Security, the amount payable in the event of acceleration of
the maturity hereof shall be the Amortized Face Amount, plus accrued but unpaid
qualified stated interest as defined in clause (iii) of the first sentence of
the preceding paragraph.
If this Note is subject to Optional Repayment as specified above, the
Holder hereof may at its option require the Company to repay this Note in whole
or from time to time in part in increments of U.S.$1,000 or the minimum
denomination specified above (provided that any remaining principal amount
hereof shall not be less than the minimum
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<PAGE>
denomination, as described above) on any Optional Repayment Date specified above
at the sum of (i) 100% of the unpaid principal amount hereof or the portion
thereof to be repaid (or if this Note is an Original Issue Discount Security,
100% of the Amortized Face Amount, or portion thereof to be repaid, determined
as of the Repayment Date), plus (ii) accrued but unpaid interest to the
Repayment Date (or, if this Note is an Original Issue Discount Security, any
accrued but unpaid interest to the Repayment Date but only to the extent such
interest would constitute qualified stated interest within the meaning of
Treasury Regulation Section 1.1273-1(c) under the Code). In order for this Note
to be repaid, this Note must be received, together with the form entitled
"Option to Elect Repayment" duly completed, by the Trustee at its Corporate
Trust Office (or such other address of which the Company shall from time to time
notify the Holders of the Notes) not more than 60 nor less than 30 days prior to
the Repayment Date. Exercise of such repayment option by the Holder hereof shall
be irrevocable, except as otherwise provided above.
Prior to due presentment of this Note for registration of transfer,
the Company, the Guarantor, the Trustee and any agent of the Company, the
Guarantor, or the Trustee may treat the Holder hereof as the owner of this Note,
for the purpose of receiving payment of the principal hereof and premium, if
any, and interest hereon and for all other purposes whatsoever, whether or not
such Note be overdue, and neither the Company, the Guarantor, the Trustee nor
any such agent of the Company, the Guarantor, or the Trustee shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of, or
premium, if any, or interest on, this Note, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any incorporator, stockholder, officer, director or employee, as such, past,
present, or future, of the Company or the Guarantor or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
All terms used but not defined in this Note shall have the meanings
assigned to them in the Indenture.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by or on behalf of the Trustee under the Indenture.
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<PAGE>
IN WITNESS WHEREOF, Countrywide Home Loans, Inc. has caused this
instrument to be signed in its name by the facsimile signatures of its duly
authorized officers, and has caused a facsimile of its corporate seal to be
affixed hereunto or imprinted hereon.
Date: COUNTRYWIDE HOME LOANS, INC.
[SEAL]
By:
----------------------------------
President
Attest:
----------------------
Secretary
-20-
<PAGE>
GUARANTEE
OF
COUNTRYWIDE CREDIT INDUSTRIES, INC.
For value received, Countrywide Credit Industries, Inc., a corporation
duly organized and existing under the laws of Delaware (the "Guarantor"), hereby
unconditionally guarantees to the Holder of the Note upon which this Guarantee
is endorsed the due and punctual payment of the principal of, and premium, if
any, and interest on, and sinking fund payments, if any, required with respect
to said Note, when and as the same shall become due and payable, whether on the
Stated Maturity Date, by acceleration, redemption or repayment or otherwise,
according to the terms thereof and of the Indenture referred to therein. In
case of the failure of Countrywide Home Loans, Inc. (the "Company") punctually
to pay any such principal, premium, interest, or sinking fund payment, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether on the Stated Maturity Date,
by acceleration, redemption or repayment, or otherwise, and as if such payment
were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of said Note or said Indenture, any failure to
enforce the provisions of said Note or said Indenture, or any waiver,
modification, consent or indulgence granted to the Company with respect thereto,
by the Holder of said Note or the Trustee under said Indenture, the recovery of
any judgment against the Company or any action to enforce the same, or any other
circumstances which may otherwise constitute a legal or equitable discharge of a
surety or guarantor. The Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of merger, insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest or notice with respect to said Note or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that this Guarantee
will not be discharged except by payment in full of the principal of, and
premium, if any, and interest on, or any sinking fund payment required with
respect to, said Note and the complete performance of all other obligations
contained in said Note.
The Guarantor shall be subrogated to all rights of the Holder of said
Note against the Company in respect of any amounts paid to such Holder by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
-------- -------
the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such
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<PAGE>
right of subrogation until the principal of, and premium, if any, and interest
on, and any sinking fund payments required with respect to, all Notes of this
series issued under said Indenture shall have been paid in full and its other
obligations under said Indenture completed.
The Guarantor hereby certifies and warrants that all acts, conditions
and things required to be done and performed and to have happened precedent to
the creation and issuance of this Guarantee and to constitute the same the valid
obligation of the Guarantor have been done and performed and have happened in
due compliance with all applicable laws.
This Guarantee as endorsed on said Note shall not be entitled to any
benefit under said Indenture or become valid or obligatory for any purpose until
the certificate of authentication on said Note shall have been signed manually
by or on behalf of the Trustee under said Indenture.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York.
-22-
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed in facsimile by its duly authorized officer under its corporate seal.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:
----------------------------------
Vice Chairman and
Chief Executive Officer
Attest:
----------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
Date: By:
----------------------------
Authorized Signatory
-23-
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company
to repay this Note, or portion thereof specified below, in accordance with the
terms of this Note at a price equal to the principal amount hereof, or portion
thereof to be repaid (or, if this Note is an Original Issue Discount Security,
the Amortized Face Amount, or portion thereof to be repaid, determined as of the
Repayment Date), together with accrued but unpaid interest to the Repayment Date
(or, if this Note is an Original Issue Discount Security, any accrued but unpaid
interest to the Repayment Date but only to the extent such interest would
constitute qualified stated interest within the meaning of Treasury Regulation
Section 1.1273-1(c) under the Code), by payment to the undersigned at
________________________________________________________________________________
________________________________________________________________
(Please print or typewrite name and address, including zip code, of
the undersigned).
In order for this Note to be repaid, the Trustee must receive at its
Corporate Trust Office at 101 Barclay Street, New York, New York 10286, or at
such other place or places of which the Company shall from time to time notify
the Holders of the Notes, not more than 60 nor less than 30 days prior to the
Repayment Date, this Note with this Option to Elect Repayment form duly
completed.
If less than the entire principal amount, or Amortized Face Amount, as
applicable, of this Note is to be repaid, specify the portion thereof (which
shall be in increments of U.S.$1,000 or other increments specified above) to be
repaid: ______________.
If less than the entire principal amount, or Amortized Face Amount, as
applicable, of this Note is to be repaid, specify the denomination(s) of the
Note(s) to be issued for the unpaid amount (which shall be U.S.$1,000 or
increments of U.S.$1,000 in excess thereof, or such other minimum denomination
specified above):______________.
Date:
______________________________________________________
Note: The signature on this Option to Elect Repayment
must correspond with the name as written upon the face
of the within instrument in every particular, without
alteration or enlargement, or any change whatsoever.
-24-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
- ------------------------------
- --------------------------------------------------------------------------------
Please Print or Typewrite Name and Address Including Zip Code of Assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- --------------------------------------------------------------------------------
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: ____________________ Signature:----------------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement, or any change whatsoever.
-25-
<PAGE>
EXHIBIT 5.1
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004-1980
212-859-8000
FAX 212-859-4000
WRITER'S DIRECT LINE
212-859-8280
October 30, 1998 (FAX: 212-859-8586)
Countrywide Credit Industries, Inc.
Countrywide Home Loans, Inc.
4500 Park Granada
Calabasa, CA 91302
Ladies and Gentlemen:
We are acting as special counsel to Countrywide Credit Industries,
Inc., a Delaware corporation (the "Guarantor"), and its wholly-owned subsidiary,
Countrywide Home Loans, Inc., a New York corporation (the "Company"), in
connection with the Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the contemplated issuance by the Company from time to time of up
to U.S. $3,000,000,000 aggregate public offering price or the equivalent thereof
in one or more foreign currencies, currency units or composite currencies of
debt securities of the Company (the "Debt Securities"), which are to be
guaranteed as to payment of principal, premium, if any, and interest by the
Guarantor (the "Guarantees") and which are to be issued pursuant to the
Indenture, dated as of January 1, 1992, as supplemented by Supplemental
Indenture No. 1 thereto, dated as of June 15, 1995, in each case among the
Company, the Guarantor and The Bank of New York, as trustee (the "Trustee") (as
so supplemented, the "Indenture"). All capitalized terms used herein that are
defined in, or by reference in, the Registration Statement have the meanings
assigned to such terms therein or by reference therein, unless otherwise defined
herein. With your permission, all assumptions and statements of reliance herein
have been made without any independent investigation or verification on our part
except to the extent otherwise expressly stated, and we express no opinion with
respect to the subject matter or accuracy of such assumptions or items relied
upon.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records of
the Company
<PAGE>
and the Guarantor, such certificates of public officials and such other
documents, and (iii) received such information from officers and representatives
of the Company and the Guarantor as we have deemed necessary or appropriate for
the purposes of this opinion. We have examined, among other documents, the
Indenture.
In all such examinations, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of original
and certified documents and the conformity to original or certified documents of
all copies submitted to us as conformed or reproduction copies. As to various
questions of fact relevant to the opinions expressed herein, we have relied
upon, and assume the accuracy of, certificates and oral or written statements
and other information of or from representatives of the Company, the Guarantor
and others and assume compliance on the part of all parties to the Indenture
with their covenants and agreements contained therein.
To the extent it may be relevant to the opinion expressed below, we
have assumed that the Trustee has the power and authority to enter into and
perform the Indenture and to consummate the transactions contemplated thereby,
that Indenture has been duly authorized, executed and delivered by, and
constitutes the legal, valid and binding obligation of, the Trustee, enforceable
against the Trustee in accordance with its terms, and that the Trustee will
comply with all of its obligations under the Indenture and all laws applicable
thereto.
Based upon the foregoing and subject to the limitations set forth
herein, we are of the opinion that when the Registration Statement has become
effective, the terms of the Debt Securities and their issue and sale and the
related Guarantees have been duly established in conformity with the Indenture
so as not to violate any applicable law or agreement or instrument then binding
on the Company or the Guarantor, the Guarantees have been endorsed on the Debt
Securities and executed in accordance with the terms of the Indenture and the
Debt Securities have been duly executed and authenticated in accordance with the
terms of the Indenture and issued and sold as contemplated in the Registration
Statement, the Debt Securities will constitute valid and binding obligations of
the Company and the Guarantees will constitute valid and binding obligations of
the Guarantor.
We express no opinion as to the enforceability of any provision of the
Indenture specifying that provisions thereof may be waived only in writing, to
-2-
<PAGE>
the extent that an oral agreement or an implied agreement by trade practice or
course of conduct has been created that modifies any provision of the
Indentures.
The opinions set forth above are subject to (i) applicable bankruptcy,
insolvency, moratorium, fraudulent conveyance and other similar laws affecting
creditors' rights and remedies generally, and (ii) general principles of equity
including, without limitation, standards of materiality, good faith, fair
dealing and reasonableness, equitable defenses and limits as to the availability
of equitable remedies, whether such principles are considered in a proceeding at
law or in equity.
We express no opinion as to the legality, validity, binding effect or
enforceability of any provision of the Debt Securities, the Indenture or the
Guarantees providing for payments thereunder in a currency other than currency
of the United States of America to the extent that a court of competent
jurisdiction, under applicable law, will convert any judgment rendered in such
other currency into currency of the United States of America or to the extent
that payment in a currency other than currency of the United States of America
is contrary to applicable law. In this connection, we note that, as of the date
of this opinion, in the case of a Debt Security denominated in a foreign
currency, a state court in the State of New York rendering a judgment on such
Debt Security would be required under Section 27 of the New York Judiciary Law
to render such judgment in the foreign currency in which the Debt Security is
denominated, and such judgment would be converted into United States dollars at
the exchange rate prevailing on the date of entry of the judgment.
The opinion expressed herein is limited to the federal laws of the
United States of America, the laws of the State of New York and, to the extent
relevant to the opinion expressed herein, the General Corporation Law of the
State of Delaware, as currently in effect. The opinion expressed herein is
given as of the date hereof, and we undertake no obligation to supplement this
letter if any applicable laws change after the date hereof or if we become aware
of any facts that might change the opinion expressed herein after the date
hereof or for any other reason.
-3-
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the captions
"Validity of Securities" in the Prospectus and "Validity of Securities" in any
Prospectus Supplement forming a part of the Registration Statement. In giving
these consents, we do not hereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Kenneth R. Blackman
------------------------------
Kenneth R. Blackman
-4-
<PAGE>
EXHIBIT 8.1
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004-1980
212-859-8000
FAX 212-859-4000
WRITER'S DIRECT LINE
October 30, 1998 212-859-8168
(FAX: 212-859-8171)
Countrywide Home Loans, Inc.
Countrywide Credit Industries, Inc.
4500 Park Granada
Calabasa, CA 91302
Ladies and Gentlemen:
We have acted as your special counsel in connection with the
Prospectus and Prospectus Supplement dated , 1998 (the "Prospectus
Supplement") pertaining to your Registration Statement on Form S-3 (File No. 333
- - _________) (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), being filed today with the Securities and
Exchange Commission, with respect to the public offering of Medium Term Notes,
Series H, of Countrywide Home Loans, Inc. (the "Notes").
We hereby confirm, based on the assumptions and subject to the
qualifications and limitations set forth therein, that the statements in the
section of the Prospectus Supplement captioned "Certain Federal Income Tax
Considerations," to the extent that such statements constitute statements of
law, reflect our opinion regarding the material federal income tax consequences
of the purchase, ownership, and disposition of the Notes. No opinion is
expressed on matters other than those specifically referred to herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Lee S. Parker
--------------------------------------
Lee S. Parker
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated May 4, 1998 accompanying the consolidated
financial statements and schedules of Countrywide Credit Industries, Inc. and
Subsidiaries appearing in the Annual Report on Form 10-K for the year ended
February 28, 1998, which is incorporated by reference in this Registration
Statement on Form S-3 (the "Registration Statement"). We consent to the
incorporation by reference in this Registration Statement of the aforementioned
report and to the use of our name as it appears under the caption "Experts."
GRANT THORNTON LLP
Los Angeles, California
October 30, 1998
<PAGE>
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
- -------------------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
- -------------------------------------------
COUNTRYWIDE HOME LOANS, INC.
(Exact name of obligor as specified in its charter)
New York 13-2631719
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4500 Park Granada
Calabasas, California 91302
(Address of principal executive offices) (Zip code)
______________________
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-2641992
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4500 Park Granada
Calabasas, California 91302
(Address of principal executive offices) (Zip code)
______________________
Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(A) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Name Address
- ---------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29
under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published pursuant
to law or to the requirements of its supervising or examining authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 29th day of October, 1998.
THE BANK OF NEW YORK
By: /s/ROBERT A. MASSIMILLO
-----------------------------------
Name: ROBERT A. MASSIMILLO
Title: ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin.................... $ 7,301,241
Interest-bearing balances............. 1,385,944
Securities:
Held-to-maturity securities........... 1,000,737
Available-for-sale securities......... 4,240,655
Federal funds sold and Securities pur-
chased under agreements to resell..... 971,453
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................. 38,788,269
LESS: Allowance for loan and
lease losses ....................... 632,875
LESS: Allocated transfer risk
reserve............................. 0
Loans and leases, net of unearned
income, allowance, and reserve 38,155,394
Assets held in trading accounts......... 1,307,562
Premises and fixed assets (including
capitalized leases)................... 670,445
Other real estate owned................. 13,598
Investments in unconsolidated
subsidiaries and associated
companies............................. 215,024
Customers' liability to this bank on
acceptances outstanding............... 974,237
Intangible assets....................... 1,102,625
Other assets............................ 1,944,777
-----------
Total assets............................ $59,283,692
===========
LIABILITIES
Deposits:
In domestic offices................... $26,930,258
Noninterest-bearing .................. 11,579,390
Interest-bearing ..................... 15,350,868
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 16,117,854
Noninterest-bearing .................. 187,464
Interest-bearing ..................... 15,930,390
Federal funds purchased and Securities
</TABLE>
<PAGE>
sold under agreements to repurchase... 2,170,238
Demand notes issued to the U.S.
Treasury.............................. 300,000
Trading liabilities..................... 1,310,867
Other borrowed money:
With remaining maturity of one year
or less............................. 2,549,479
With remaining maturity of more than
one year through three years........ 0
With remaining maturity of more than
three years......................... 46,654
Bank's liability on acceptances exe-
cuted and outstanding................. 983,398
Subordinated notes and debentures....... 1,314,000
Other liabilities....................... 2,295,520
-----------
Total liabilities....................... 54,018,268
-----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 3,385,227
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 51,233
Cumulative foreign currency transla-
tion adjustments...................... ( 37,639)
-----------
Total equity capital.................... 5,265,424
-----------
Total liabilities and equity
capital ............................ $59,283,692
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
J. Carter Bacot |
Thomas A. Renyi | Directors
Alan R. Griffith |
-
- --------------------------------------------------------------------------------
