<PAGE>
PRICING SUPPLEMENT NO. 12 DATED APRIL 8, 1999
(To Prospectus Dated November 10, 1998, as Supplemented November 10, 1998)
$600,000,000
COUNTRYWIDE HOME LOANS, INC.
6.25% Notes due April 15, 2009
Payment of Principal and Interest
Fully and Unconditionally Guaranteed by
LOGO COUNTRYWIDE /(R)/
----------------------
CREDIT INDUSTRIES, INC.
- --------------------------------------------------------------------------------
Countrywide Home Loans is offering $600,000,000 of its 6.25% notes due April
15, 2009. Interest is payable on the notes on April 15 and October 15 of each
year, beginning October 15, 1999.
Countrywide Credit Industries will guarantee all payments of principal and
interest on the notes.
Countrywide Home Loans may not redeem the notes before their maturity.
The notes will be unsecured and unsubordinated indebtedness of Countrywide Home
Loans and will rank equally with its other unsecured and unsubordinated
indebtedness.
<TABLE>
<CAPTION>
Per note Total
---------------------- -------------------------
<S> <C> <C>
Public offering price................. 99.464% $596,784,000
Underwriting discount................. .650% $ 3,900,000
Proceeds, before expenses, to Country-
wide Home Loans...................... 98.814% $592,884,000
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
pricing supplement is truthful or complete. Any representation to the contrary
is a criminal offense.
We will deliver the notes on April 13, 1999.
- --------------------------------------------------------------------------------
Lehman Brothers____________________________NationsBanc Montgomery Securities LLC
Countrywide Securities Corporation
April 8, 1999
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements
the terms of the "Notes" in the accompanying prospectus supplement and the
terms of the "CHL Debt Securities" in the accompanying prospectus. Whenever
the following description of the notes is inconsistent with the descriptions
in the prospectus supplement and prospectus, the terms in the following
description control.
General
The notes are Medium-Term Notes, Series H, as described in the accompanying
prospectus supplement. The aggregate principal amount of the notes in this
offering is $600,000,000. The notes will be fixed rate notes and will be
issued in minimum denominations of $1,000 and integral multiples of $1,000.
The notes will be denominated and payable U.S. dollars. The trade date for the
notes is April 8, 1999. The stated maturity date for the notes will be April
15, 2009.
The notes will be delivered through the facilities of The Depository Trust
Company. See "Description of Notes--Book-Entry Notes" in the accompanying
prospectus supplement.
The indenture under which the notes are being issued provides Countrywide
Home Loans with the ability to "reopen" a previous issue of notes and issue
additional notes with similar terms.
Please refer to the accompanying prospectus supplement and prospectus for a
detailed summary of additional provisions of the Notes.
As of February 28, 1999, Countrywide Credit Industries had no secured
indebtedness outstanding. As of that date, Countrywide Home Loans had
$87,635,000 of secured indebtedness outstanding and $8,216,382,000 of
unsecured and unsubordinated indebtedness outstanding. The notes will rank
equally with the unsecured and unsubordinated indebtedness of Countrywide Home
Loans.
Interest
The notes will bear interest at the rate set forth on the cover page of this
pricing supplement from April 13, 1999 or the most recent interest payment
date to which interest has been paid or provided for. Interest on the notes is
payable on April 15 and October 15 of each year, beginning October 15, 1999.
The record date for any interest payment date will be the April 1 or October 1
immediately preceding the relevant interest payment date. Principal of and
interest on the notes will be payable as described in the accompanying
prospectus supplement and prospectus.
Redemption and Repayment
Countrywide Home Loans may not redeem the notes before their maturity.
Holders of the notes may not, at their option, require that the notes be
repaid before maturity. The notes will not be entitled to the benefit of any
sinking fund.
Guarantee
Countrywide Credit Industries will guarantee the payment of principal and
interest on the notes, when due and payable, whether at maturity or otherwise.
P-2
<PAGE>
OFFERING AND SALE
Subject to the terms of a Terms Agreement, dated April 8, 1999, among
Countrywide Home Loans, Countrywide Credit Industries, Lehman Brothers Inc.,
NationsBanc Montgomery Securities LLC and Countrywide Securities Corporation,
Countrywide Home Loans has agreed to sell to the underwriters, and the
underwriters have agreed severally to purchase, the principal amounts of notes
set forth opposite their names below:
<TABLE>
<CAPTION>
Principal amount
Underwriters of notes
------------ ----------------
<S> <C>
Lehman Brothers Inc..................................... $240,000,000
NationsBanc Montgomery Securities LLC................... 240,000,000
Countrywide Securities Corporation...................... 120,000,000
------------
Total.............................................. $600,000,000
============
</TABLE>
Under the terms and conditions of the Terms Agreement, the underwriters are
committed to take and pay for all of the notes, if any are taken.
The underwriters propose to offer the notes initially at the public offering
price set forth on the cover page of this pricing supplement and to certain
dealers at such price less a concession not in excess of .40% of the principal
amount of the notes. The underwriters may allow, and the dealers may reallow,
a discount not in excess of .25% of the principal amount of the notes on sales
to certain other dealers. After the initial public offering, the offering
price and other selling terms may from time to time be varied by the
underwriters.
The notes are a new issue of securities with no established trading market.
Countrywide Home Loans has been advised by the underwriters that they intend
to make a market in the notes but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the notes.
Countrywide Home Loans has agreed that during the period beginning from the
date of this pricing supplement until the date that is three business days
after the date of this pricing supplement it will not issue (i) in any
institutional offering in the United States any debt securities (other than
(a) the notes and (b) debt securities issued in "structured" financings) and
(ii) in any institutional offering outside of the United States any debt
securities with a stated maturity of ten years (other than debt securities
issued in "structured" financings), in each case without the prior consent of
the underwriters.
Countrywide Home Loans has agreed to indemnify the underwriters against
certain liabilities as described in the accompanying prospectus supplement.
----------------
You should rely only on the information contained or incorporated by
reference in this pricing supplement and the accompanying prospectus
supplement and prospectus. Countrywide Home Loans and Countrywide Credit
Industries have not, and the underwriters 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. Countrywide
Home Loans and Countrywide Credit Industries are not, and the underwriters 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 pricing supplement
and the accompanying prospectus supplement and prospectus is accurate as of
the date on the front cover of this pricing supplement only. Countrywide Home
Loans' and Countrywide Credit Industries' business, financial condition,
results of operations and prospects may have changed since that date.
P-3
<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus Dated November 10, 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 $2,996,250,000-
Loans, Inc..................... 99.875%-99.25% $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
November 10, 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
The Company 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>
PROSPECTUS
COUNTRYWIDE HOME LOANS, INC.
DEBT SECURITIES
UNCONDITIONALLY GUARANTEED BY
LOGO COUNTRYWIDE /(R)/
----------------------
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 November 10, 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
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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
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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.
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$3,000,000,000
COUNTRYWIDE HOME LOANS, INC.
Medium-Term Notes, Series H
Unconditionally Guaranteed by
LOGO COUNTRYWIDE/(R)/
----------------------
CREDIT INDUSTRIES, INC.
-------------
PROSPECTUS SUPPLEMENT
November 10, 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>
[GRAPHIC]
$600,000,000
COUNTRYWIDE HOME LOANS, INC.
6.25% Notes due April 15, 2009
Payment of Principal and Interest
Fully and Unconditionally Guaranteed by
LOGO COUNTRYWIDE/(R)/
----------------------
CREDIT INDUSTRIES, INC.
--------------------
PRICING SUPPLEMENT
April 8, 1999
--------------------
Lehman Brothers
NationsBanc Montgomery Securities LLC
Countrywide Securities Corporation
