<PAGE>
FILED PURSUANT TO RULE 424(B)(5)
REGISTRATION NO. 333-66467
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 10, 1998)
$750,000,000
Countrywide Home Loans, Inc.
6.85% Notes due 2004
Payment of Principal and Interest
Fully and Unconditionally Guaranteed by
[LOGO APPEARS HERE]
----------------
Countrywide Home Loans is offering the notes for sale in the United
States, Europe and Asia.
The notes will mature on June 15, 2004. The notes bear interest at the
rate of 6.85% each year. Countrywide Home Loans will pay interest on the notes
semiannually on June 15 and December 15 of each year, beginning December 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, unless Countrywide Home Loans is required to pay
additional amounts as described under "Description of Notes--Redemption for Tax
Reasons."
The notes are unsecured and rank equally with all of the other unsecured
senior indebtedness of Countrywide Home Loans. Countrywide Home Loans will
issue the notes only in registered form in denominations of $1,000 and
multiples of $1,000.
The notes have been approved for listing effective June 25, 1999 on the
Luxembourg Stock Exchange, subject to official notice of issuance.
----------------
<TABLE>
<CAPTION>
Per Note Total
-------- ------------
<S> <C> <C>
Public Offering Price (1).......................... 99.936% $749,520,000
Underwriting Discount.............................. .35% $2,625,000
Proceeds, before expenses, to Countrywide Home
Loans (1)......................................... 99.586% $746,895,000
</TABLE>
--------
(1)Plus accrued interest from June 24, 1999, if settlement occurs after
that date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company, Cedelbank and Euroclear on or about June 24, 1999.
----------------
Joint Bookrunners
Chase Securities Inc. Merrill Lynch & Co.
----------------
Countrywide Securities Corporation J.P. Morgan & Co.
----------------
The date of this prospectus supplement is June 17, 1999.
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Countrywide Home Loans and Countrywide Credit Industries................... S-3
Capitalization............................................................. S-4
Summary Financial Information.............................................. S-6
Management................................................................. S-9
Description of Notes....................................................... S-11
United States Taxation of Non-United States Persons........................ S-18
Underwriting............................................................... S-22
General Information........................................................ S-24
Validity of Securities..................................................... S-25
Prospectus
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 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.
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 prospectus
supplement and the accompanying prospectus is accurate as of the date on the
front cover of this prospectus supplement and the accompanying prospectus,
respectively. The business, financial condition, results of operations and
prospects of Countrywide Home Loans and Countrywide Credit Industries may have
changed since those dates.
This prospectus supplement and the accompanying prospectus include
particulars given in compliance with the rules governing the listing of
securities on the Luxembourg Stock Exchange for the purpose of giving
information with regard to Countrywide Home Loans and Countywide Credit
Industries. Countrywide Home Loans and Countrywide Credit Industries accept
full responsibility for the accuracy of the information contained in this
prospectus supplement and the accompanying prospectus and confirm, having made
all reasonable inquiries, that to the best of their knowledge and belief there
are no other facts the omission of which would make any statement in this
prospectus supplement or in the accompanying prospectus misleading in any
material respect.
References in this prospectus supplement to "Countrywide Home Loans,"
"we," "us" and "our" are to Countrywide Home Loans, Inc.
References in this prospectus supplement to "Countrywide Credit
Industries" are to Countrywide Credit Industries, Inc.
References herein to "$" are to the currency of the United States.
S-2
<PAGE>
COUNTRYWIDE HOME LOANS AND COUNTRYWIDE CREDIT INDUSTRIES
Countrywide Home Loans was incorporated under the laws of the State of
New York, U.S.A., in 1969. Its principal executive office is located at 4500
Park Granada, Calabasas, California 91302, U.S.A., and its telephone number is
(818) 225-3000. Its registered office in the State of New York is c/o The
Prentice-Hall Corporation System, Inc., 80 State Street, Albany, New York
12207, U.S.A.
Countrywide Credit Industries was incorporated under the laws of the
State of Delaware, U.S.A., in 1986. Its principal executive office is located
at 4500 Park Granada, Calabasas, California 91302, U.S.A., and its telephone
number is (818) 225-3000. Countrywide Credit Industries' registered office in
the State of Delaware is c/o The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, Delaware 19801, U.S.A.
Countrywide Credit Industries is a holding company which owns all of the
outstanding capital stock of Countrywide Home Loans. Countrywide Home Loans is
the principal subsidiary of Countrywide Credit Industries. At February 28,
1999, Countrywide Credit Industries, together with its subsidiaries on a
consolidated basis, had total assets of $15.6 billion of which $13.7 billion
were assets of Countrywide Home Loans. Countrywide Home Loans is engaged
primarily in the mortgage banking business, and as such, originates, purchases,
sells and services mortgage loans. Full Spectrum Lending, Inc., another
subsidiary of Countrywide Credit Industries, originates sub-prime and home
equity loans which are transferred to Countrywide Home Loans following
origination. Countrywide Credit Industries has other subsidiaries, the
principal ones of which are:
. Countrywide Securities Corporation, a securities broker-dealer that
underwrites and trades mortgage-backed securities and other
securities;
. Countrywide Investments, Inc., a service provider for unaffiliated
mutual funds, a securities broker-dealer and an investment advisor;
. Countrywide Insurance Services, Inc., an agent for the sale of
insurance, including homeowners', fire, flood, auto, life and
disability insurance;
. Second Charter Reinsurance Company--Vermont, a reinsurer of mortgage
insurance losses on loans originated by Countrywide Home Loans;
. CTC Real Estate Services, a provider of trustee services in
connection with foreclosures;
. Landsafe, Inc., a title insurance agent and a provider of closing
escrow services; and
. Countrywide Tax Services Corporation, a provider of property tax
services.
Countrywide Home Loans does not have any material subsidiaries.
For a more complete description of the businesses of Countrywide Home
Loans and Countrywide Credit Industries, you should read the section entitled
"The Company and CCI" which may be found on page 3 of the accompanying
prospectus.
Recent Developments
On June 12, 1999, Countrywide Credit Industries agreed to purchase Balboa
Life Insurance Company and Balboa Insurance Company from Associates First
Capital Corporation for a price of $425 million, payable in cash, subject to
adjustment. Balboa Life Insurance Company underwrites life insurance policies,
and Balboa Insurance Company underwrites credit-related insurance and
specializes in creditor-placed auto and homeowners insurance. Completion of the
acquisition is subject to regulatory approval and customary closing conditions.
Assuming the parties receive the necessary regulatory approvals and satisfy
other closing conditions, Countrywide Credit Industries anticipates that the
acquisition will close during its fiscal quarter ending November 30, 1999.
Countrywide Credit Industries intends to finance the acquisition with the
proceeds of an equity offering and the issuance of unsecured debt. Countrywide
Credit Industries can not assure that the acquisition or financing will occur.
S-3
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Countrywide Home
Loans at February 28, 1999.
<TABLE>
<CAPTION>
February 28, 1999
-----------------
(in thousands)
<S> <C>
Debt:
Commercial paper............................................ $ 176,559
Medium-term notes, Series A, B, C, D, E, F, G, H and Euro... 8,039,824
Repurchase agreements....................................... --
Subordinated notes.......................................... 200,000
Unsecured notes payable..................................... --
Due to parent (Countrywide Credit Industries)............... 409,113
Other notes payable......................................... 1,971
Drafts payable issued in connection with mortgage loan
closings................................................... 1,083,499
-----------
Total debt................................................ 9,910,966
Accounts payable and accrued liabilities.................... 366,232
Deferred income taxes....................................... 1,068,495
-----------
Total debt and liabilities.................................. $11,345,693
-----------
Shareholders' Equity:
Common stock -- authorized, 20,000 shares of $1.00 par
value; one issued and outstanding share.................... $ --
Additional paid-in capital.................................. 900,144
Accumulated other comprehensive (loss) income............... (14,850)
Retained earnings........................................... 1,452,054
-----------
Total shareholders' equity.................................. $ 2,337,348
-----------
Total capitalization........................................ $13,683,041
===========
</TABLE>
- --------
(1) There has been no material change in the capitalization of Countrywide
Home Loans as a whole other than in the normal course of its business
since February 28, 1999.
S-4
<PAGE>
The following table sets forth the consolidated capitalization of
Countrywide Credit Industries at February 28, 1999. The table should be read
together with the audited consolidated financial statements and accompanying
notes of Countrywide Credit Industries incorporated by reference in this
prospectus supplement. See "Additional Information" on page 2 in the
accompanying prospectus.
<TABLE>
<CAPTION>
February 28, 1999
-----------------
(in thousands)
<S> <C>
Debt:
Commercial paper............................................ $ 176,559
Medium-term notes, Series A, B, C, D, E, F, G, H and Euro... 8,039,824
Repurchase agreements....................................... 1,517,405
Subordinated notes.......................................... 200,000
Unsecured notes payable..................................... --
Other notes payable......................................... 1,971
Drafts payable in connection with mortgage loan closings.... 1,083,499
-----------
Total debt................................................ 11,019,258
Accounts payable and accrued liabilities.................... 517,937
Deferred income taxes....................................... 1,092,176
-----------
Total debt and liabilities.................................. $12,629,371
-----------
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding a company-guaranteed
related subordinated debt(2)............................... 300,000
Company-obligated mandatorily redeemable subordinated
capital income securities of subsidiary trust holding a
company-guaranteed related subordinated debt(3)............ 200,000
Shareholders' Equity:
Preferred stock -- authorized 1,500,000 shares of $.05 par
value; issued and outstanding, none........................ $ --
Common stock -- authorized, 240,000,000 shares of $.05 par
value; 112,619,313 issued and outstanding shares(4)........ 5,631
Additional paid-in capital.................................. 1,153,673
Accumulated other comprehensive (loss) income............... (19,593)
Retained earnings........................................... 1,379,174
-----------
Total shareholders' equity.................................. $ 2,518,885
-----------
Total capitalization........................................ $15,648,256
===========
</TABLE>
- --------
(1) There has been no material change in the consolidated capitalization of
Countrywide Credit Industries as a whole other than in the normal course of
its business since February 28, 1999.
(2) Represents the 8% Capital Trust Pass-through Securities of Countrywide
Capital I, a Delaware business trust.
(3) Represents the 8.05% Subordinated Capital Income Securities of Countrywide
Capital III, a Delaware business trust.
(4) Does not include 11,497,044 shares reserved for issuance upon exercise of
stock options of which options for 6,514,039 shares were exercisable as of
February 28, 1999.
S-5
<PAGE>
SUMMARY FINANCIAL INFORMATION
Countrywide Home Loans
The summary financial data of Countrywide Home Loans set forth below as
of and for the fiscal years ended February 28, 1999 and 1998 have been derived
from Countrywide Credit Industries' Annual Report on Form 10-K for the fiscal
year ended February 28, 1999.
<TABLE>
<CAPTION>
Years Ended February
28,
-----------------------
1999 1998
----------- -----------
(in thousands)
<S> <C> <C>
Selected Statement of Earnings Data:
Revenues.............................................. $ 1,668,627 $ 1,260,657
Expenses.............................................. 1,149,886 838,909
Provision for income taxes............................ 202,308 164,166
----------- -----------
Net earnings.......................................... $ 316,433 $ 257,582
=========== ===========
Selected Balance Sheet Data at End of Period:
Mortgage loans and mortgage-backed securities held for
sale................................................. $ 6,231,220 $ 5,292,191
Other assets.......................................... 7,451,821 6,216,382
----------- -----------
Total assets.......................................... $13,683,041 $11,508,573
=========== ===========
Short- and long-term debt............................. $ 9,910,966 $ 8,747,794
Other liabilities..................................... 1,434,727 1,027,884
Equity................................................ 2,337,348 1,732,895
----------- -----------
Total liabilities and equity.......................... $13,683,041 $11,508,573
=========== ===========
</TABLE>
Countrywide Credit Industries
The summary consolidated financial data of Countrywide Credit Industries
set forth below as of the end of and for each of the five fiscal years in the
period ended February 28, 1999 have been derived from, and should be read
together with, Countrywide Credit Industries' audited consolidated financial
statements and accompanying notes incorporated by reference in this prospectus
supplement. See "Additional Information" on page 2 in the accompanying
prospectus.
S-6
<PAGE>
<TABLE>
<CAPTION>
Years Ended February 28 (29),
------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ----------- -----------
(amounts in thousands, except Per Share and Operating Data)
<S> <C> <C> <C> <C> <C>
Selected Statement of
Earnings Data(1):
Revenues:
Loan origination fees.. $ 623,531 $ 301,389 $ 193,079 $ 199,724 $ 203,426
Gain (loss) on sale of
loans................. 699,433 417,427 247,450 92,341 (41,342)
------------ ------------ ------------ ----------- -----------
Loan production
revenue............... 1,322,964 718,816 440,529 292,065 162,084
Interest earned........ 1,029,066 584,076 457,005 364,531 311,781
Interest charges....... (983,829) (568,359) (423,447) (337,655) (267,685)
------------ ------------ ------------ ----------- -----------
Net interest income.... 45,237 15,717 33,558 26,876 44,096
Loan servicing income.. 1,023,700 907,674 773,715 620,835 460,351
Amortization and
impairment/recovery of
mortgage servicing
rights................ (1,013,578) (561,804) (101,380) (342,811) (95,768)
Servicing hedge benefit
(expense)............. 412,812 232,959 (125,306) 200,135 (40,030)
Less write-off of
servicing hedge....... -- -- -- -- (25,600)
------------ ------------ ------------ ----------- -----------
Net loan administration
income................ 422,934 578,829 547,029 478,159 298,953
Commissions, fees and
other income.......... 187,867 138,217 91,346 63,642 40,650
Gain on sale of
subsidiary............ -- 57,381 -- -- --
Gain on sale of
servicing............. -- -- -- -- 56,880
------------ ------------ ------------ ----------- -----------
Total revenues......... 1,979,002 1,508,960 1,112,462 860,742 602,663
------------ ------------ ------------ ----------- -----------
Expenses:
Salaries and related
expenses.............. 669,686 424,321 286,884 229,668 199,061
Occupancy and other
office expenses....... 277,921 184,338 129,877 106,298 102,193
Guarantee fees......... 181,117 172,692 159,360 121,197 85,831
Marketing expenses..... 64,510 42,320 34,255 27,115 23,217
Other operating
expenses.............. 153,963 119,743 80,188 50,264 37,016
Branch and
administrative office
consolidation costs... -- -- -- -- 8,000
------------ ------------ ------------ ----------- -----------
Total expenses......... 1,347,197 943,414 690,564 534,542 455,318
------------ ------------ ------------ ----------- -----------
Earnings before income
taxes.................. 631,805 565,546 421,898 326,200 147,345
Provision for income
taxes.................. 246,404 220,563 164,540 130,480 58,938
------------ ------------ ------------ ----------- -----------
Net earnings............ $ 385,401 $ 344,983 $ 257,358 $ 195,720 $ 88,407
============ ============ ============ =========== ===========
Per Share Data(2):
Basic(3)............... $ 3.46 $ 3.21 $ 2.50 $ 1.99 $ 0.97
Diluted(3)............. $ 3.29 $ 3.09 $ 2.44 $ 1.95 $ 0.96
Cash dividends per
share................. $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.32
Weighted average shares
outstanding:
Basic.................. 111,414,000 107,491,000 103,112,000 98,352,000 91,240,000
Diluted................ 117,045,000 111,526,000 105,677,000 100,270,000 92,087,000
Selected Balance Sheet
Data at End of
Period(1):
Mortgage loans and
mortgage-backed
securities shipped and
held for sale......... $ 6,231,220 $ 5,292,191 $ 2,579,972 $ 4,740,087 $ 2,898,825
Total assets........... $ 15,648,256 $ 12,183,211 $ 7,689,090 $ 8,321,652 $ 5,589,138
Short-term debt........ $ 5,065,934 $ 4,043,774 $ 2,567,420 $ 4,423,738 $ 2,664,006
Long-term debt......... $ 5,953,324 $ 4,195,732 $ 2,367,661 $ 1,911,800 $ 1,499,306
Common shareholders'
equity................ $ 2,518,885 $ 2,087,943 $ 1,611,531 $ 1,319,755 $ 942,558
Operating Data (dollar
amounts in millions):
Loan servicing
portfolio(4).......... $ 215,489 $ 182,889 $ 158,585 $ 136,835 $ 113,111
Volume of loans
originated............ $ 92,881 $ 48,772 $ 37,811 $ 34,584 $ 27,866
Ratio of earnings to
fixed charges(5)...... 1.63 1.98 1.98 1.95 1.54
</TABLE>
- --------
(1) Certain amounts in the consolidated financial statements of Countrywide
Credit Industries have been reclassified to conform to the fiscal year
February 28, 1999 presentation.
(2) Adjusted to reflect the subsequent stock dividends and splits.
(3) Earnings per share for the fiscal year ended February 28, 1998 include a
$57.4 million gain on sale of subsidiary. Excluding the non-recurring gain
on sale of subsidiary, basic and diluted earnings per share would have been
$2.88 and $2.78, respectively.
(4) Includes warehoused loans and loans under subservicing agreements.
(5) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before U.S. 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).
S-7
<PAGE>
Incorporation of Information We File with the SEC
The audited consolidated financial statements of Countrywide Credit
Industries and its subsidiaries for the fiscal years ended February 28, 1999
and 1998 are contained in the Annual Report on Form 10-K of Countrywide Credit
Industries for the year ended February 28, 1999, which Annual Report is
incorporated by reference in this prospectus supplement. Copies of the Annual
Report may be obtained free of charge (1) by writing or telephoning Countrywide
Credit Industries, 4500 Park Granada, Calabasas, California 91302, U.S.A.,
telephone (818) 225-3000, Attention: Investor Relations, or (2) at Kredietbank
S.A., Luxembourgeoise, 43 boulevard Royal, L-2995, Luxembourg, the office of
the paying agent for the notes in Luxembourg. Summarized financial information
of Countrywide Home Loans is included in the consolidated financial statements
of Countrywide Credit Industries and its subsidiaries. Separate financial
statements of Countrywide Home Loans are not publicly available.
S-8
<PAGE>
MANAGEMENT
Directors of Countrywide Home Loans
The directors of Countrywide Home Loans and their principal occupations
as of the date of this prospectus supplement are set forth in the following
table.
<TABLE>
<CAPTION>
Name Principal Occupation
---- --------------------
<C> <S>
Angelo R. Mozilo............... Chairman of the Board, Countrywide Home
Loans; Chairman of the Board and Chief
Executive Officer, Countrywide Credit
Industries; Vice Chairman and President,
IndyMac Mortgage Holdings, Inc.
("IndyMac REIT")
David S. Loeb.................. President, Countrywide Credit Industries;
Chairman of the Board, IndyMac REIT
Stanford L. Kurland............ Chief Executive Officer and President,
Countrywide Home Loans
</TABLE>
The business address of the directors of Countrywide Home Loans is 4500
Park Granada, Calabasas, California 91302, U.S.A.
Directors of Countrywide Credit Industries
The directors of Countrywide Credit Industries and their principal
occupations as of the date of this prospectus supplement are set forth in the
following table.
<TABLE>
<CAPTION>
Name Principal Occupation
---- --------------------
<C> <S>
Angelo R. Mozilo............... Chairman of the Board and Chief Executive
Officer, Countrywide Credit Industries;
Chairman of the Board, Countrywide Home
Loans; Vice Chairman and President, IndyMac
REIT
David S. Loeb.................. President, Countrywide Credit Industries;
Chairman of the Board, IndyMac REIT
Jeffrey M. Cunningham.......... Chief Executive Officer, Planet Direct
Robert J. Donato............... Senior Vice President, Branch Manager,
PaineWebber, Incorporated
Michael E. Dougherty........... Co-Founder and Chairman, Dougherty Financial
Group, LLC; Co-Chairman of Board of Trustees
of Fairview System; Director of Dougherty
Summit LLC; Director of St. Paul Chamber
Orchestra
Ben M. Enis.................... Professor of Marketing (Retired), University
of Southern California; Director of
Protection One, Inc.
Edwin Heller................... Attorney, Of Counsel, Fried, Frank, Harris,
Shriver & Jacobson
Harley W. Snyder............... Senior Vice President, Real Estate, Whiteco
Industries, Inc.; President, S-W
Corporation; Member of Board of Trustees,
Porter Memorial Hospital; Member of Board of
Trustees, Valparaiso University; Director,
National Association of Realtors
</TABLE>
The business address of the directors of Countrywide Credit Industries is
4500 Park Granada, Calabasas, California 91302, U.S.A.
S-9
<PAGE>
Officers of Countrywide Credit Industries
In addition to the directors named above, the following persons, all of
whom are full-time employees of Countrywide Credit Industries, hold the offices
indicated in the following table as of the date of this prospectus supplement.
<TABLE>
<CAPTION>
Name Office
---- ------
<C> <S>
Angelo R. Mozilo............... Chairman of the Board and Chief Executive
Officer
David S. Loeb.................. President
Stanford L. Kurland............ Senior Managing Director and Chief Operating
Officer
Kevin W. Bartlett.............. Managing Director, Secondary Marketing
Thomas H. Boone................ Managing Director, Portfolio Services
Carlos M. Garcia............... Managing Director, Finance, Chief Financial
Officer and Chief Accounting Officer
Marshall M. Gates.............. Managing Director, Developing Markets
Gregory A. Lumsden............. Managing Director, Originations
David Sambol................... Managing Director, Capital Markets
Sandor E. Samuels.............. Managing Director, Legal, General Counsel and
Secretary
</TABLE>
The business address of the officers of Countrywide Credit Industries is
4500 Park Granada, Calabasas, California 91302, U.S.A.
S-10
<PAGE>
DESCRIPTION OF NOTES
General
The following description of the terms of the notes supplements and, to
the extent it is inconsistent, replaces the description of the general terms
and provisions of debt securities set forth in the accompanying prospectus. The
notes are part of the debt securities registered by Countrywide Home Loans with
the Securities and Exchange Commission (the "SEC") in November 1998 to be
issued on terms to be determined at the time of sale. The notes are to be
issued as separate series of Debt Securities under the Indenture, dated as of
January 1, 1992, as supplemented by Supplemental Indenture No. 1 thereto, dated
as of June 15, 1995 (as so supplemented, the "Indenture"), among Countrywide
Home Loans, Countrywide Credit Industries, and The Bank of New York, as
Trustee, which is more fully described in the accompanying prospectus.
The 6.85% notes due 2004 will mature at par on June 15, 2004. The notes
will bear interest at the rate of 6.85% per annum from June 24, 1999, payable
semiannually on June 15 and December 15 of each year, commencing December 15,
1999, and at maturity to the persons in whose names the notes are registered on
the preceding June 1 and December 1, respectively.
If any interest payment date or maturity date falls on a day that is not
a Business Day, the related payment of principal or interest will be made on
the next succeeding Business Day as if made on the date such payment was due,
and no interest will accrue on the amount so payable for the period from and
after such interest payment date or maturity date, as the case may be.
"Business Day" with respect to any place of payment means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in the place of payment or the city in which the corporate trust office of the
Trustee, or in New York, New York or Los Angeles, California are authorized or
obligated by law, executive order or regulation to close. The amount of
interest payable for the notes for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
The notes are not subject to redemption by Countrywide Home Loans before
maturity unless certain events occur involving U.S. taxation. See "Description
of Notes--Redemption for Tax Reasons."
The notes will be issued in denominations of $1,000 and integral
multiples thereof.
Any notes issued in definitive form will be issued only in fully
registered form, without coupons, in denominations of $1,000 and in integral
multiples thereof, in the amount of each holder's registered holdings. Any
notes so issued will be registered in such names, and in such denominations, as
the Depositary (as defined below) shall request. Such notes may be presented
for registration of transfer or exchange at the office of the Trustee in The
City of New York and principal thereof and interest thereon will be payable at
such office of the Trustee provided that interest thereon may be paid by check
mailed to the registered holders of the definitive notes. In the event
definitive notes are issued, the holders thereof will be able to receive
payments thereon and effect transfers thereof at the offices of Kredietbank
S.A. or its successor as paying agent and transfer agent in Luxembourg with
respect to the notes.
Countrywide Home Loans has appointed Kredietbank S.A. as paying agent and
transfer agent in Luxembourg with respect to the notes in definitive form, and
as long as the notes are listed on the Luxembourg Stock Exchange, Countrywide
Home Loans will maintain a paying agent and transfer agent in Luxembourg and
any change in the identity of the Luxembourg paying agent and transfer agent
will be published in Luxembourg. See "Description of Notes--Notices."
Depositary
Upon issuance, all notes will be represented by one or more fully
registered global notes. Each global note will be deposited with, or on behalf
of, The Depository Trust Company (otherwise known as "DTC") or any successor to
it as depositary (the "Depositary"), and registered in the name of Cede & Co.
(DTC's
S-11
<PAGE>
partnership nominee). Unless and until a global note is exchanged in whole or
in part for notes in definitive form, it may not be transferred except as a
whole by the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee
of such successor. Investors may elect to hold interests in the global notes
through either the Depositary (in the United States) or Cedelbank, and Morgan
Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear"), if they are participants in such systems, or
indirectly through organizations which are participants in such systems.
Cedelbank and Euroclear will hold interests on behalf of their participants
through customers' securities accounts in Cedelbank's and Euroclear's names on
the books of their respective depositaries, which in turn will hold such
interests in customers' securities accounts in the depositaries' names on the
books of the Depositary. Citibank, N.A. will act as depositary for Cedelbank
and The Chase Manhattan Bank will act as depositary for Euroclear (in such
capacities, the "U.S. Depositaries").
So long as the Depositary, or its nominee, is a registered owner of a
global note, the Depositary or its nominee, as the case may be, will be
considered the sole owner or holder of the notes represented by such global
note for all purposes under the Indenture. Except as provided below, the
beneficial owners of the notes represented by a global note will not be
entitled to have the notes represented by such global note registered in their
names, will not receive or be entitled to receive physical delivery of the
notes in definitive form and will not be considered the owners or holders
thereof under the Indenture, including for purposes of receiving any reports
delivered by Countrywide Home Loans, Countrywide Credit Industries or the
Trustee pursuant to 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 of the Depositary, on the procedures of the
participant through which such person owns its interest, to exercise any rights
of a holder under the Indenture. Countrywide Home Loans and Countrywide Credit
Industries understand that under existing industry practices, in the event that
Countrywide Home Loans or Countrywide Credit Industries requests any action of
holders which these holders are entitled to give or take under the Indenture,
the Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners. Conveyance
of notices and other communications by the Depositary to participants, by
participants to indirect participants and by participants and indirect
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
If (x) the Depositary is at any time unwilling or unable to continue as
Depositary and a successor depositary is not appointed by Countrywide Home
Loans within 60 days, (y) Countrywide Home Loans executes and delivers to the
Trustee a company order to the effect that the global notes will be
exchangeable for certificated notes or (z) an Event of Default (as defined in
the Indenture) has occurred and is continuing with respect to the notes, the
global notes will be exchangeable for notes in definitive form of like tenor
and of an equal aggregate principal amount, in denominations of $1,000 and
integral multiples of $1,000. Such definitive notes will be registered in such
name or names as the Depositary will instruct the Trustee. It is expected that
such instructions may be based upon directions received by the Depositary from
participants with respect to ownership of beneficial interests in such global
notes.
The following is based on information furnished by DTC:
DTC will act as securities depositary for the notes. The notes will be
issued as fully registered notes registered in the name of Cede & Co. (DTC's
partnership nominee). One or more fully registered global notes will be issued
for the aggregate principal amount of the notes and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities that
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its participants deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct participants of DTC include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its direct participants and by the
New York Stock Exchange Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to DTC's system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of notes under DTC's system must be made by or through direct
participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each beneficial owner is in turn to be recorded on the
records of direct and indirect participants. Beneficial owners will not receive
written confirmation from DTC of their purchase, but beneficial owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the direct or indirect
participants through which such beneficial owner entered into the transaction.
Transfers of ownership interests in the notes 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 notes, except as provided above.
To facilitate subsequent transfers, all notes deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
notes 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 notes; DTC's records reflect only the identity of the direct
participants to whose accounts such notes are credited, which may or may not be
the beneficial owners. The participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
notes. Under its usual procedures, DTC mails an Omnibus Proxy to Countrywide
Home Loans as soon as possible after the applicable record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those direct
participants to whose accounts the notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal of, additional amounts, if any, and/or interest payments on the
notes will be made in immediately available funds to DTC. DTC's practice is to
credit direct participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless DTC has reason to believe that it will not receive payment on such date.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participant and not of DTC, the Trustee or
Countrywide Home Loans, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal, additional amounts,
if any, and/or interest to DTC is the responsibility of Countrywide Home Loans
or the Trustee, disbursement of such payments to direct participants will be
the responsibility of DTC, and disbursement of such payments to the beneficial
owners will be the responsibility of direct and indirect participants.
DTC has advised us that management of DTC is aware that some computer
applications, systems, and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on,
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and after January 1, 2000, may encounter "Year 2000 problems." DTC has informed
direct and indirect participants and other members of the financial community
(the "Industry") that it has developed and is implementing a program so that
its Systems, as the same relate to the timely payment of distributions
(including principal and interest payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC ("Depositary Services"),
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including, but not limited to, issuers and their agents, as
well as DTC's direct and indirect participants, third party vendors from whom
DTC licenses software and hardware, and third party vendors on whom DTC relies
for information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
Industry that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant; and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
According to DTC, the information in the preceding two paragraphs with
respect to DTC has been provided to the Industry for informational purposes
only and is not intended to serve as a representation, warranty, or contract
modification of any kind.
DTC may discontinue providing its services as securities depositary with
respect to the notes at any time by giving reasonable notice to Countrywide
Home Loans or the Trustee. Under such circumstances, in the event that a
successor securities depositary is not obtained, note certificates are required
to be printed and delivered.
Countrywide Home Loans may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depositary). In
that event, note certificates will be printed and delivered.
Cedelbank advises that it is incorporated under the laws of Luxembourg as
a professional depositary. Cedelbank holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedelbank provides
to Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedelbank interfaces with domestic
markets in several countries. As a professional depositary, Cedelbank is
subject to regulation by the Luxembourg Monetary Institute. Cedel Participants
are recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters. Indirect
access to Cedelbank is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant either directly or indirectly.
Distributions with respect to the notes held beneficially through
Cedelbank will be credited to cash accounts of Cedel Participants in accordance
with its rules and procedures, to the extent received by the U.S. Depositary
for Cedelbank.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic
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markets in several countries. Euroclear is operated by the Brussels, Belgium
office of Morgan Guaranty Trust Company of New York (the "Euroclear Operator"),
under contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the underwriters. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System, and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary
for Euroclear.
Global Clearance and Settlement Procedures
Initial settlement for the notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with the Depositary's rules and will be settled in
immediately available funds using the Depositary's Same-Day Funds Settlement
System. Secondary market trading between Cedel Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Cedelbank and Euroclear and will be settled
using the procedures applicable to conventional eurobonds in immediately
available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depositary on the one hand, and directly or indirectly through
Cedel or Euroclear Participants, on the other, will be effected in the
Depositary in accordance with the Depositary's rules on behalf of the relevant
European international clearing system by its U.S. Depositary; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving notes in the Depositary, and making or receiving
payment in accordance with normal procedures for same-day funds settlement
applicable to the Depositary. Cedel Participants and Euroclear Participants may
not deliver instructions directly to the Depositary.
Because of time-zone differences, credits of notes received in Cedelbank
or Euroclear as a result of a transaction with a DTC participant will be made
during subsequent securities settlement processing and will be credited the
business day following the Depositary settlement date. Such credits or any
transactions in such
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notes settled during such processing will be reported to the relevant Euroclear
or Cedel Participants on such business day. Cash received in Cedelbank or
Euroclear as a result of sales of notes by or through a Cedel Participant or a
Euroclear Participant to a DTC participant will be received with value on the
Depositary settlement date but will be available in the relevant Cedelbank or
Euroclear cash account only as of the business day following settlement in the
Depositary.
Although the Depositary, Cedelbank and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of notes among
participants of the Depositary, Cedelbank and Euroclear, they are under no
obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
Replacement of Notes
If a note is mutilated, destroyed, lost or stolen, the holder of that
note may request that the Trustee issue a replacement note. A replacement note
will be issued if the holder follows any required procedures, provides any
necessary security or indemnity to Countrywide Home Loans, Countrywide Credit
Industries and the Trustee and otherwise satisfies any other conditions for
such replacement as provided in the Indenture. Countrywide Home Loans may
require that the holder pay the cost of any tax or other governmental charge
imposed and any other expenses incurred as a result of the issuance of a
replacement note. Mutilated notes must be surrendered before replacement notes
will be issued. Requests for a replacement note, together with any required
supporting documentation, may be submitted at the corporate trust office of the
Trustee in New York, New York, U.S.A. or at the offices of Kredietbank S.A.,
agent of the Trustee and the paying agent and transfer agent for the notes in
Luxembourg.
Acts of Holders
Holders of notes may, through a written instrument signed by the required
number of holders (or their appointed agents) specified in the Indenture, make
requests or demands, authorize or direct the Trustee to take action, provide
consents or waivers and take any other action that holders are permitted to
take under the Indenture. These written instruments, if provided to the Trustee
(or its agent) (and in some instances to Countrywide Home Loans and Countrywide
Credit Industries) in the manner stated in the Indenture, will be regarded as
the "act" of the holders signing the instruments.
Notices
Notices to holders of the notes will be sent by mail to the registered
holders and will be published, so long as the notes are listed on the
Luxembourg Stock Exchange, in a daily newspaper of general circulation in
Luxembourg. It is expected that publication will be made in Luxembourg in the
"Luxemburger Wort." Any such notice shall be deemed to have been given on the
date of such publication or, if published more than once, on the date of the
first such publication. So long as the notes are listed on the Luxembourg Stock
Exchange, any change in the identity of the Luxembourg paying agent and
transfer agent will be published in Luxembourg in the manner set forth above.
Further Issues
We may, from time to time, without notice to or the consent of the
registered holders of the notes, create and issue additional notes ranking
equally with the notes offered hereby in all respects (or in all respects
except for the payment of interest accruing prior to the issue date of the
notes or except for the first payment of interest following the issue date of
the notes) so that such additional notes may be consolidated and form a single
series with the notes offered hereby and have the same terms as to status,
redemption or otherwise as the notes offered hereby.
Payment of Additional Amounts
We will, subject to the exceptions and limitations set forth below, pay
as additional interest on the notes, such additional amounts as are necessary
in order that the net payment by Countrywide Home Loans or a paying agent of
the principal of and interest on the notes to a holder who is a non-United
States person (as
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defined below), after deduction for any present or future tax, assessment or
other governmental charge of the United States or a political subdivision or
taxing authority thereof or therein, imposed by withholding with respect to the
payment, will not be less than the amount provided in the notes to be then due
and payable; provided, however, that the foregoing obligation to pay additional
amounts shall not apply:
(1) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership or corporation, or a person holding a
power over an estate or trust administered by a fiduciary holder,
being considered as:
(a) being or having been present or engaged in a trade or business in
the United States or having had a permanent establishment in the
United States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled
foreign corporation with respect to the United States or a
corporation that has accumulated earnings to avoid United States
federal income tax;
(d) being or having been a "10-percent shareholder" of Countrywide
Home Loans as defined in section 871 (h) (3) of the United States
Internal Revenue Code or any successor provision; or
(e) being a bank receiving payments on an extension of credit made
pursuant to a loan agreement entered into in the ordinary course
of its trade or business;
(2) to any holder that is not the sole beneficial owner of the note, or
a portion thereof, or that is a fiduciary or partnership, but only
to the extent that a beneficiary or settlor with respect to the
fiduciary, a beneficial owner or member of the partnership would not
have been entitled to the payment of an additional amount had the
beneficiary, settlor, beneficial owner or member received directly
its beneficial or distributive share of the payment;
(3) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of the failure of the holder or any
other person to comply with certification, identification or
information reporting requirements concerning the nationality,
residence, identity or connection with the United States of the
holder or beneficial owner of such note, if compliance is required
by statute, by regulation of the United States Treasury Department
or by an applicable income tax treaty to which the United States is
a party as a precondition to exemption from such tax, assessment or
other governmental charge;
(4) to any tax, assessment or other governmental charge that is imposed
otherwise than by withholding by Countrywide Home Loans or a paying
agent from the payment;
(5) to any tax, assessment or other governmental charge that is imposed
or withheld solely by reason of a change in law, regulation, or
administrative or judicial interpretation that becomes effective
more than 15 days after the payment becomes due or is duly provided
for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth or
personal property tax or similar tax, assessment or other
governmental charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or
interest on any note, if such payment can be made without such
withholding by any other paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5), (6)
and (7).
The notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable thereto.
Except as specifically provided under this heading "--Payment of Additional
Amounts" and under the heading "Description of Notes--Redemption for Tax
Reasons,"
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Countrywide Home Loans shall not be required to make any payment with respect
to any tax, assessment or other governmental charge imposed by any government
or a political subdivision or taxing authority thereof or therein.
As used under this heading "--Payment of Additional Amounts" and under
the headings "Description of Notes--Redemption for Tax Reasons" and "United
States Taxation of Non-United States Persons," the term "United States" means
the United States of America (including the States and the District of
Columbia) and its territories, its possessions and other areas subject to its
jurisdiction and "United States person" means any individual who is a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia (other than a partnership that is not
treated as a United States person under any applicable Treasury regulations),
any estate the income of which is subject to United States federal income
taxation regardless of its source, or any trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in the Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons prior to such date that
elect to continue to be treated as United States persons will also be a United
States person. "Non-United States person" means a person who is not a United
States person.
An individual may, subject to certain exceptions, be deemed to be a
resident alien, as opposed to a non-resident alien, by virtue of being present
in the United States on at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the current
calendar year. For this purpose the number of days an individual is present in
the U.S. includes all of the days present in the current year, one-third of the
days present in the immediately preceding year, and one-sixth of the days
present in the second preceding year. Resident aliens are subject to U.S.
federal tax as if they were U.S. citizens.
Redemption for Tax Reasons
If, as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change
in, or amendments to, an official position regarding the application or
interpretation of such laws, regulations or rulings, which change or amendment
is announced or becomes effective on or after the date of this prospectus
supplement, Countrywide Home Loans becomes or, based upon a written opinion of
independent counsel selected by Countrywide Home Loans, will become obligated
to pay additional amounts as described herein under the heading "Description of
Notes--Payment of Additional Amounts" with respect to the notes offered hereby,
then Countrywide Home Loans may, at its option, redeem, as a whole, but not in
part, the notes on not less than 30 nor more than 60 days' prior notice, at a
redemption price equal to 100% of their principal amount, together with
interest accrued but unpaid thereon to the date fixed for redemption.
Guarantee
Countrywide Credit Industries will guarantee the payment of principal and
interest on the notes, when due and payable, whether at maturity or otherwise.
UNITED STATES TAXATION OF NON-UNITED STATES PERSONS
The following is a discussion of certain U.S. federal income tax
consequences and certain U.S. federal estate tax consequences to non-United
States persons of the acquisition, ownership and disposition of the notes by
investors that acquire the notes from the initial purchasers in this offering
at a cash purchase price equal to the "issue price" of the notes. The issue
price is generally the first price at which a substantial amount of the notes
is sold other than to bond houses, brokers, or similar persons or organizations
acting in the capacity of underwriters, placement agents or wholesalers.
This discussion does not discuss all of the aspects of U.S. federal
income and estate taxation that may be relevant to investors in light of their
particular investment or other circumstances. In addition, this discussion does
not discuss any U.S. state or local income or foreign income or other tax
consequences. This
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discussion is based upon the provisions of the Internal Revenue Code of 1986,
as amended, the Treasury Regulations, and administrative and judicial
interpretations of the Internal Revenue Code, all as in effect as of the date
of this prospectus supplement and all of which are subject to change or
differing interpretation, possibly with retroactive effect. Prospective
investors should consult their own tax advisors regarding the particular U.S.
federal, state and local and foreign income and other tax consequences of
acquiring, owning and disposing of the notes that may be applicable to them.
Income and Withholding Tax
In the opinion of Fried, Frank, Harris, Shriver & Jacobson (a partnership
including professional corporations), counsel to Countrywide Home Loans, under
United States federal tax law as of the date of this prospectus supplement, and
subject to the discussion of backup withholding below:
(1) payments of principal and interest on a note that is beneficially
owned by a non-United States person will not be subject to United
States federal withholding tax; provided, that in the case of
interest:
(a) . the beneficial owner does not directly or indirectly, actually
or constructively, own 10% or more of the total combined voting
power of all classes of stock of Countrywide Home Loans entitled
to vote,
. the beneficial owner is not a controlled foreign corporation
that is related to Countrywide Home Loans through stock
ownership, or a bank receiving interest described in Section
881(c)(3)(A) of the Internal Revenue Code, and
. either:
(x) the beneficial owner of the note certifies to the person
otherwise required to withhold U.S. federal income tax from
such interest, under penalties of perjury, that it is not a
"United States person" under the meaning of the Internal
Revenue Code and provides its name and address or
(y) a securities clearing organization, bank or other financial
institution that holds customers' securities in the
ordinary course of its trade or business (a "financial
institution") and holds the note certifies to the person
otherwise required to withhold U.S. federal income tax from
such interest, under penalties of perjury, that such
statement has been received from the beneficial owner by it
or by a financial institution between it and the beneficial
owner and furnishes the payor with a copy thereof;
(b) the beneficial owner is entitled to the benefits of an income tax
treaty under which the interest is exempt from U.S. federal
withholding tax and the beneficial owner of the note or such
owner's agent provides an IRS Form W-8 BEN or other permitted
form on or before any payment date claiming the exemption; or
(c) the beneficial owner conducts a trade or business in the United
States to which the interest is effectively connected and the
beneficial owner of the note or such owner's agent provides an
IRS Form W-8 ECI or other permitted form on or before any payment
date claiming the exemption;
provided that in each such case, the relevant certification or IRS
Form is delivered pursuant to applicable procedures and is properly
transmitted to the person otherwise required to withhold United
States federal income tax, and none of the persons receiving the
relevant certification or IRS Form has actual knowledge that the
certification or any statement on the IRS Form is false;
(2) a non-United States person will not be subject to United States
federal income tax on any gain realized on the sale, exchange or
redemption of a note unless the gain is effectively connected
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with the beneficial owner's trade or business in the United States or
if an income tax treaty applies, is generally attributable to a U.S.
"permanent establishment" maintained by the holder; or, in the case of
an individual, the holder is present in the United States for 183 days
or more in the taxable year in which the sale, exchange or redemption
occurs and certain other conditions are met; and
(3) a note owned by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to United
States federal estate tax as a result of such individual's death if,
at the time of the individual's death, the individual does not
directly or indirectly, actually or constructively, own 10% or more of
the total combined voting power of all classes of stock of Countrywide
Home Loans entitled to vote and the income on the note would not have
been effectively connected with a U.S. trade or business of the
individual.
Interest on a note that is effectively connected with the conduct of a
trade or business in the United States by a non-United States person, although
exempt from U.S. withholding tax if the requirements described in (1)(c) above
are met, may nevertheless be subject to United States income tax as if such
interest was earned by a United States person.
In addition, a foreign corporation that is a holder of a note may be
subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to some adjustments, unless
it qualifies for a lower rate under an applicable income tax treaty. For this
purpose, interest on a note or gain recognized on the disposition of a note
will be included in earnings and profits if the interest or gain is effectively
connected with the conduct by the foreign corporation of a trade or business in
the United States.
Recently finalized Treasury Regulations generally effective for payments
made after December 31, 2000 will provide alternative methods for satisfying
the certification requirement described in paragraph (1) above and will require
a non-United States person that provides an Internal Revenue Service Form W-
8ECI or other permitted form as discussed above as well as a non-United States
person claiming the benefit of an income tax treaty, to also provide its U.S.
taxpayer identification number. The finalized Treasury Regulations generally
also will require, in the case of a note held by a foreign partnership, that
the certification described in paragraph (1) above be provided by the partners
and that the partnership provide certain information, including a U.S. taxpayer
identification number. A look-through rule will apply in the case of tiered
partnerships.
Backup Withholding and Information Reporting
Information reporting on IRS Form 1099 and backup withholding will not
apply to payments made by Countrywide Home Loans or any of our paying agents to
a non-United States person on a note if, in the case of interest, the IRS Form
described in clauses (b) or (c) in paragraph (1) under "Income and Withholding
Tax" has been provided under applicable procedures, or, in the case of interest
or principal, the certification described in clause (1)(a) under "Income and
Withholding Tax" and a certification that the beneficial owner satisfies
certain other conditions have been supplied under applicable procedures,
provided that the payor does not have actual knowledge that the certifications
are incorrect. Countrywide Home Loans or its agent may, however, report
payments of interest on the notes.
Payments of the proceeds from the sale of a note made to or through a
foreign office of a broker will generally not be subject to information
reporting or backup withholding. However, information reporting may apply to
such payments if the broker is
(1) a United States person,
(2) a controlled foreign corporation for United States tax purposes,
(3) a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified
three-year period, or
S-20
<PAGE>
(4) effective beginning January 1, 2001, a foreign partnership if, at any
time during its tax year, one or more partners are United States
persons who, in the aggregate, hold more than 50% of the income or
capital interests in the partnership or if, at any time during its tax
year, such foreign partnership is engaged in a United States trade or
business.
Payments of the proceeds from the sale of a note to or through the United
States office of a broker are subject to information reporting and backup
withholding unless the holder or beneficial owner certifies that it is a non-
United States person and that it satisfies certain other conditions or
otherwise establishes an exemption from information reporting and backup
withholding.
Backup withholding is not a separate tax, but is allowed as a refund or
credit against the holder's U.S. federal income tax, provided the necessary
information is furnished to the IRS.
S-21
<PAGE>
UNDERWRITING
The underwriters named below have each severally agreed, subject to the
terms and conditions of the purchase agreement dated June 17, 1999, to purchase
from Countrywide Home Loans the principal amount of notes set forth opposite
their respective names. The underwriters for the notes are committed to
purchase all of the notes, if any of such notes are purchased.
<TABLE>
<CAPTION>
Principal Amount
Underwriter of Notes
----------- ----------------
<S> <C>
Chase Securities Inc. ......................................... $309,375,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... 309,375,000
Countrywide Securities Corporation............................. 75,000,000
J.P. Morgan Securities Inc. ................................... 56,250,000
------------
Total..................................................... $750,000,000
============
</TABLE>
The underwriters have advised Countrywide Home Loans that they propose
initially to offer all or part of the notes directly to the public at the
offering price set forth on the cover page of this prospectus supplement and to
certain dealers at such price less a concession not in excess of .20% of the
principal amount of the notes. The underwriters may allow, and the dealers may
reallow, a discount not in excess of .125% of the principal amount of the notes
on sales to certain other dealers. After the initial public offering, the
public offering price and other selling terms may be changed.
Certain of the underwriters and their affiliates engage in transactions
with, and perform services for, Countrywide Home Loans and Countrywide Credit
Industries in the ordinary course of business and have engaged, and may in the
future engage, in commercial banking and investment banking transactions with
Countrywide Home Loans and Countrywide Credit Industries.
The underwriting of the notes will conform to the requirements set forth
in the applicable sections of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc.
Countrywide Home Loans and Countrywide Credit Industries have agreed that
during the period beginning from the date of this prospectus supplement until
the date that is five business days after the date of this prospectus
supplement they will not issue in any institutional offering any debt
securities (other than (a) the notes and (b) debt securities issued in
"structured" financings), without the prior written consent of the
underwriters.
The underwriters 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 market price of
the notes.
If the underwriters create a short position in the notes in connection
with the offering, that is, if they sell more notes than are set forth on the
cover page of this prospectus supplement, the underwriters 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 market price of the security to be
higher than it might be in the absence of such purchases. None of Countrywide
Home Loans, Countrywide Credit Industries or the underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the market price of the
notes. In addition, none of Countrywide Home Loans, Countrywide Credit
Industries or the underwriters makes any representation that the underwriters
will engage in such transactions or that such transactions, once commenced,
will not be discontinued without notice.
S-22
<PAGE>
The notes are offered for sale in those jurisdictions in the United
States, Europe and Asia where it is legal to make such offers. The distribution
of this prospectus supplement and the offering of the notes in certain
jurisdictions may be restricted by law. Persons into whose possession this
prospectus supplement and the accompanying prospectus come should inform
themselves about and observe any such restrictions. This prospectus supplement
and the accompanying prospectus do not constitute, and may not be used in
connection with, an offer or solicitation by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to
whom it is unlawful to make such offer or solicitation.
Each of the underwriters has represented and agreed that it has not and
will not offer, sell or deliver any of the notes directly or indirectly, or
distribute this prospectus supplement or the prospectus or any other offering
material relating to the notes, in or from any jurisdiction except under
circumstances that will result in compliance with the applicable laws and
regulations thereof and that will not impose any obligations on Countrywide
Home Loans or Countrywide Credit Industries except as set forth in the purchase
agreement.
In particular, each underwriter has represented and agreed that:
. it has not offered or sold and will not offer or sell any notes to
persons in the United Kingdom prior to the expiry of the period of six
months from the issue date of the notes except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purpose of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995;
. it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue
of the notes to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 (as amended) or is a person to whom such
document may otherwise lawfully be issued or passed on; and
. it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to any notes in, from or otherwise involving the United
Kingdom.
Although the notes have been approved for listing effective June 25, 1999
on the Luxembourg Stock Exchange, subject to official notice of issuance, the
notes are new issues of securities with no established trading market. No
assurance can be given as to the liquidity of, or the trading markets for, the
notes. Purchasers of the notes may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase in
addition to the issue price set forth on the cover page of this prospectus
supplement. Countrywide Home Loans and Countrywide Credit Industries have been
advised by the underwriters that the underwriters intend to make a market in
the notes, but they are not obligated to do so and may discontinue such market-
making at any time without notice.
It is expected that delivery of the notes will be made against payment
therefor on or about June 24, 1999, which is the fifth business day following
the date of this prospectus supplement (such settlement cycle being herein
referred to as "T+5"). Purchasers of notes should note that the ability to
settle secondary market trades of the notes effected on the date of pricing and
the succeeding business days may be affected by the T+5 settlement.
S-23
<PAGE>
GENERAL INFORMATION
Listing
The notes have been approved for listing effective June 25, 1999 on the
Luxembourg Stock Exchange, subject to official notice of issuance. In
connection with the listing application for the notes, the Certificate of
Incorporation and the By-Laws of Countrywide Home Loans and Certificate of
Incorporation and Bylaws of Countrywide Credit Industries and a legal notice
relating to the issuance of the notes have been deposited with "Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg," where copies thereof may
be obtained upon request. Copies of the above documents together with this
prospectus supplement, the accompanying prospectus, the Indenture and
Countrywide Credit Industries' Annual Report on Form 10-K for the year ended
February 28, 1999, as well as all future Annual Reports, Quarterly Reports on
Form 10-Q and financial Current Reports on Form 8-K, so long as any of the
notes are outstanding and listed on the Luxembourg Stock Exchange, will be made
available free of charge at the main office of Kredietbank S.A. The purchase
agreement will be available for inspection at Kredietbank S.A, which will act
as intermediary between the Luxembourg Stock Exchange and Countrywide Home
Loans and the holders of the notes so long as the notes are in global form.
The consolidated financial statements contained in Countrywide Credit
Industries' Annual Report on Form 10-K for the fiscal year ended February 28,
1999 have been audited by Grant Thornton LLP.
Authorization
The notes will be issued pursuant to authority granted by the Board of
Directors of Countrywide Home Loans on October 28, 1998, May 13, 1999 and June
17, 1999, as each such authority may be supplemented from time to time.
The guarantees will be issued pursuant to authority granted by the Board
of Directors of Countrywide Credit Industries on October 28, 1998 and May 13,
1999, as each such authority may be supplemented from time to time.
Material Change
There has been no material adverse change in the financial position or
operations of Countrywide Credit Industries and its subsidiaries (including
Countrywide Home Loans) on a consolidated basis since February 28, 1999, except
as disclosed herein or in the documents incorporated by reference.
Litigation
Neither Countrywide Credit Industries nor any subsidiary (including
Countrywide Home Loans) is involved in any legal or arbitration proceedings,
nor, to Countrywide Credit Industries' knowledge, are any legal or arbitration
proceedings pending or threatened involving Countrywide Credit Industries or
any subsidiary (including Countrywide Home Loans), which have had during the 12
months prior to the date of this prospectus supplement a material effect on the
financial position of Countrywide Credit Industries and its subsidiaries
(including Countrywide Home Loans) on a consolidated basis.
Countrywide Credit Industries and certain subsidiaries (including
Countrywide Home Loans) are defendants in various legal proceedings involving
matters generally incidental to their business. Although it is difficult to
predict the ultimate outcome of these proceedings, management of Countrywide
Credit Industries believes, based on discussions with counsel, that any
ultimate liability will not materially affect the consolidated financial
position or results of operations of Countrywide Credit Industries and its
subsidiaries (including Countrywide Home Loans).
S-24
<PAGE>
Governing Law
The notes, the guarantees, the Indenture and the purchase agreement are
governed by, and shall be construed in accordance with, the laws of the State
of New York, U.S.A., applicable to agreements made and to be performed wholly
within such jurisdiction.
Identification Numbers
The notes have been accepted for clearance through Euroclear and
Cedelbank (Common Code: 9903747; ISIN: US22237UAB89; CUSIP: 22237UAB8).
VALIDITY OF SECURITIES
The validity of the notes and the guarantees will be passed upon for
Countrywide Home Loans and Countrywide Credit Industries, respectively, by
Fried, Frank, Harris, Shriver & Jacobson (a partnership including professional
corporations), New York, New York. Edwin Heller (whose professional corporation
retired as partner of Fried, Frank, Harris, Shriver & Jacobson in September
1996) is Of Counsel to Fried, Frank, Harris, Shriver & Jacobson and a director
of Countrywide Credit Industries. Brown & Wood LLP, New York, New York, will
serve as counsel for the underwriters. Brown & Wood LLP also serves as counsel
for CWMBS, Inc. and CWABS, Inc., each a wholly owned subsidiary of Countrywide
Credit Industries, in connection with offerings of mortgage-backed and asset-
backed securities and from time to time also serves as counsel for Countrywide
Credit Industries on other matters.
S-25
<PAGE>
PROSPECTUS
Countrywide Home Loans, Inc.
Debt Securities
Unconditionally Guaranteed by
[LOGO APPEARS HERE]
----------------
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
3
<PAGE>
its mortgage banking business. Countrywide Insurance Services, Inc. acts as an
agent in the sale of insurance, 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
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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;
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(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
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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.
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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;
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(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
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(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.
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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
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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PRINCIPAL OFFICES OF COUNTRYWIDE HOME LOANS, INC.
AND COUNTRYWIDE CREDIT INDUSTRIES, INC.
4500 Park Granada
Calabasas, California 91302
TRUSTEE AND REGISTRAR
The Bank of New York
101 Barclay Street
New York, New York 10286
LUXEMBOURG PAYING AGENT/TRANSFER AGENT
Kredietbank S.A.
Luxembourgeoise
43 boulevard Royal
L-2955 Luxembourg
LISTING AGENT
Kredietbank S.A.
Luxembourgeoise
43 boulevard Royal
L-2955 Luxembourg
LEGAL ADVISERS TO COUNTRYWIDE HOME LEGAL ADVISERS TO THE UNDERWRITERS
LOANS, INC. AND COUNTRYWIDE CREDIT
INDUSTRIES, INC.
As to United States Law: As to United States Law:
Fried, Frank, Harris, Shriver & Brown & Wood LLP
Jacobson One World Trade Center
(A partnership including New York, New York 10048-0557
professional corporations)
One New York Plaza
New York, New York 10004
AUDITORS TO COUNTRYWIDE HOME LOANS, INC.
AND COUNTRYWIDE CREDIT INDUSTRIES, INC.
Grant Thornton LLP
1000 Wilshire Boulevard
Suite 700
Los Angeles, California 90017-2464
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$750,000,000
Countrywide Home Loans, Inc.
6.85% Notes due 2004
Payment of Principal and Interest
Fully and Unconditionally Guaranteed by
[LOGO APPEARS HERE]
---------------------------------
PROSPECTUS SUPPLEMENT
---------------------------------
Chase Securities Inc.
Merrill Lynch & Co.
Countrywide Securities Corporation
J.P. Morgan & Co.
June 17, 1999
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