Rule 424(b)(5)
File Nos.333-82583 and 333-82583-01
PROSPECTUS SUPPLEMENT
(To Prospectus Dated June 8, 2000)
$3,000,000,000
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES I
UNCONDITIONALLY GUARANTEED BY
[COUNTRYWIDE CREDIT INDUSTRIES, INC. LOGO]
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This is a public offering to be conducted on a continuous basis by Countrywide
Home Loans, Inc. of Medium-Term Notes, Series I. Countrywide Home Loans, Inc.
plans to issue Notes with the general terms described below. The final terms for
each Note will be described in a pricing supplement prepared at the time the
Notes are offered for sale.
- The Notes will mature 9 months or more from their date of issue.
- The Notes may be subject to redemption or repayment at the option of
Countrywide Home Loans, Inc. or the holder.
- The Notes will bear interest at either a fixed or floating rate. Interest will
be paid on the Notes on the dates specified in the pricing supplement.
- The Notes will be denominated in U.S. dollars or such foreign currencies as
Countrywide Home Loans, Inc. may designate in the pricing supplement.
- The Notes will be unsecured and unsubordinated indebtedness of Countrywide
Home Loans, Inc. and will rank equally with its other unsecured and
unsubordinated indebtedness.
- Countrywide Credit Industries, Inc., the parent company of Countrywide Home
Loans, Inc., will guarantee the payment of principal, premium, if any, and
interest on the Notes. The guarantee will be an unsecured and unsubordinated
obligation of Countrywide Credit Industries, Inc.
INVESTING IN THE NOTES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE S-3.
Unless stated differently in the pricing supplement, the pricing terms of the
Notes will be:
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------------- -----------------------------
<S> <C> <C>
Public Offering Price............................ 100.000% $3,000,000,000
Commission or Discount........................... .125%-.75% $3,750,000-$22,500,000
Proceeds to Countrywide Home Loans, Inc.......... 99.875%-99.25% $2,996,250,000-$2,977,500,000
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved 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.
If Countrywide Home Loans, Inc. or Countrywide Credit Industries, Inc. sell
other securities referred to in the accompanying prospectus, the amount of Notes
that Countrywide Home Loans, Inc. may offer and sell under this prospectus
supplement will be reduced.
Countrywide Home Loans, Inc. may sell the Notes to the agents referred to
below as principals for resale at varying or fixed offering prices or through
such agents as agents using their reasonable best efforts to sell the Notes on
behalf of Countrywide Home Loans, Inc. Countrywide Home Loans, Inc. also may
sell the Notes directly to investors. Countrywide Home Loans, Inc. will deliver
the Notes in either certificated form or through the book-entry facilities of
The Depository Trust Company, as described in the pricing supplement.
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LEHMAN BROTHERS
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
DEUTSCHE BANC ALEX. BROWN
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
COUNTRYWIDE SECURITIES CORPORATION
June 15, 2000
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Risk Factors................................................ S-3
Description of Notes........................................ S-5
Certain Federal Income Tax Consequences..................... S-27
Plan of Distribution of Notes............................... S-32
Validity of Notes........................................... S-34
</TABLE>
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Additional Information...................................... 2
Countrywide Credit Industries and Countrywide Home Loans.... 3
Use of Proceeds............................................. 4
Selected Consolidated Financial Data........................ 5
Description of Capital Stock................................ 6
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 8
Description of Debt Securities of Countrywide Credit
Industries................................................ 8
Description of Debt Securities of Countrywide Home Loans and
Related Guarantees of
Countrywide Credit Industries............................. 15
Plan of Distribution........................................ 30
Validity of Securities...................................... 31
Experts..................................................... 32
</TABLE>
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You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus.
Countrywide Home Loans, Inc. and Countrywide Credit Industries, Inc. have not,
and the agents have not, authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. Countrywide Home Loans, Inc. and
Countrywide Credit Industries, Inc. are not, and the agents are not, making an
offer to sell these securities in any jurisdiction where the offer or sale is
not permitted.
You should assume that the information appearing in this prospectus
supplement and the accompanying prospectus is accurate as of the date on the
front cover of this prospectus supplement only. The business, financial
condition, results of operations and prospects of Countrywide Home Loans, Inc.
and Countrywide Credit Industries, Inc. may have changed since that date.
References in this prospectus supplement to "Countrywide Credit Industries"
are to Countrywide Credit Industries, Inc. and its consolidated subsidiaries.
References in this prospectus supplement to "Countrywide Home Loans" are to
Countrywide Home Loans, Inc. and its consolidated subsidiaries.
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RISK FACTORS
Your investment in the Notes will include certain risks. In consultation
with your own financial and legal advisers, you should carefully consider, among
other matters, the following discussion of risks before deciding whether an
investment in the Notes is suitable for you.
STRUCTURE RISKS
GENERAL
If you invest in Notes indexed to one or more interest rate, currency or
other indices or formulas, there will be significant risks not associated with a
conventional fixed rate or floating rate debt security. These risks include
fluctuation of the indices or formulas and the possibility that you will receive
a lower (or no) amount of principal, premium or interest and at different times
than you expected. Countrywide Home Loans has no control over a number of
matters, including economic, financial and political events, that are important
in determining the existence, magnitude and longevity of such risks and their
results. In addition, if an index or formula used to determine any amounts
payable in respect of the Notes contains a multiplier or leverage factor, the
effect of any change in such index or formula will be magnified. In recent
years, values of certain indices and formulas have been volatile and volatility
in those and other indices and formulas may be expected in the future. However,
past experience is not necessarily indicative of what may occur in the future.
REDEMPTION
If your Notes are redeemable at the option of Countrywide Home Loans or are
otherwise subject to mandatory redemption, Countrywide Home Loans may choose to
redeem (in the case of optional redemption) or must redeem (in the case of
mandatory redemption) your Notes at times when prevailing interest rates may be
relatively low. At those times, you generally will not be able to reinvest the
redemption proceeds in a comparable security at an effective interest rate as
high as that of the Notes.
UNCERTAIN TRADING MARKETS
Countrywide Home Loans cannot assure you that a trading market for your
Notes will ever develop or be maintained. Many factors independent of the
creditworthiness of Countrywide Home Loans affect the trading market. These
factors include:
- complexity and volatility of any index or formula applicable to the Notes,
- method of calculating the principal, premium and interest in respect of the
Notes,
- time remaining to the maturity of the Notes,
- outstanding amount of the Notes,
- redemption features of the Notes,
- amount of other debt securities linked to any index or formula applicable to
the Notes, and
- level, direction and volatility of market interest rates generally.
In addition, certain Notes may have a more limited trading market and
experience more price volatility because they were designed for specific
investment objectives or strategies. There may be a limited number of buyers
when you decide to sell those Notes. This may affect your ability to sell those
Notes at all or the price you receive for those Notes if you choose to sell them
prior to maturity. You should not purchase Notes unless you understand and know
you can bear the foregoing investment risks.
EXCHANGE RATES AND EXCHANGE CONTROLS
If you invest in Notes that are denominated and/or payable in a currency
other than U.S. dollars ("Foreign Currency Notes"), there will be significant
risks not associated with an investment in a debt security denominated and
payable in U.S. dollars, including the possibility of material changes in the
exchange rate between U.S. dollars and your payment currency and the imposition
or modification of exchange controls by the applicable governments. Countrywide
Home Loans has no control over the factors that generally affect these risks,
such as economic, financial and political events and the supply and demand for
the
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applicable currencies. Moreover, if payments on your Foreign Currency Notes are
determined by reference to a formula containing a multiplier or leverage factor,
the effect of any change in the exchange rates between the applicable currencies
will be magnified. In recent years, exchange rates between certain currencies
have been highly volatile and volatility between such currencies or with other
currencies may be expected in the future. Fluctuations between currencies in the
past are not necessarily indicative, however, of fluctuations that may occur in
the future. Depreciation of your payment currency would result in a decrease in
the U.S. dollar equivalent yield of your Foreign Currency Notes, in the U.S.
dollar equivalent value of the principal and any premium payable at maturity or
earlier redemption of your Foreign Currency Notes and, generally, in the U.S.
dollar equivalent market value of your Foreign Currency Notes.
Governmental exchange controls could affect exchange rates and the
availability of your payment currency on a required payment date. Even if there
are no exchange controls, it is possible that your payment currency will not be
available on a required payment date because of circumstances beyond the control
of Countrywide Home Loans. In such cases, Countrywide Home Loans will be allowed
to satisfy its obligations in respect of your Foreign Currency Notes in U.S.
dollars.
YOU SHOULD CONSULT YOUR FINANCIAL AND LEGAL ADVISORS ABOUT THE RISKS
ASSOCIATED WITH FOREIGN CURRENCY NOTES. YOU SHOULD NOT PURCHASE SUCH NOTES IF
YOU ARE UNSOPHISTICATED WITH REGARD TO FOREIGN CURRENCY TRANSACTIONS.
CREDIT RATINGS
The credit ratings of this medium-term note program may not reflect the
potential impact of all risks related to structure and other factors on the
value of your Notes. In addition, actual or anticipated changes in the credit
ratings of Countrywide Home Loans will generally affect the market value of your
Notes.
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DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements and, to the extent inconsistent with, replaces the
description of the general terms and provisions of the Countrywide Home Loans
debt securities and Countrywide Credit Industries guarantees under the caption
"Description of Debt Securities of Countrywide Home Loans and Related Guarantees
of Countrywide Credit Industries" in the accompanying Prospectus, to which
description reference is hereby made. Unless otherwise specified in a Pricing
Supplement, the terms of the Notes will be as set forth below.
GENERAL
The Notes will be issued as a series of debt securities of Countrywide Home
Loans limited to U.S. $3,000,000,000, or its equivalent in one or more foreign
currencies or currency units, aggregate initial offering price under an
Indenture dated as of January 1, 1992, as amended, supplemented or modified from
time to time, including Supplemental Indenture No. 1 thereto dated as of June
15, 1995 (collectively, the "Indenture"), among Countrywide Home Loans,
Countrywide Credit Industries, as guarantor, and The Bank of New York, as
trustee (the "Trustee"), which is described more fully under "Description of
Debt Securities of Countrywide Home Loans and Related Guarantees of Countrywide
Credit Industries" in the accompanying Prospectus. The statements herein
concerning the Notes and the Indenture do not purport to be complete and are
qualified in their entirety by reference to the provisions of the Indenture,
including the definitions of certain terms used herein without definition.
The Notes will be offered on a continuous basis and will mature on any day
nine months or more from their dates of issue, as specified in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, interest-bearing Notes will either bear interest at a fixed rate
("Fixed Rate Notes") or bear interest at a floating rate ("Floating Rate
Notes"), as specified in the applicable Pricing Supplement. Notes also may be
issued that do not bear any interest currently or that bear interest at a below
market rate.
Each Note will be represented by either a global security registered in the
name of a nominee of The Depository Trust Company, New York, New York ("DTC"),
as depositary (a "Book-Entry Note"), or a certificate issued in definitive form
(a "Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in Book-Entry Notes will be shown on, and transfers thereof
will be effected only through, records maintained by DTC (with respect to
interests of its Participants (as defined below)) and by its Participants (with
respect to interests of beneficial owners (as defined below)). Book-Entry Notes
will not be issuable as Certificated Notes, except under the limited
circumstances described herein.
Unless otherwise specified in the applicable Pricing Supplement, the
minimum denomination of Notes will be $1,000 or the equivalent thereof in any
foreign currency or currency unit (if other than U.S. dollars) (a "Specified
Currency") as may be designated by Countrywide Home Loans, and integral
multiples of $1,000 in excess thereof or the equivalent thereof in such
Specified Currency.
Interest rates offered by Countrywide Home Loans with respect to the Notes
may differ depending upon, among other things, the aggregate principal amount
purchased in any single transaction. Notes with similar terms but different
interest rates may be offered concurrently to different investors. Notes with
different variable terms also may be offered concurrently to different
investors.
Unless otherwise specified herein or in the applicable Pricing Supplement,
"Exchange Rate" means, with respect to a Specified Currency, the noon dollar
buying rate for such Specified Currency for cable transfers quoted by the
Exchange Rate Agent (as specified in the applicable Pricing Supplement) in The
City of New York on the Record Date or Special Record Date (each as defined
below) or the fifteenth day immediately preceding the Maturity Date or on such
other date provided in the applicable Note or in the Indenture, as the case may
be, as certified for customs purposes by the Federal Reserve Bank of New York.
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Certificated Notes may be presented for registration of transfer or
exchange at the Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York. Registration of transfers or exchanges of
Book-Entry Notes may be effected only through a participating member of the
Depositary (as defined below).
The Notes will constitute unsecured and unsubordinated indebtedness of
Countrywide Home Loans and will rank equally with the other unsecured and
unsubordinated indebtedness of Countrywide Home Loans. As of February 29, 2000,
Countrywide Credit Industries had no secured indebtedness outstanding, and
Countrywide Home Loans had $46,152,000 aggregate principal amount of secured
indebtedness outstanding, all of which was short-term indebtedness. As of that
date, Countrywide Home Loans had $8,081,216,000 aggregate principal amount of
unsecured and unsubordinated indebtedness outstanding, which indebtedness ranked
equally with the other unsecured and unsubordinated indebtedness of Countrywide
Home Loans and will rank equally with the Notes. See "Description of Debt
Securities of Countrywide Home Loans and Related Guarantees of Countrywide
Credit Industries -- Senior Indenture -- General" and "-- Senior
Indenture -- Guarantees" in the accompanying Prospectus. A substantial portion
of the assets of Countrywide Home Loans may be pledged under various credit
agreements among Countrywide Home Loans and various lending institutions. See
Note F to the consolidated financial statements of Countrywide Credit Industries
incorporated by reference into the accompanying Prospectus.
The Indenture does not contain any provisions that would limit the ability
of Countrywide Home Loans, Countrywide Credit Industries or any of their
respective affiliates to incur indebtedness (secured or unsecured) or that would
afford holders of the Notes protection in the event of a highly leveraged
transaction, restructuring, change in control, merger or similar transaction
involving Countrywide Home Loans or Countrywide Credit Industries that may
adversely affect holders of the Notes.
If so specified in the applicable Pricing Supplement, the Notes will be
redeemable at the option of Countrywide Home Loans or repayable at the option of
the holder prior to maturity. See "-- Redemption and Repayment" below. The Notes
will not be subject to any sinking fund.
"Business Day" means (A) any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law, regulation or executive order to close in New York, New York
or Los Angeles, California; provided, however, if the Specified Currency
specified in the applicable Pricing Supplement is other than U.S. dollars, such
day is also not a day on which banking institutions are authorized or required
by law, regulation or executive order to close in the relevant Principal
Financial Center (as defined below) (or if the Specified Currency is Euro, such
day is also not a day on which the Trans-European Automated Real-Time Gross
Settlement Express Transfer (TARGET) System is closed), and (B) with respect to
Floating Rate Notes as to which LIBOR (as defined below) is an applicable Base
Rate, the day must also be a London Banking Day (as defined below). "Principal
Financial Center" means the capital city of the country issuing the Specified
Currency, except that with respect to United States dollars, Australian dollars,
Canadian dollars, Deutsche marks, Dutch guilders, Italian lire, Portuguese
escudos, South African rand and Swiss francs, the "Principal Financial Center"
shall be The City of New York, Sydney and (soley in the case of the Specified
Currency) Melbourne, Toronto, Frankfurt, Amsterdam, Milan, London (solely in the
case of the LIBOR Currency (as defined below)), Johannesburg and Zurich,
respectively. "London Banking Day" means any day on which banking institutions
are open for business (including dealings in the LIBOR Currency) in London.
The "Maturity Date" means the earlier of the date on which the principal of
a Note is redeemed (the "Redemption Date") or repaid (the "Repayment Date") or
the date on which the Note will mature (the "Stated Maturity Date").
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on Floating
Rate Notes will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)),
and all amounts used in or
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resulting from such calculation on Floating Rate Notes will be rounded, in the
case of U.S. dollars, to the nearest cent (with one-half cent being rounded
upward) or, in the case of a Specified Currency other than U.S. dollars, to the
nearest unit (with one-half unit being rounded upward).
The Pricing Supplement relating to each Note will describe the following
terms:
(1) the Specified Currency;
(2) whether such Note is a Fixed Rate Note, a Floating Rate Note or such
other Note as is specified in such Pricing Supplement;
(3) if other than 100%, the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Note will be issued
to the public (the "Issue Price");
(4) the trade date;
(5) the date on which such Note will be issued (the "Issue Date");
(6) the Stated Maturity Date and whether the Stated Maturity Date may be
extended by Countrywide Home Loans, and if so, the Extension Periods
and Final Maturity Date (each as defined below);
(7) if such Note is a Fixed Rate Note, the rate per annum at which such
Note will bear interest, if any, and the Interest Payment Dates (as
defined below) and whether such rate may be reset by Countrywide Home
Loans prior to the Stated Maturity Date and, if so, the date(s) and
basis or formula therefor;
(8) if such Note is a Floating Rate Note, whether it is a "Floating
Rate/Fixed Rate Note" and, if so, the Fixed Rate Commencement Date and
Fixed Interest Rate (each as defined below), as well as the Base Rate,
the Initial Interest Rate, the Interest Determination Dates, the
Interest Reset Dates, the Interest Payment Dates, the Index Maturity,
the Maximum Interest Rate and/or the Minimum Interest Rate, if any, and
the Spread and/or Spread Multiplier, if any (each as defined below),
and any other terms relating to the particular method of calculating
the interest rate for such Note, and whether the Spread and/or Spread
Multiplier may be reset by Countrywide Home Loans prior to the Stated
Maturity Date and, if so, the date(s) and basis or formula therefor;
(9) whether such Note will have the Estate Option (as defined below);
(10) whether such Note may be redeemed at the option of Countrywide Home
Loans, or repaid at the option of the holder, prior to maturity, and
if so, the earliest date of redemption (the "Initial Redemption Date")
and optional date(s) of repayment (each, an "Optional Repayment Date")
and the other provisions relating to such redemption or repayment;
(11) whether such Note will be issued initially as a Book-Entry Note or a
Certificated Note; and
(12) any other terms of such Note not inconsistent with the provisions of
the Indenture.
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
Principal, premium, if any, and interest will be paid by Countrywide Home
Loans in the Specified Currency. If and as specified in the applicable Pricing
Supplement, at the request of a holder of a Note payable in a Specified Currency
other than U.S. dollars, payments of principal, premium, if any, and interest in
respect of such Note will be paid in U.S. dollars. Under such circumstances,
Countrywide Home Loans will be required to tender payment in U.S. dollars at the
Exchange Rate, and any costs associated with such conversion would be borne by
such holder through deduction from such payments. Such holder may elect to
receive payments in U.S. dollars by delivering a written request to the Trustee
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not later than the close of business on the Record Date immediately preceding
the Interest Payment Date or the fifteenth day immediately preceding the
Maturity Date, as the case may be. Such election will remain in effect until
revoked by written notice from such holder to the Trustee, but written notice of
any such revocation must be received by the Trustee not later than the close of
business on the Record Date immediately preceding the Interest Payment Date or
the fifteenth day immediately preceding the Maturity Date, as the case may be.
Upon request, the Trustee will mail a copy of a form of request to any holder.
Unless otherwise specified in the applicable Pricing Supplement, interest
on the certificated Notes due on any Interest Payment Date other than the
Maturity Date will be paid, except as provided below, by mailing a check in the
Specified Currency (from an account at a bank located outside of the United
States if such check is payable in a Specified Currency other than U.S. dollars)
to the holder at the address of such holder appearing on the Security Register
on the applicable Record Date. Unless otherwise specified in the applicable
Pricing Supplement, the first payment of interest on any Note originally issued
between a Record Date and an Interest Payment Date will be made on the Interest
Payment Date following the next Record Date to the holder on such next Record
Date. Notwithstanding the foregoing, on any Interest Payment Date other than the
Maturity Date, a holder of U.S. $10,000,000 (or the equivalent thereof in a
Specified Currency other than U.S. dollars) or more in aggregate principal
amount of Notes (whether or not having identical terms and provisions) shall be
entitled: (1) if the Specified Currency is U.S. dollars, to receive such payment
by wire transfer of immediately available funds to an account maintained by the
payee with a bank located in the United States, but only if appropriate wire
transfer instructions have been received in writing by the Trustee not later
than the Record Date immediately preceding such Interest Payment Date, and (2)
if the Specified Currency is other than U.S. dollars, to receive such payment by
wire transfer of immediately available funds to an account maintained by the
payee with a bank located in a jurisdiction in which payment in such Specified
Currency is then lawful. Countrywide Home Loans will pay any administrative
costs imposed by banks in connection with making payments by wire transfer, but
any tax, assessment or other governmental charge imposed upon payments will be
borne by the holders of the Notes in respect of which payments are made.
Interest payable on the Maturity Date will be payable to the person to whom
principal is payable. Beneficial owners of Global Notes (as defined below) will
be paid in accordance with the procedures of the Depositary and its Participants
in effect from time to time as described under "-- Book-Entry Notes" below.
Unless otherwise specified in the applicable Pricing Supplement, payments
of principal, premium, if any, and interest on the Maturity Date will be made in
immediately available funds in the Specified Currency upon presentation and
surrender of Notes at the Corporate Trust Office of the Trustee. In the case of
such payments in a Specified Currency other than U.S. dollars, Notes shall be
presented and surrendered to the Trustee in time for the Trustee to make such
payments in accordance with its normal procedures.
If any Interest Payment Date other than the Maturity Date for any Floating
Rate Note would otherwise fall on a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next Business Day, except that
if interest thereon is determined by reference to LIBOR and such next Business
Day falls in the next calendar month, such Interest Payment Date shall be the
immediately preceding Business Day. If the Maturity Date for any Fixed Rate Note
or Floating Rate Note or the Interest Payment Date for any Fixed Rate Note falls
on a day that is not a Business Day, payment of principal, premium, if any, and
interest with respect to such Note will be made on the next Business Day with
the same force and effect as if made on such date, and no interest on such
payment will accrue to such next Business Day.
Any interest not punctually paid or duly provided for with respect to a
Note ("Defaulted Interest") will forthwith cease to be payable to the holder
thereof on the applicable Record Date and may either be paid to the person in
whose name such Note is registered at the close of business on a special record
date (the "Special Record Date") for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to the holder of such
Note not less than ten days prior to such Special Record
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Date, or may be paid at any time in any other lawful manner, all as more
completely provided in the Indenture.
Unless otherwise specified in the applicable Pricing Supplement, the
"Record Date" with respect to any Interest Payment Date for Floating Rate Notes
shall be the fifteenth day immediately preceding such Interest Payment Date, and
for Fixed Rate Notes shall be the December 31 or June 30 immediately preceding
such Interest Payment Date, in each case whether or not such date shall be a
Business Day.
PAYMENT CURRENCY
If any payment of principal, premium, if any, or interest in respect of any
Note is to be made in a Specified Currency other than U.S. dollars and such
Specified Currency is not available to Countrywide Home Loans for making such
payment due to the imposition of exchange controls or other circumstances beyond
the control of Countrywide Home Loans, Countrywide Home Loans will be entitled
to satisfy its obligations to the holder of such Note by making such payment in
U.S. dollars on the basis of the Exchange Rate (as defined below) two Business
Days prior to the Interest Payment Date or the Maturity Date, as the case may be
(or, if no rate is quoted for such Specified Currency on such date, the last
date such Exchange Rate is quoted). Any payment made under such circumstances in
U.S. dollars where the required payment is in a Specified Currency other than
U.S. dollars will not constitute an Event of Default under the Indenture. For
purposes of this section, the "Exchange Rate" for a foreign currency will be the
noon Dollar selling rate for such foreign currency for cable transfers quoted by
the Exchange Rate Agent in The City of New York, as certified for customs
purposes by the Federal Reserve Bank of New York.
All determinations referred to above made by an Exchange Rate Agent shall
be at its sole discretion (except to the extent expressly provided that any
determination is subject to approval) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the holder of such Note and
such Exchange Rate Agent shall have no liability therefor.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Issue Date at the rate per
annum stated on the face thereof until the principal amount thereof is paid or
made available for payment. Unless otherwise specified in the applicable Pricing
Supplement, interest on each Fixed Rate Note will be payable semi-annually in
arrears on each January 15 and July 15 (each, an "Interest Payment Date") and on
the Maturity Date. Each payment of interest shall include interest accrued from
and including the Issue Date or the most recent Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, to, but
excluding, the applicable Interest Payment Date or the Maturity Date, as the
case may be (each, an "Interest Period"). Unless otherwise specified in the
applicable Pricing Supplement, interest on the Fixed Rate Notes will be computed
on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest at a rate determined by
reference to an interest rate basis (each, a "Base Rate"), which may be adjusted
by a Spread and/or Spread Multiplier. The applicable Pricing Supplement will
designate one or more of the following Base Rates as applicable to each Floating
Rate Note: (a) the CD Rate (as defined below), (b) the CMT Rate (as defined
below), (c) the Commercial Paper Rate (as defined below), (d) the Eleventh
District Cost of Funds Rate (as defined below), (e) the Federal Funds Rate (as
defined below), (f) LIBOR, (g) the Prime Rate (as defined below), (h) the
Treasury Rate (as defined below) or (i) such other interest rate basis or
formula as is set forth in such Pricing Supplement and in such Floating Rate
Note. The "Index Maturity" for any Floating Rate Note is the period of maturity
of the instrument or obligation from which the Base Rate is calculated.
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Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate, or the lowest, highest or average of two or more specified
Base Rates, (a) plus or minus the Spread, if any, and/or (b) multiplied by the
Spread Multiplier, if any. The "Spread" is the number of basis points (one basis
point equals one-hundredth of a percentage point) specified in the applicable
Pricing Supplement to be added or subtracted from the related Base Rate
applicable to such Floating Rate Note, and the "Spread Multiplier" is the
percentage specified in the applicable Pricing Supplement as being applicable to
such Floating Rate Note by which such Base Rate will be multiplied to determine
the applicable interest rate on such Floating Rate Note.
If a Floating Rate Note is designated as a "Floating Rate/Fixed Rate Note,"
unless otherwise specified in the applicable Pricing Supplement, the interest
rate will be calculated in the same manner as any other Floating Rate Note until
a designated date when the interest rate will become fixed (the "Fixed Rate
Commencement Date"). The interest rate in effect for the period commencing on
the Fixed Rate Commencement Date and continuing until the Maturity Date will be
the rate per annum specified in the applicable Pricing Supplement as the "Fixed
Interest Rate" or, if no Fixed Interest Rate is specified, the interest rate in
effect on the day immediately preceding the Fixed Rate Commencement Date. Unless
otherwise specified herein or in the applicable Pricing Supplement, the Fixed
Rate Commencement Date shall also constitute an Interest Payment Date for
purposes of calculating and paying interest. Unless otherwise specified herein
or in the applicable Pricing Supplement, the Floating Rate/Fixed Rate Note shall
be treated as a Floating Rate Note until the Fixed Rate Commencement Date and as
a Fixed Rate Note from the Fixed Rate Commencement Date and thereafter. Material
United States federal income tax considerations associated with an investment in
a Floating Rate/Fixed Rate Note will be specified in the applicable Pricing
Supplement.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (1) a maximum numerical limitation,
or ceiling, on the rate of interest that may accrue during any Interest Period
("Maximum Interest Rate"); and (2) a minimum numerical limitation, or floor, on
the rate of interest that may accrue during any Interest Period ("Minimum
Interest Rate"). In addition to any Maximum Interest Rate that may be applicable
to any Floating Rate Note pursuant to the above provisions, the interest rate on
a Floating Rate Note will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by United States law of general
application.
As specified in the applicable Pricing Supplement, the rate of interest on
each Floating Rate Note will be reset daily, weekly, monthly, quarterly,
semi-annually or annually (each, an "Interest Reset Date") and the period
between Interest Reset Dates will be the "Interest Reset Period." Unless
otherwise specified in the applicable Pricing Supplement, the Interest Reset
Date will be, in the case of Floating Rate Notes that reset (a) daily, each
Business Day; (b) weekly, the Wednesday of each week (with the exception of
weekly reset Floating Rate Notes as to which the Treasury Rate is an applicable
Base Rate, which will reset the Tuesday of each week, except as specified
below); (c) monthly, the third Wednesday of each month (with the exception of
monthly reset Floating Rate Notes as to which the Eleventh District Cost of
Funds Rate is an applicable Base Rate, which will reset on the first calendar
day of each month); (d) quarterly, the third Wednesday of March, June, September
and December; (e) semi-annually, the third Wednesday of the two months specified
in the applicable Pricing Supplement; and (f) annually, the third Wednesday of
the month specified in the applicable Pricing Supplement. If an Interest Reset
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next Business Day,
except that if interest thereon is determined by reference to LIBOR and such
next Business Day falls in the next calendar month, such Interest Reset Date
shall be the immediately preceding Business Day.
The interest rate applicable to an Interest Reset Period commencing on the
related Interest Reset Date will be determined by reference to the applicable
Base Rate as of the particular "Interest Determination Date", which will be (a)
with respect to the Federal Funds Rate and the Prime Rate, the
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Business Day immediately preceding the related Interest Reset Date; (b) with
respect to the CD Rate, the CMT Rate and the Commercial Paper Rate, the second
Business Day preceding the related Interest Reset Date; (c) with respect to the
Eleventh District Cost of Funds Rate, the last working day of the month
immediately preceding the related Interest Reset Date on which the Federal Home
Loan Bank of San Francisco publishes the Index (as defined below); (d) with
respect to LIBOR, the second London Banking Day preceding the related Interest
Reset Date; and (e) with respect to the Treasury Rate, the day in the week in
which the related Interest Reset Date falls on which day Treasury Bills (as
defined below) are normally auctioned (i.e. Treasury Bills are normally sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday, except that the
auction may be held on the preceding Friday); provided however, that if an
auction is held on the Friday of the week preceding the related Interest Reset
Date, the Interest Determination Date will be the preceding Friday. If interest
on a Floating Rate Note is determined by reference to two or more Base Rates,
the "Interest Determination Date" means the most recent Business Day that is at
least two Business Days prior to the applicable Interest Reset Date on which
each Base Rate shall be determinable. Each Base Rate shall be determined and
compared as of such date, and the applicable interest rate shall take effect on
the related Interest Reset Date.
Interest on Floating Rate Notes will be payable on the Interest Payment
Dates specified in the applicable Pricing Supplement (each, an "Interest Payment
Date") and on the Maturity Date. Unless otherwise specified in the applicable
Pricing Supplement, interest payments shall be the amount of interest accrued
from and including the most recent Interest Payment Date to which interest has
been paid or duly provided for, or, if no interest has been paid or duly
provided for, from and including the Issue Date to but excluding the applicable
Interest Payment Date or the Maturity Date, as the case may be (each, an
"Interest Period").
With respect to a Floating Rate Note, accrued interest shall be calculated
by multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factor calculated for each day in the Interest Period for which accrued
interest is being calculated. The interest factor for each such day is computed
by dividing the interest rate applicable to such day by 360, if an applicable
Base Rate is the CD Rate, Commercial Paper Rate, Eleventh District Cost of Funds
Rate, Federal Funds Rate, LIBOR or Prime Rate, or by the actual number of days
in the year, if an applicable Base Rate is the CMT Rate or Treasury Rate. If
more than one Base Rate is applicable to a Floating Rate Note, the interest
factor will be calculated in the same manner as if only the Base Rate specified
for such purpose in the applicable Pricing Supplement applied.
Unless otherwise specified in the applicable Pricing Supplement, The Bank
of New York will be the calculation agent (the "Calculation Agent") with respect
to the Floating Rate Notes. Upon the request of the holder of any Floating Rate
Note, the Calculation Agent will provide the interest rate then in effect and,
if determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note. The "Calculation Date," if
applicable, pertaining to a Floating Rate Note will be the earlier of (1) the
10th day after the Interest Determination Date pertaining to a Base Rate or, if
such day is not a Business Day, the next Business Day or (2) the Business Day
immediately preceding the applicable Interest Payment Date or the Maturity Date,
as the case may be.
The interest rate in effect with respect to a Floating Rate Note from the
Issue Date to the first Interest Reset Date (the "Initial Interest Rate") will
be specified in the applicable Pricing Supplement. The interest rate for each
subsequent Interest Reset Date, except in the case of a Floating Rate/Fixed Rate
Note for the period subsequent to the Fixed Rate Commencement Date, will be
determined by the Calculation Agent as follows.
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CD RATE
"CD Rate" means:
(1) the rate on the particular Interest Determination Date for negotiable
United States dollar certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published in
H.15(519) (as defined below) under the caption "CDs (secondary
market)," or
(2) if the rate referred to in clause (1) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date for negotiable United States
dollar certificates of deposit of the particular Index Maturity as
published in H.15 Daily Update (as defined below), or such other
recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "CDs (secondary market)," or
(3) if the rate referred to in clause (2) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation
Agent as the arithmetic mean of the secondary market offered rates as
of 10:00 A.M., New York City time, on that Interest Determination Date,
of three leading nonbank dealers in negotiable United States dollar
certificates of deposit in The City of New York (which may include the
Agents or their affiliates) selected by the Calculation Agent for
negotiable United States dollar certificates of deposit of major United
States money market banks for negotiable United States certificates of
deposit with a remaining maturity closest to the particular Index
Maturity in an amount that is representative for a single transaction
in that market at that time, or
(4) if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (3), the CD Rate in effect on the particular
Interest Determination Date.
"H.15(519)" means the weekly statistical release designated as H.15(519),
or any successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http:/www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
CMT RATE
"CMT Rate" means:
(1) if CMT Telerate Page 7051 is specified in the applicable Pricing
Supplement:
(a) the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the Index Maturity specified in
the applicable Pricing Supplement as published in H.15(519) under the
caption "Treasury Constant Maturities", as the yield is displayed on Bridge
Telerate, Inc. (or any successor service) on page 7051 (or any other page
as may replace the specified page on that service) ("Telerate Page 7051"),
for the particular Interest Determination Date, or
(b) if the rate referred to in clause (a) does not so appear on
Telerate Page 7051, the percentage equal to the yield for United States
Treasury securities at "constant maturity" having the particular Index
Maturity and for the particular Interest Determination Date as published in
H.15(519) under the caption "Treasury Constant Maturities", or
(c) if the rate referred to in clause (b) does not so appear in
H.15(519), the rate on the particular Interest Determination Date for the
period of the particular Index Maturity as may then be
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published by either the Federal Reserve System Board of Governors or the
United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate which would otherwise have been
published in H.15(519), or
(d) if the rate referred to in clause (c) is not so published, the
rate on the particular Interest Determination Date calculated by the
Calculation Agent as a yield to maturity based on the arithmetic mean of
the secondary market bid prices at approximately 3:30 P.M., New York City
time, on that Interest Determination Date of three leading primary United
States government securities dealers in The City of New York (which may
include the agents or their affiliates) (each, a "Reference Dealer"),
selected by the Calculation Agent from five Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation, or, in the
event of equality, one of the highest, and the lowest quotation or, in the
event of equality, one of the lowest, for United States Treasury securities
with an original maturity equal to the particular Index Maturity, a
remaining term to maturity no more than 1 year shorter than that Index
Maturity and in a principal amount that is representative for a single
transaction in the securities in that market at that time, or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the particular Interest
Determination Date calculated by the Calculation Agent based on the
arithmetic mean of the bid prices obtained and neither the highest nor the
lowest of the quotations shall be eliminated, or
(f) if fewer than three prices referred to in clause (d) are provided
as requested, the rate on the particular Interest Determination Date
calculated by the Calculation Agent as a yield to maturity based on the
arithmetic mean of the secondary market bid prices as of approximately 3:30
P.M., New York City time, on that Interest Determination Date of three
Reference Dealers selected by the Calculation Agent from five Reference
Dealers selected by the Calculation Agent and eliminating the highest
quotation or, in the event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest, for United
States Treasury securities with an original maturity greater than the
particular Index Maturity, a remaining term to maturity closest to that
Index Maturity and in a principal amount that is representative for a
single transaction in the securities in that market at that time, or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate on the particular Interest
Determination Date calculated by the Calculation Agent based on the
arithmetic mean of the bid prices obtained and neither the highest nor the
lowest of the quotations will be eliminated, or
(h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on the particular Interest
Determination Date.
(2) if CMT Telerate Page 7052 is specified in the applicable Pricing
Supplement:
(a) the percentage equal to the one-week or one-month, as specified in
the applicable Pricing Supplement, average yield for United States Treasury
securities at "constant maturity" having the Index Maturity specified in
the applicable Pricing Supplement as published in H.15(519) opposite the
caption "Treasury Constant Maturities", as the yield is displayed on Bridge
Telerate, Inc. (or any successor service) (on page 7052 or any other page
as may replace the specified page on that service) ("Telerate Page 7052"),
for the week or month, as applicable, ended immediately preceding the week
or month, as applicable, in which the particular Interest Determination
Date falls, or
(b) if the rate referred to in clause (a) does not so appear on
Telerate Page 7052, the percentage equal to the one-week or one-month, as
specified in the applicable Pricing Supplement, average yield for United
States Treasury securities at "constant maturity" having the particular
Index Maturity and for the week or month, as applicable, preceding the
particular Interest Determination Date as published in H.15(519) opposite
the caption "Treasury Constant Maturities," or
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(c) if the rate referred to in clause (b) does not so appear in
H.15(519), the one-week or one-month, as specified in the applicable
Pricing Supplement, average yield for United States Treasury securities at
"constant maturity" having the particular Index Maturity as otherwise
announced by the Federal Reserve Bank of New York for the week or month, as
applicable, ended immediately preceding the week or month, as applicable,
in which the particular Interest Determination Date falls, or
(d) if the rate referred to in clause (c) is not so published, the
rate on the particular Interest Determination Date calculated by the
Calculation Agent as a yield to maturity based on the arithmetic mean of
the secondary market bid prices at approximately 3:30 P.M., New York City
time, on that Interest Determination Date of three Reference Dealers
selected by the Calculation Agent from five Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation, or, in the
event of equality, one of the highest, and the lowest quotation or, in the
event of equality, one of the lowest, for United States Treasury securities
with an original maturity equal to the particular Index Maturity, a
remaining term to maturity no more than 1 year shorter than that Index
Maturity and in a principal amount that is representative for a single
transaction in the securities in that market at that time, or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the particular Interest
Determination Date calculated by the Calculation Agent based on the
arithmetic mean of the bid prices obtained and neither the highest nor the
lowest of the quotations shall be eliminated, or
(f) if fewer than three prices referred to in clause (d) are provided
as requested, the rate on the particular Interest Determination Date
calculated by the Calculation Agent as a yield to maturity based on the
arithmetic mean of the secondary market bid prices as of approximately 3:30
P.M., New York City time, on that Interest Determination Date of three
Reference Dealers selected by the Calculation Agent from five Reference
Dealers selected by the Calculation Agent and eliminating the highest
quotation or, in the event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest, for United
States Treasury securities with an original maturity greater than the
particular Index Maturity, a remaining term to maturity closest to that
Index Maturity and in a principal amount that is representative for a
single transaction in the securities in that market at the time, or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate on the particular Interest
Determination Date calculated by the Calculation Agent based on the
arithmetic mean of the bid prices obtained and neither the highest or the
lowest of the quotations will be eliminated, or
(h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on that Interest Determination Date.
If two United States Treasury securities with an original maturity greater
than the Index Maturity specified in the applicable Pricing Supplement have
remaining terms to maturity equally close to the particular Index Maturity, the
quotes for the United States Treasury security with the shorter original
remaining term to maturity will be used.
COMMERCIAL PAPER RATE
"Commercial Paper Rate" means:
(1) the Money Market Yield (as defined below) on the particular Interest
Determination Date of the rate for commercial paper having the Index
Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the caption "Commercial Paper -- Nonfinancial", or
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(2) if the rate referred to in clause (1) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the Money Market
Yield of the rate on the particular Interest Determination Date for
commercial paper having the particular Index Maturity as published in
H.15 Daily Update, or such other recognized electronic source used for
the purpose of displaying the applicable rate, under the caption
"Commercial Paper -- Nonfinancial", or
(3) if the rate referred to in clause (2) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation
Agent as the Money Market Yield of the arithmetic mean of the offered
rates at approximately 11:00 A.M., New York City time, on that Interest
Determination Date of three leading dealers of United States dollar
commercial paper in The City of New York (which may include the Agents
or their affiliates) selected by the Calculation Agent for commercial
paper having the particular Index Maturity placed for industrial
issuers whose bond rating is "Aa", or the equivalent, from a nationally
recognized statistical rating organization, or
(4) if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (3), the Commercial Paper Rate in effect on the
particular Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
D X 360
Money Market Yield = ---------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable Interest Reset Period.
ELEVENTH DISTRICT COST OF FUNDS RATE
"Eleventh District Cost of Funds Rate" means:
(1) the rate equal to the monthly weighted average cost of funds for the
calendar month immediately preceding the month in which the particular
Interest Determination Date falls as set forth under the caption "11th
District" on the display on Bridge Telerate, Inc. (or any successor
service) on page 7058 (or any other page as may replace the specified
page on that service) ("Telerate Page 7058") as of 11:00 A.M., San
Francisco time, on that Interest Determination Date, or
(2) if the rate referred to in clause (1) does not so appear on Telerate
Page 7058, the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District that was
most recently announced (the "Index") by the Federal Home Loan Bank of
San Francisco as the cost of funds for the calendar month immediately
preceding that Interest Determination Date, or
(3) if the Federal Home Loan Bank of San Francisco fails to announce the
Index on or prior to the particular Interest Determination Date for the
calendar month immediately preceding that Interest Determination Date,
the Eleventh District Cost of Funds Rate in effect on the particular
Interest Determination Date.
FEDERAL FUNDS RATE
"Federal Funds Rate" means:
(1) the rate on the particular Interest Determination Date for United
States dollar federal funds as published in H.15(519) under the caption
"Federal Funds (Effective)" and displayed on Bridge
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Telerate, Inc. (or any successor service) on page 120 (or any other
page as may replace the specified page on that service) ("Telerate Page
120"), or
(2) if the rate referred to in clause (1) does not so appear on Telerate
Page 120 or is not so published by 3:00 P.M., New York City time, on
the related Calculation Date, the rate on the particular Interest
Determination Date for United States dollar federal funds as published
in H.15 Daily Update, or such other recognized electronic source used
for the purpose of displaying the applicable rate, under the caption
"Federal Funds (Effective)", or
(3) if the rate referred to in clause (2) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation
Agent as the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading
brokers of United States dollar federal funds transactions in The City
of New York (which may include the Agents or their affiliates) selected
by the Calculation Agent prior to 9:00 A.M., New York City time, on
that Interest Determination Date, or
(4) if the brokers so selected by the Calculation Agent are not quoting as
mentioned in clause (3), the Federal Funds Rate in effect on the
particular Interest Determination Date.
LIBOR
"LIBOR" means:
(1) if "LIBOR Telerate" is specified in the applicable Pricing Supplement
or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, the
rate for deposits in the LIBOR Currency having the Index Maturity
specified in the applicable Pricing Supplement, commencing on the
related Interest Reset Date, that appears on the LIBOR Page as of 11:00
A.M., London time, on the particular Interest Determination Date, or
(2) if "LIBOR Reuters" is specified in the applicable Pricing Supplement,
the arithmetic mean of the offered rates, calculated by the Calculation
Agent, or the offered rate, if the LIBOR Page by its terms provides
only for a single rate, for deposits in the LIBOR Currency having the
particular Index Maturity, commencing on the related Interest Reset
Date, that appear or appears, as the case may be, on the LIBOR Page as
of 11:00 A.M., London time, on the particular Interest Determination
Date, or
(3) if fewer than two offered rates appear, or no rate appears, as the case
may be, on the particular Interest Determination Date on the LIBOR Page
as specified in clause (1) or (2), as applicable, the rate calculated
by the Calculation Agent of at least two offered quotations obtained by
the Calculation Agent after requesting the principal London offices of
each of four major reference banks (which may include affiliates of the
Agents) in the London interbank market to provide the Calculation Agent
with its offered quotation for deposits in the LIBOR Currency for the
period of the particular Index Maturity, commencing on the related
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on that Interest Determination
Date and in a principal amount that is representative for a single
transaction in the LIBOR Currency in that market at that time, or
(4) if fewer than two offered quotations referred to in clause (3) are
provided as requested, the rate calculated by the Calculation Agent as
the arithmetic mean of the rates quoted at approximately 11:00 A.M., in
the applicable Principal Financial Center, on the particular Interest
Determination Date by three major banks (which may include affiliates
of the Agents) in that Principal Financial Center selected by the
Calculation Agent for loans in the LIBOR Currency to leading
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European banks having the particular Index Maturity and in a principal
amount that is representative for a single transaction in the LIBOR
Currency in that market at that time, or
(5) if the banks so selected by the Calculation Agent are not quoting as
mentioned in clause (4), LIBOR in effect on the particular Interest
Determination Date.
"LIBOR Currency" means the currency specified in the applicable Pricing
Supplement as to which LIBOR shall be calculated or, if no currency is specified
in the applicable Pricing Supplement, United States dollars.
"LIBOR Page" means either:
- if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
display on the Reuter Monitor Money Rates Service (or any successor
service) on the page specified in the applicable Pricing Supplement (or
any other page as may replace that page on that service) for the purpose
of displaying the London interbank rates of major banks for the LIBOR
Currency; or
- if "LIBOR Telerate" is specified in the applicable Pricing Supplement or
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, the
display on Bridge Telerate, Inc. (or any successor service) on the page
specified in the applicable Pricing Supplement (or any other page as may
replace such page on such service) for the purpose of displaying the
London interbank rates of major banks for the LIBOR Currency.
PRIME RATE
"Prime Rate" means:
(1) the rate on the particular Interest Determination Date as published in
H.15(519) under the caption "Bank Prime Loan", or
(2) if the rate referred to in clause (1) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date as published in H.15 Daily
Update, or such other recognized electronic source used for the purpose
of displaying the applicable rate, under the caption "Bank Prime Loan",
or
(3) if the rate referred to in clause (2) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation
Agent as the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen US PRIME 1
Page (as defined below) as the applicable bank's prime rate or base
lending rate as of 11:00 A.M., New York City time, on that Interest
Determination Date, or
(4) if fewer than four rates referred to in clause (3) are so published by
3:00 p.m., New York City time, on the related Calculation Date, the
rate on the particular Interest Determination Date calculated by the
Calculation Agent as the arithmetic mean of the prime rates or base
lending rates quoted on the basis of the actual number of days in the
year divided by a 360-day year as of the close of business on that
Interest Determination Date by three major banks (which may include
affiliates of the Agents) in The City of New York selected by the
Calculation Agent, or
(5) if the banks so selected by the Calculation Agent are not quoting as
mentioned in clause (4), the Prime Rate in effect on the particular
Interest Determination Date.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the "US PRIME 1" page (or any
other page as may replace that page on that service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
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TREASURY RATE
"Treasury Rate" means:
(1) the rate from the auction held on the Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified in the
applicable Pricing Supplement under the caption "INVESTMENT RATE" on
the display on Bridge Telerate, Inc. (or any successor service) on page
56 (or any other page as may replace that page on that service)
("Telerate Page 56") or page 57 (or any other page as may replace that
page on that service) ("Telerate Page 57"), or
(2) if the rate referred to in clause (1) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the Bond
Equivalent Yield (as defined below) of the rate for the applicable
Treasury Bills as published in H.15 Daily Update, or another recognized
electronic source used for the purpose of displaying the applicable
rate, under the caption "U.S. Government Securities/Treasury
Bills/Auction High", or
(3) if the rate referred to in clause (2) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the Bond
Equivalent Yield of the auction rate of the applicable Treasury Bills
as announced by the United States Department of the Treasury, or
(4) if the rate referred to in clause (3) is not so announced by the United
States Department of the Treasury, or if the Auction is not held, the
Bond Equivalent Yield of the rate on the particular Interest
Determination Date of the applicable Treasury Bills as published in
H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market", or
(5) if the rate referred to in clause (4) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date of the applicable Treasury Bills
as published in H.15 Daily Update, or another recognized electronic
source used for the purpose of displaying the applicable rate, under
the caption "U.S. Government Securities/Treasury Bills/Secondary
Market", or
(6) if the rate referred to in clause (5) is not so published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the Calculation
Agent as the Bond Equivalent Yield of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York
City time, on that Interest Determination Date, of three primary United
States government securities dealers (which may include the Agents or
their affiliates) selected by the Calculation Agent for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity
specified in the applicable Pricing Supplement, or
(7) if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (6), the Treasury Rate in effect on the particular
Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
<TABLE>
<S> <C> <C>
D X N
Bond Equivalent Yield = --------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the applicable
Interest Reset Period.
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INDEXED NOTES
Countrywide Home Loans may from time to time offer Notes ("Indexed Notes")
with the amount of principal, premium and/or interest payable in respect thereof
to be determined with reference to the price or prices of specified commodities
or stocks, to the exchange rate of one or more designated currencies (including
a composite currency such as the ECU) relative to an indexed currency or to
other items, in each case as specified in the applicable Pricing Supplement. In
certain cases, holders of Indexed Notes may receive a principal payment on the
Maturity Date that is greater than or less than the principal amount of such
Indexed Notes depending upon the relative value on the Maturity Date of the
specified indexed item. Information as to the method for determining the amount
of principal, premium, if any, and/or interest payable in respect of Indexed
Notes, certain historical information with respect to the specified indexed item
and any material tax considerations associated with an investment in Indexed
Notes will be specified in the applicable Pricing Supplement. See also "Risk
Factors -- Structure Risks -- General."
RESET NOTES
The Pricing Supplement relating to each Note will indicate whether
Countrywide Home Loans has the option with respect to such Note to reset the
interest rate, in the case of a Fixed Rate Note, or to reset the Spread and/or
Spread Multiplier, in the case of a Floating Rate Note (in each case, a "Reset
Note"), and, if so, (1) the date or dates on which such interest rate or such
Spread and/or Spread Multiplier, as the case may be, may be reset (each an
"Optional Interest Reset Date") and (2) the basis or formula, if any, for such
resetting. Material United States federal income tax considerations associated
with an investment in a Reset Note will be specified in the applicable Pricing
Supplement.
Countrywide Home Loans may exercise such option with respect to a Note by
notifying the Trustee of such exercise at least 45 but not more than 60 calendar
days prior to an Optional Interest Reset Date for such Note. If the Company so
notifies the Trustee of such exercise, not later than 40 calendar days prior to
such Optional Interest Reset Date the Trustee will send by telegram, telex,
facsimile transmission or letter (first class, postage prepaid) to the holder of
such Note a notice (the "Reset Notice") indicating (1) that Countrywide Home
Loans has elected to reset the interest rate, in the case of a Fixed Rate Note,
or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, (2)
such new interest rate or such new Spread and/or Spread Multiplier, as the case
may be, and (3) the provisions, if any, for redemption by Countrywide Home Loans
during the period from such Optional Interest Reset Date to the next Optional
Interest Reset Date or, if there is no such next Optional Interest Reset Date,
to the Stated Maturity Date of such Note (each such period, a "Subsequent
Interest Period"), including the date or dates on which, or the period or
periods during which, and the price or prices at which such redemption may occur
during such Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 calendar days prior to an
Optional Interest Reset Date for a Note, Countrywide Home Loans may, at its
option, revoke the interest rate, in the case of a Fixed Rate Note, or the
Spread and/or Spread Multiplier, in the case of a Floating Rate Note, provided
for in the Reset Notice and establish a higher interest rate, in the case of a
Fixed Rate Note, or a higher Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, for the Subsequent Interest Period commencing on such
Optional Interest Reset Date by causing the Trustee to send by telegram, telex,
facsimile transmission or letter (first class, postage prepaid) notice of such
higher interest rate or higher Spread and/or Spread Multiplier, as the case may
be, to the holder of such Note. Such notice shall be irrevocable. All Notes with
respect to which the interest rate or Spread and/or Spread Multiplier is reset
on an Optional Interest Reset Date, and with respect to which holders of such
Notes have not surrendered such Notes for repayment (or have validly revoked any
such surrender) pursuant to the next paragraph, will bear such higher interest
rate, in the case of a Fixed Rate Note, or higher Spread and/or Spread
Multiplier, in the case of a Floating Rate Note.
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<PAGE> 20
If Countrywide Home Loans elects prior to an Optional Interest Reset Date
to reset the interest rate or the Spread and/or Spread Multiplier of a Note, the
holder of such Note will have the option to elect repayment of such Note by
Countrywide Home Loans on such Optional Interest Reset Date at a price equal to
the principal amount thereof plus any accrued interest to such Optional Interest
Reset Date. In order to obtain repayment of such Note to be so repaid on such
Optional Interest Reset Date, the holder thereof must follow the procedures set
forth below under "Redemption and Repayment" for optional repayment, except that
the period for delivery of such Note or notification to the Trustee shall be at
least 25 but not more than 35 calendar days prior to such Optional Interest
Reset Date. A holder who has tendered a Note for repayment following receipt of
a Reset Notice may revoke such tender for repayment by written notice to the
Trustee received prior to 5:00 P.M., New York City time, on the 10th calendar
day prior to such Optional Interest Reset Date.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether
Countrywide Home Loans has the option to extend the Stated Maturity Date of such
Note for one or more periods of one to five whole years (each such period, an
"Extension Period") up to but not beyond the date (the "Final Stated Maturity
Date") set forth in such Pricing Supplement.
Countrywide Home Loans may exercise such option with respect to a Note by
notifying the Trustee of such exercise at least 45 but not more than 60 calendar
days prior to the Stated Maturity Date of such Note in effect prior to the
exercise of such option (the "Current Stated Maturity Date"). If Countrywide
Home Loans so notifies the Trustee of such exercise, not later than 40 calendar
days prior to the Current Stated Maturity Date the Trustee will send by
telegram, telex, facsimile transmission or letter (first class, postage prepaid)
to the holder of such Note a notice (the "Extension Notice") relating to such
Extension Period, indicating (1) that Countrywide Home Loans has elected to
extend the Current Stated Maturity Date of such Note, (2) the new Stated
Maturity Date and the Final Stated Maturity Date, (3) in the case of a Fixed
Rate Note, the interest rate applicable to the Extension Period or, in the case
of a Floating Rate Note, the Spread and/or Spread Multiplier applicable to the
Extension Period, and (4) the provisions, if any, for redemption by Countrywide
Home Loans during the Extension Period, including the date or dates on which, or
the period or periods during which, and the price or prices at which such
redemption may occur during the Extension Period. Upon the sending by the
Trustee of an Extension Notice to the holder of a Note, the Current Stated
Maturity Date of such Note shall be extended automatically, and, except as
modified by the Extension Notice and as described in the next two paragraphs,
such Note will have the same terms as prior to the sending of such Extension
Notice.
Notwithstanding the foregoing, not later than 20 calendar days prior to the
Current Stated Maturity Date of a Note, Countrywide Home Loans may, at its
option, revoke the interest rate, in the case of a Fixed Rate Note, or the
Spread and/or Spread Multiplier, in the case of a Floating Rate Note, provided
for in the Extension Notice and establish a higher interest rate, in the case of
a Fixed Rate Note, or a higher Spread and/or Spread Multiplier, in the case of a
Floating Rate Note, for the Extension Period by causing the Trustee to send by
telegram, telex, facsimile transmission or letter (first class, postage prepaid)
notice of such higher interest rate or higher Spread and/or Spread Multiplier,
as the case may be, to the holder of such Note. Such notice shall be
irrevocable. All Notes with respect to which the Current Stated Maturity Date is
extended, and with respect to which the holders of such Notes have not
surrendered such Notes for repayment (or have validly revoked any such
surrender) pursuant to the next paragraph, will bear such higher interest rate,
in the case of a Fixed Rate Note, or higher Spread and/or Spread Multiplier, in
the case of a Floating Rate Note, for the Extension Period.
If Countrywide Home Loans elects to extend the Current Stated Maturity Date
of a Note, the holder of such Note will have the option to elect repayment of
such Note by Countrywide Home Loans on the Current Stated Maturity Date at a
price equal to the principal amount thereof plus any accrued interest to the
Current Stated Maturity Date. In order for a Note to be so repaid on the Current
Stated Maturity Date, the holder thereof must follow the procedures set forth
below under "-- Redemption and
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<PAGE> 21
Repayment" for optional repayment, except that the period for delivery of such
Note or notification to the Trustee shall be at least 25 but not more than 35
calendar days prior to the Current Stated Maturity Date. A holder who has
tendered a Note for repayment following receipt of an Extension Notice may
revoke such tender for repayment by written notice to the Trustee received prior
to 5:00 P.M., New York City time on the 10th calendar day prior to the Current
Stated Maturity Date.
RENEWABLE NOTES
If so indicated in the applicable Pricing Supplement, the term of all or
any portion of a Note may be renewed beyond the Stated Maturity Date by the
holder in accordance with the procedures described in such Pricing Supplement.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "-- Reset Notes," "-- Extension of Maturity" and
"-- Renewable Notes."
BOOK-ENTRY NOTES
Countrywide Home Loans has established a depositary arrangement with DTC
with respect to the Book-Entry Notes, the terms of which are summarized below.
Any additional or differing terms of such depositary arrangement will be
described in the applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes having the same Specified Currency,
Issue Date, Stated Maturity Date, redemption and/or repayment provisions, if
any, reset and/or extension provisions, if any, Interest Payment Dates, if any,
and, in the case of Fixed Rate Notes, interest rate or, in the case of Floating
Rate Notes, Base Rate or Rates, Initial Interest Rate, Index Maturity, Interest
Reset Dates, Spread and/or Spread Multiplier, if any, Minimum Interest Rate, if
any, and/or Maximum Interest Rate, if any, will be represented by one or more
global securities (each, a "Global Note"). Each Global Note representing
Book-Entry Notes will be deposited with, or on behalf of, DTC, or such other
depositary as is specified in the Pricing Supplement (the "Depositary"), and
registered in the name of a nominee of such Depositary. Global Notes may not be
transferred except as a whole by the applicable Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any nominee to a successor
of such Depositary or a nominee of such successor.
Book-Entry Notes will not be exchangeable for Certificated Notes and,
except under the limited circumstances described below, will not otherwise be
issuable in definitive form.
DTC has advised Countrywide Home Loans and the Agents as follows:
DTC will initially act as securities depositary for the Global Notes.
The Global Notes will be issued as fully registered securities registered
in the name of Cede & Co. (DTC's partnership nominee). One fully registered
Global Note will be issued with respect to each $400,000,000 of principal
amount of Notes.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. DTC holds
securities that its participants ("Participants") deposit with it. DTC also
facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes
S-21
<PAGE> 22
in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations ("Direct Participants"). DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to DTC's system is also available to others
such as securities brokers and dealers, banks, and trust companies that
clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The
Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
Purchases of securities under DTC's system must be made by or through
Direct Participants, which will receive a credit for the securities on
DTC's records. The ownership interest of each actual purchaser of each
security (a "beneficial owner") is in turn recorded on the Direct
Participant's and Indirect Participant's records. Beneficial owners will
not receive written confirmation from DTC of their purchase, but such
beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participant or Indirect Participant through which
the beneficial owner entered into the transaction. Transfers of ownership
interests in the securities are to be accomplished by entries made on the
books of Participants acting on behalf of beneficial owners. Beneficial
owners will not receive certificates representing their ownership interests
in securities, except in the event that use of the book-entry system for
the securities is discontinued.
To facilitate subsequent transfers, all securities deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the
securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such securities are credited, which may or
may not be the beneficial owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to beneficial owners is
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to
securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the securities are credited on the record date (identified
in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the securities
will be made to DTC. DTC's practice is to credit Direct Participants'
accounts on the payable date in accordance with their respective holdings
shown on DTC's records unless DTC has reason to believe that it will not
receive payment on the payable date. Payments by Participants to beneficial
owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such
Participant and not of DTC, the applicable Paying Agent, or Countrywide
Home Loans, subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment of principal and interest to DTC is
the responsibility of Countrywide Home Loans or the applicable Paying
Agent, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and
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<PAGE> 23
disbursement of such payments to the beneficial owners shall be the
responsibility of Direct Participants and Indirect Participants.
DTC may discontinue providing its services as securities depositary
with respect to the Global Notes at any time by giving reasonable notice to
Countrywide Home Loans, the Trustee or the applicable Paying Agent. Under
such circumstances, in the event that a successor securities depositary is
not obtained, the Global Notes are required to be printed and delivered.
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, the Global Notes will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Countrywide Home Loans believes to be
reliable, but Countrywide Home Loans takes no responsibility for the accuracy
thereof.
So long as the Depositary for a Global Note, or its nominee, is the
registered owner of such Global Note, such Depositary or such nominee, as the
case may be, will be considered the sole owner or holder of the Book-Entry Notes
represented by such Global Note for all purposes under the Indenture governing
such Book-Entry Notes. Except as set forth below, owners of beneficial interests
in such Global Notes will not be entitled to have Notes represented by such
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of Certificated Notes and will not be considered the
owners or holders thereof under the Indenture. Accordingly, each person owning a
beneficial interest in a Global Note must rely on the procedures of the
Depositary and, if such person is not a Participant, those of the Participant
through which such person owns its interests, in order to exercise any rights of
a holder under the Indenture or such Note. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to transfer beneficial interests in a Global Note.
Principal, premium, if any, and interest payments on Notes registered in
the name of or held by the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner or the
holder of the Global Note representing such Book-Entry Notes. None of
Countrywide Home Loans, Countrywide Credit Industries, the Trustee, the
Calculation Agent, any Paying Agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Note for
such Book-Entry Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
If the Depositary is at any time unwilling, unable or ineligible to
continue as Depositary and a successor Depositary is not appointed by
Countrywide Home Loans within 60 days or if an Event of Default under the
Indenture has occurred and is continuing, Countrywide Home Loans will issue
Certificated Notes in exchange for the Global Note or Notes representing such
Book-Entry Notes. In addition, Countrywide Home Loans may at any time and in its
sole discretion determine not to have any Notes in registered form represented
by one or more Global Notes and, in such event, will issue Certificated Notes in
exchange for all Global Notes representing such Notes. In any such instance, an
owner of a beneficial interest in a Global Note will be entitled to physical
delivery of Certificated Notes represented by such Global Note equal in
principal amount to such beneficial interest and to have such Notes registered
in its name.
REDEMPTION AND REPAYMENT
If so specified in the applicable Pricing Supplement, Countrywide Home
Loans may at its option on and after the Initial Redemption Date, if any, set
forth in a Note redeem such Note in whole or, from time to time, in part in
increments of $1,000 (provided that any remaining principal amount thereof shall
not be less than $100,000 (or such other amount in a foreign currency or
currency unit as is specified in
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<PAGE> 24
the applicable Pricing Supplement), or, if another minimum denomination is set
forth in the applicable Pricing Supplement, then such minimum denomination) at
the sum of (1) 100% of the unpaid principal amount thereof or the portion
thereof redeemed (or, if such Note is an Original Issue Discount Security (as
defined below), 100% of the Amortized Face Amount (as defined below), or portion
thereof redeemed, determined as of the Redemption Date as provided below), plus
(2) the Initial Redemption Percentage specified in the applicable Pricing
Supplement (as adjusted by the Annual Redemption Percentage Reduction, if
applicable) multiplied by the unpaid principal amount or the portion thereof
redeemed (or, if such Note is an Original Issue Discount Security, the Issue
Price thereof, net of any portion of such Issue Price that has been deemed paid
prior to redemption (by reason of any payments, other than a payment of
qualified stated interest, in excess of the original issue discount accrued to
the date of such payment), or the portion of such Issue Price (or such net
amount) proportionate to the portion of the unpaid principal amount of the Note
redeemed), plus (3) accrued but unpaid interest to the Redemption Date (or, if
such Note is an Original Issue Discount Security, any accrued but unpaid
interest to the Redemption Date but only to the extent such interest would
constitute qualified stated interest within the meaning of Treasury Regulation
Section 1.1273-1(c) under the Internal Revenue Code of 1986, as amended (the
"Code"), as in effect on the date hereof). Such Initial Redemption Percentage
shall decline at each anniversary of the Initial Redemption Date by an amount
equal to the Annual Redemption Percentage Reduction, if any, specified in the
applicable Pricing Supplement, until the Initial Redemption Percentage equals
zero percent. Countrywide Home Loans may exercise such option by causing the
Trustee to mail a notice of such redemption to the holder of such Note not less
than 30 but not more than 60 days prior to the Redemption Date. In the event of
redemption of such Note in part only, a new Note or Notes for the unredeemed
portion thereof shall be issued in the name of the holder thereof upon the
cancellation thereof. If less than all of the Notes with like tenor and terms to
such Note are to be redeemed, the Notes to be redeemed shall be selected by the
Trustee by such method as the Trustee shall deem fair and appropriate.
An "Original Issue Discount Security" means any Note that has been issued
at an Issue Price lower, by an amount that equals or exceeds a de minimis amount
(as determined under United States federal income tax rules applicable to
original issue discount instruments), than the principal amount thereof. The
"Amortized Face Amount" of such Note shall be the amount equal to the sum of (a)
the Issue Price plus (b) the aggregate of the portions of the original issue
discount (the excess of the amounts considered as part of the "stated redemption
price at maturity" of such Note within the meaning of Section 1273(a)(2) of the
Code, whether denominated as principal or interest, over the Issue Price of such
Note) that shall theretofore have accrued pursuant to Section 1272 of the Code
(without regard to Section 1272(a)(7) of the Code) from the Issue Date of such
Note to the date of determination, minus (c) any amount considered as part of
the "stated redemption price at maturity" of such Note that has been paid on
such Note from the Issue Date to the date of determination. If a Note is an
Original Issue Discount Security, the amount payable in the event of
acceleration of the maturity thereof shall be the Amortized Face Amount, plus
accrued but unpaid qualified stated interest as defined in clause (3) of the
first sentence of the preceding paragraph.
If so specified in the applicable Pricing Supplement, the Notes will be
repayable by Countrywide Home Loans in whole or in part at the option of holders
thereof on their respective Optional Repayment Dates specified in such Pricing
Supplement. If no Optional Repayment Date is specified with respect to a Note,
such Note will not be repayable at the option of the holder thereof prior to the
Stated Maturity Date. Any repayment in part will be in increments of $1,000
(provided that any remaining principal amount thereof shall be at least the
minimum denomination). Unless otherwise specified in the applicable Pricing
Supplement, the repayment price for any Note to be repaid means an amount equal
to the sum of (1) 100% of the unpaid principal amount thereof or the portion to
be repaid thereof (or if this Note is an Original Issue Discount Security, 100%
of the Amortized Face Amount, or portion thereof to be repaid, determined as of
the Repayment Date) plus (2) accrued but unpaid interest to the Repayment Date
(or, if this Note is an Original Issue Discount Security, any accrued but unpaid
interest to the Repayment Date but only to the extent such interest would
constitute qualified stated interest within the meaning of
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<PAGE> 25
Treasury Regulation Section 1.1273-1(c)). For any Note to be repaid, such Note
must be received, together with the form thereon entitled "Option to Elect
Repayment" duly completed, by the Trustee at its Corporate Trust Office (or such
other address of which Countrywide Home Loans shall from time to time notify the
holders) not more than 60 nor less than 30 days prior to the Repayment Date.
Exercise of such repayment option by the holder will be irrevocable, except as
otherwise provided above under "-- Reset Notes" and "-- Extension of Maturity."
While the Book-Entry Notes are represented by the Global Notes held by or
on behalf of the Depositary, and registered in the name of the Depositary or the
Depositary's nominee, the option for repayment may be exercised by the
Depositary, acting on behalf of each applicable Participant who is, in turn,
acting on behalf of the beneficial owners of the Global Note or Notes
representing such Book-Entry Notes, by delivering a written notice substantially
similar to the above mentioned form to the Trustee at its Corporate Trust Office
(or such other address of which Countrywide Home Loans shall from time to time
notify the holders), not more than 60 nor less than 30 days prior to the
Repayment Date. Notices of elections from the Depositary must be received by the
Trustee by 5:00 P.M., New York City time, on the last day for giving such
notice. In order to ensure that a notice is received by the Trustee on a
particular day, the beneficial owner of the Global Note or Notes representing
such Book-Entry Notes must so direct the applicable Participant before such
Participant's deadline for accepting instructions for that day. Different firms
may have different deadlines for accepting instructions from their customers.
Accordingly, beneficial owners of the Global Note or Notes representing
Book-Entry Notes should consult the Participants through which they own their
interest therein for the respective deadlines for such Participants. All
instructions given to Participants from beneficial owners of Global Notes
relating to the option to elect repayment shall be irrevocable, except as
otherwise provided above under "-- Reset Notes" and "-- Extension of Maturity."
In addition, at the time such instructions are given, such beneficial owners
shall cause the applicable Participant to transfer such beneficial owner's
interest in the Global Note or Notes representing the related Book-Entry Notes,
on the Depositary's records, to the Trustee. See "-- Book-Entry Notes" above.
Countrywide Home Loans or Countrywide Credit Industries may purchase Notes
in the open market by tender or contract. Notes so purchased may be held, resold
or surrendered to the Trustee for cancellation.
If applicable, Countrywide Home Loans will comply with the requirements of
Rule 14e-1 under the Securities Exchange Act of 1934, as amended, and any other
securities laws or regulations in connection with any such repayment.
ESTATE OPTION
The Pricing Supplement relating to any Note will indicate whether the
holder of the Note will have the right to require Countrywide Home Loans to
repay such Note prior to its maturity date upon the death of the owner of such
Note (the "Estate Option").
Pursuant to the exercise of the Estate Option, if applicable, Countrywide
Home Loans will, at its option and subject to certain limitations, either repay
or purchase any Note, or portion thereof, properly tendered for repayment by or
on behalf of the person (the "Representative") that has authority to act on
behalf of the deceased owner of the beneficial interest in such Note under the
laws of the appropriate jurisdiction (including, without limitation, the
personal representative, executor, surviving joint tenant or surviving tenant by
the entirety of such deceased beneficial owner) at a price equal to 100% of the
principal amount of the beneficial interest of the deceased owner in such Note
(or if such Note is an Original Issue Discount Security, 100% of the Amortized
Face Amount, determined as of the Repayment Date) plus accrued and unpaid
interest to the Repayment Date.
Countrywide Home Loans may, in its sole discretion, limit the aggregate
principal amount of Notes as to which exercises of the Estate Option will be
accepted in any calendar year (the "Annual Put
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<PAGE> 26
Limitation") to one percent (1%) of the outstanding aggregate principal amount
of the Notes as of the end of the most recent fiscal year, but not less than
$1,000,000 in any such calendar year, or such greater amount as Countrywide Home
Loans, in its sole discretion, may determine for any such calendar year.
Countrywide Home Loans also may, in its sole discretion, limit to $25,000, or
such greater amount as Countrywide Home Loans, in its sole discretion, may
determine for any calendar year, the aggregate principal amount of Notes, or
portions thereof, as to which exercise of the Estate Option will be accepted in
such calendar year with respect to any individual deceased owner of beneficial
interests in such Notes (the "Individual Put Limitation"). Countrywide Home
Loans will not make principal repayments or purchases pursuant to exercise of
the Estate Option in amounts that are less than $1,000, and if the foregoing
limitations would result in the partial repayment or purchase of any Note, the
principal amount of such Note remaining outstanding after repayment must be at
least $1,000.
In order for an Estate Option to be validly exercised with respect to any
Note, or portion thereof, the Trustee must receive from the Representative of
the deceased owner:
(1) a written request for repayment signed by the Representative and such
signature must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities
Dealers, Inc. (the "NASD") or a commercial bank or trust company having
an office or correspondent in the United States,
(2) tender of the Note, or portion thereof, to be repaid,
(3) appropriate evidence satisfactory to the Trustee that (a) the
Representative has authority to act on behalf of the deceased
beneficial owner, (b) the death of such beneficial owner has occurred
and (c) the deceased was the owner of a beneficial interest in such
Note at the time of death,
(4) a properly executed assignment or endorsement, if applicable, and
(5) if the beneficial interest in such Note is held by a nominee of the
deceased beneficial owner, a certificate satisfactory to the Trustee
from such nominee attesting to the deceased's ownership of a beneficial
interest in such Note.
In the case of repayment pursuant to the exercise of the Estate Option for
Notes represented by a Global Note, the Depository or its nominee will be the
holder of such Note and therefore will be the only entity that can exercise the
Estate Option for such Note. To obtain repayment pursuant to exercise of the
Estate Option with respect to such Note, the Representative must provide to the
broker or other entity through which the beneficial interest in such Note is
held by the deceased owner the documents described in clauses (1) and (3) of the
preceding paragraph and instructions to such broker or other entity to notify
the Depository of such Representative's desire to obtain repayment pursuant to
exercise of the Estate Option. Such broker or other entity will provide to the
Trustee the documents received from the Representative pursuant to the preceding
sentence and a certificate from such broker or other entity satisfactory to the
Trustee stating that such broker or other entity represents the deceased
beneficial owner. Such broker or other entity will be responsible for disbursing
any payments it receives pursuant to exercise of the Estate Option to the
appropriate Representative.
Subject to any Annual Put Limitation and Individual Put Limitation imposed
by Countrywide Home Loans, all questions as to the eligibility or validity of
any exercise of the Estate Option will be determined by the Trustee, in its sole
discretion, which determination will be final and binding on all parties. Any
Note, or portion thereof, tendered pursuant to exercise of the Estate Option may
not be withdraw, except as specifically set forth below.
Each Note, or portion thereof, that is tendered pursuant to valid exercise
of the Estate Option will be accepted promptly in the order all such Notes are
tendered, except for any Note, or portion thereof, the acceptance of which would
contravene (1) the Annual Put Limitation, if applied, or (2) the Individual Put
Limitation, if applied, with respect to the relevant individual deceased owner
of beneficial interests therein. Any Note, or portion thereof, accepted for
repayment pursuant to exercise of the Estate Option
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will be repaid no later than the first Interest Payment Date that occurs 20 or
more calendar days after the date of such acceptance. If a Note, or any portion
thereof, tendered for repayment pursuant to a valid exercise of the Estate
Option is not accepted, the Trustee will deliver a notice by first-class mail to
the registered holder thereof at its last known address as indicated in the Note
Register, that states the reason such Note, or portion thereof, has not been
accepted for payment.
If, as of the end of any calendar year, the aggregate principal amount of
Notes, or portions thereof, that have been accepted pursuant to exercise of the
Estate Option during such year has not exceeded the Annual Put Limitation, if
applied, for such year, any exercise of the Estate Option with respect to Notes,
or portions thereof, not accepted during such calendar year because such
acceptance would have contravened the Individual Put Limitation, if applied,
with respect to an individual deceased owner of beneficial interests therein
will be accepted in the order all such Notes, or portions thereof, were
tendered, to the extent that any such exercise would not trigger the Annual Put
Limitation for such calendar year.
Each Note, or portion thereof, tendered for repayment that is not accepted
in the calendar year in which it is tendered due to the application of the
Annual Put Limitation will be deemed to be tendered in the following calendar
year in the order in which all such Notes, or portions thereof, were originally
tendered, unless any such Note, or portion thereof, is withdrawn by the
Representative for the deceased owner.
The death of a person owning a Note in joint tenancy or tenancy by the
entirety with another or others will be deemed the death of the holder of the
Note, and the entire principal amount of the Note so held will be subject to
repayment, together with interest accrued thereon to the repayment date. The
death of a person owning a Note by tenancy in common will be deemed the death of
a holder of a Note only with respect to the deceased holder's interest in the
Note so held by tenancy in common; except that if a Note is held by husband and
wife as tenants in common, the death of either will be deemed the death of the
holder of the Note and the entire principal amount of the Note so held will be
subject to repayment. The death of a person who, during his or her lifetime, was
entitled to substantially all of the beneficial interest of ownership of a Note,
will be deemed the death of the holder thereof for purposes of this provision,
regardless of the registered holder, if such beneficial interest can be
established to the satisfaction of the Trustee. Such beneficial interest will be
deemed to exist in typical cases of nominee ownership, ownership under the
Uniform Gifts to Minors Act, community property or other joint ownership
arrangements between a husband and wife and trust arrangements where one person
has substantially all of the beneficial ownership interest in the Note during
his or her lifetime.
A Representative may obtain the forms used to exercise the Estate Option
from the Trustee.
GUARANTEES
The Notes will be unconditionally guaranteed by Countrywide Credit
Industries as to payment of principal, premium, if any, and interest, when and
as the same shall become due and payable, whether at maturity or upon redemption
or repayment or otherwise. See "Description of Debt Securities of Countrywide
Home Loans and Related Guarantees of Countrywide Credit Industries" in the
accompanying Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain of the material United States
federal income tax consequences of the purchase, ownership and disposition of
Notes by United States Holders (as defined below). This discussion represents
the opinion of Munger, Tolles & Olson LLP insofar as it relates to matters of
United States federal income tax laws and legal conclusions with respect
thereto. The summary is for general information only and is based on the Code,
the Treasury Regulations promulgated or proposed thereunder, and judicial and
administrative interpretations thereof, all as in effect on the date
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hereof and all of which are subject to change, possibly with retroactive effect,
or to different interpretations.
The tax treatment of a holder of the Notes may vary depending upon the
particular situation of the holder. The summary is limited to investors who will
hold the Notes as "capital assets" within the meaning of Section 1221 of the
Code and does not deal with holders in special tax situations (including, but
not limited to, insurance companies, tax-exempt organizations, financial
institutions, dealers in securities or currencies, traders in securities,
holders whose functional currency is not the U.S. dollar, or holders who will
hold Notes as a hedge against currency risks or as a position in a "straddle"
for tax purposes), who may be subject to special rules not discussed below. The
summary does not apply to holders that are not United States Holders (defined
below). The summary is applicable only to purchasers of Notes on original issue
at the issue price (as defined below) and does not address other purchasers. The
discussion below also does not address the effect of any state, local or foreign
tax law on a holder of Notes. As used herein, the term "United States Holder"
means an individual who is a citizen or resident of the United States, a
partnership or corporation organized in or under the laws of the United States
or any state thereof, an estate the income of which is subject to United States
federal income taxation regardless of its source, or a trust, if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons (within the
meaning of Section 7701(a)(30) of the Code) have authority to control all
substantial decisions of the trust.
The summary does not constitute, and should not be considered as, legal or
tax advice to prospective holders of Notes. Each prospective holder of Notes
should consult a tax advisor as to the particular tax consequences of holding
Notes to such holder, including the applicability and effect of any state, local
or foreign tax laws.
PAYMENTS OF INTEREST
Interest on a Note, other than interest on a Discount Note (defined below
under "Original Issue Discount") that is not a "qualified stated interest"
payment (also as defined under "Original Issue Discount"), will be taxable to a
holder as ordinary interest income at the time it is accrued or is received in
accordance with the holder's regular method of accounting for tax purposes. If
interest is paid in a Specified Currency other than U.S. dollars ("Foreign
Currency"), the amount of interest income realized by a holder will be the U.S.
dollar value of (a) in the case of a cash basis holder, the Foreign Currency
received (based on the spot rate in effect on the date of receipt), or (b) in
the case of an accrual basis holder, the Foreign Currency accrued during an
interest accrual period, or partial interest accrual period (based on (1) the
average exchange rate in effect during the accrual period, or (2) the spot rate
on the last day of the accrual period (or on the payment date, if such date is
within five business days of the last day of the accrual period); provided that
any such spot election will apply to all debt instruments held at the beginning
of the first taxable year to which it applies or subsequently acquired, which
election may not be revoked without the consent of the Internal Revenue
Service), in each case, regardless of whether the payment is in fact converted
into U.S. dollars. In the case of an accrual basis holder, at the time the
interest accrued is received, the holder will realize exchange gain or loss,
taxable as ordinary income or loss, equal to the difference, if any, between the
amount of Foreign Currency received with respect to such accrual period
(translated into U.S. dollars at the spot rate in effect on the date the
interest is received) and the amount of interest on the Note included in income.
The federal income tax consequences of the disposition of Foreign Currency
received as interest are described below under "-- Exchange of Amounts in
Foreign Currency."
ORIGINAL ISSUE DISCOUNT
General. A Note will be treated as issued at an original issue discount (a
"Discount Note") if the excess of the "stated redemption price at maturity" of
the Note over its issue price (defined as the first
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price at which a substantial amount of Notes of the same issue is sold to the
public) equals or exceeds a de minimis amount (generally 1/4 of 1 percent of the
Note's stated redemption price at maturity multiplied by the number of complete
years from the issue date to maturity). "Stated redemption price at maturity" is
the total of all payments provided by the Note that are not payments of
"qualified stated interest." A "qualified stated interest" payment is a payment
of stated interest that is unconditionally payable in cash or property (other
than debt instruments of Countrywide Home Loans) at least annually during the
entire term of the Note, including short periods, with respect to a Floating
Rate Note, at certain specified types of variable rates (as discussed below) or,
with respect to a Fixed Rate Note, at a single fixed rate. Interest is payable
at a single fixed rate only if the rate appropriately takes into account the
length of the intervals between payments. Stated interest that exceeds qualified
stated interest is included in the Note's stated redemption price at maturity.
Holders of Discount Notes having a maturity of more than one year from
their date of issue will be required to include original issue discount in
income as it accrues, which can result in recognition of income before the
receipt of cash attributable to such income. The amount of original issue
discount includable in income by the holder of such a Discount Note is the sum
of the daily portions of original issue discount with respect to the Discount
Note for each day during the taxable year or portion of the taxable year in
which it holds such Discount Note ("accrued original issue discount"). The daily
portion is determined by allocating to each day in any "accrual period" a pro
rata portion of the original issue discount that accrued in such period (the
excess of (a) the product of the Discount Note's adjusted issue price at the
beginning of the accrual period and its yield to maturity, appropriately
adjusted for the length of the period, over (b) the sum of the qualified stated
interest payments, if any, payable during the accrual period). The "accrual
period" for a Discount Note may be of any length and may vary in length over the
term of a Note, provided that each accrual period is no longer than one year and
each scheduled payment of principal or interest occurs either on the first day
or the last day of an accrual period. The "adjusted issue price" of a Discount
Note at the start of any accrual period is the sum of the issue price of the
Note plus the accrued original issue discount for each prior accrual period
minus any prior payments on the Note that were not qualified stated interest
payments. Holders of Notes with a de minimis amount of original issue discount
generally must include a proportionate amount of each payment of stated
principal received in respect of the Notes in income as capital gain.
Floating Rate Notes. If a Floating Rate Note that otherwise qualifies as a
"variable rate debt instrument" under the applicable Treasury Regulations
provides for stated interest at a single "qualified floating rate" or a single
"objective rate" (each as defined in the Treasury Regulations) that is
unconditionally payable in cash or property (other than debt instruments of
Countrywide Home Loans), or that will be constructively received, at least
annually, then all payments of stated interest with respect to such Note will be
"qualified stated interest." The amount of original issue discount (if any) with
which such a Note is issued will be determined under the rules discussed above
by assuming that the Floating Rate Note pays stated interest at the appropriate
fixed rate substitute (generally, the value, as of the Issue Date, of the
floating rate, or in the case of certain Floating Rate Notes, a fixed rate that
reflects the yield that is reasonably expected for such Notes).
The Treasury Regulations provide additional rules for a Floating Rate Note
that qualifies as a variable rate debt instrument and that provides for stated
interest at more than one floating rate or at a fixed rate for a portion of its
term. In certain cases, such a Floating Rate Note that is not issued at a
discount may be deemed to bear original issue discount for federal income tax
purposes, with the result that inclusion of original issue discount in gross
income for federal income tax purposes may vary from the cash payments of
interest received on such Note, generally accelerating income for cash method
taxpayers. For example, under the Treasury Regulations, a Floating Rate Note may
be a Discount Note where (a) it bears interest at a floating rate followed by
another floating rate and, as of the Issue Date, the values of the two floating
rates differ, or (b) it bears interest at a fixed rate followed by a floating
rate (or vice versa) and, as of the Issue Date, the value of the floating rate
differs from the fixed rate. The tax treatment of a United States Holder of a
Floating Rate Note ultimately will depend upon the precise terms of the Notes
offered;
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consequently, the proper tax treatment of such Notes will be more fully
described in the applicable Pricing Supplement.
A Floating Rate Note that does not qualify as a variable rate debt
instrument may be subject to Treasury Regulations concerning the treatment of
"contingent payment debt instruments" (the "contingent payment debt
regulations"). If a Floating Rate Note is subject to the contingent debt
regulations, then, inter alia, all gain and (subject to certain limitations)
loss recognized by a United States Holder with respect to the Note would be
ordinary, rather than capital, in nature and all United States Holders would be
required to accrue interest income on the Note as original issue discount over
the term of the Note based upon a projected payment schedule (subject to later
adjustments) provided by Countrywide Home Loans. The tax treatment of a Floating
Rate Note that is treated as a contingent payment debt instrument will be more
fully described in the applicable Pricing Supplement.
Any determination of the type described above made by Countrywide Home
Loans when a Note is issued may be subject to subsequent changes and
clarifications of applicable law or to challenge by the Internal Revenue
Service.
Optional Redemption. For purposes of calculating the yield and maturity of
a Note, an unconditional option of Countrywide Home Loans or a holder to redeem
a Note prior to the Maturity Date will be presumed to be exercised if, by
utilizing any date on which the Note may be redeemed as its maturity date and
the amount payable on that date in accordance with the terms of the Note (the
"redemption price") as its stated redemption price at maturity, the yield on the
Note is lower than its yield to maturity in the case of an option exercisable by
Countrywide Home Loans (or, in the case of an option exercisable by a holder, is
greater than its yield to maturity). If such an option is not in fact exercised
when presumed to be, solely for purposes of accruing original issue discount,
the Note will be treated as if it were redeemed, and a new Note issued, on the
presumed exercise date for an amount equal to its adjusted issue price on that
date.
Short-Term Notes. A Note that matures one year or less from the date of its
issuance (a "Short-Term Note") will be treated as having been issued at an
original issue discount equal to the excess of the total principal and interest
payments on the Note over its issue price. In general, an individual or other
cash basis holder of a Short-Term Note is not required to currently include in
income accrued original issue discount for United States federal income tax
purposes unless it elects to do so. Accrual basis holders and certain other
holders are required to include in income accrued original issue discount on
Short-Term Notes on a straight-line basis unless an irrevocable election is made
to include in income accrued original issue discount under the constant yield
method (based on daily compounding). In the case of a holder not required and
not electing to include accrued original issue discount in income currently, any
gain realized on the sale or retirement of the Short-Term Note will be ordinary
income to the extent of the original issue discount accrued on a straight-line
basis (or, at the holder's irrevocable election, under a constant yield method,
based on daily compounding) through the date of sale or retirement. A holder who
is not required and does not elect to include in income accrued original issue
discount on a Short-Term Note will be required to defer deduction of a portion
of the holder's interest expense with respect to any indebtedness incurred or
maintained to purchase or carry the Note.
Foreign Currency Denominated Discount Notes. In the case of a Discount Note
denominated in a Foreign Currency, for purposes of calculating original issue
discount, a holder should: (1) calculate the amount and accrual of original
issue discount in respect of the Note in the Foreign Currency; (2) determine the
U.S. dollar amount of original issue discount includable in income for each
accrual period by translating the Foreign Currency amounts into U.S. dollars
based on the average exchange rate in effect during that accrual period or based
on the spot rate (A) on the last day of the relevant accrual period (or partial
accrual period) or (B) on the payment date, if such date is within five business
days of the last day of the accrual period; and (3) recognize any Foreign
Currency gain or loss when the original issue discount is received to the extent
of the difference between the amount determined pursuant to clause (2) above and
the U.S. dollar value of such payment determined by translating the Foreign
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Currency at the spot rate in effect on the date of payment. The federal income
tax consequences of the disposition of any Foreign Currency received are
described below under "-- Exchange of Amounts in Foreign Currency."
NOTES PURCHASED AT A PREMIUM
A holder that purchases a Note for an amount in excess of the sum of all
amounts payable on the Note after the purchase date other than payments of
qualified stated interest may elect to treat that excess as "amortizable bond
premium," in which case the amount required to be included in the holder's
income each year with respect to interest on the Note will generally be reduced
by the amount of amortizable bond premium allocable (based on the Note's yield
to maturity) to that year. Any such election would apply to all bonds (other
than bonds the interest on which is excludable from gross income) held by the
holder at the beginning of the first taxable year to which the election applies
or thereafter acquired by the holder, and is irrevocable without the consent of
the Internal Revenue Service. Amortizable bond premium on a Note denominated in
a Foreign Currency will, if a holder so elects, reduce the amount of Foreign
Currency interest income on the Note. An electing holder will recognize exchange
gain or loss at the time it offsets the portion of the premium amortized with
respect to any period against the interest income for such period.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
A holder may elect to treat all interest on any Note as original issue
discount and calculate the amount includible in gross income under the constant
yield method described above. For the purposes of this election, interest
includes stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount and
unstated interest, as adjusted by any amortizable bond premium or acquisition
premium. The election is made for the year in which the holder acquired the
Note, and may not be revoked without the consent of the Internal Revenue
Service.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A holder's tax basis in a Note generally will be its cost, increased by the
amount of any original issue discount included in the holder's income with
respect to the Note and reduced by the amount of any cash payments on the Note
that are not qualified stated interest payments and by the amount of any
amortizable bond premium applied to reduce interest on the Note. In the case of
a Note denominated, and purchased, in a Foreign Currency, the holder's initial
tax basis will be the U.S. dollar value of the Foreign Currency on the date of
purchase of the Note (or, in certain circumstances, on the settlement date of
the transaction).
A holder will recognize gain or loss on the sale or retirement of a Note
equal to the difference between the amount realized on the sale or retirement
and the holder's tax basis in the Note. The amount realized on a sale or
retirement for an amount in a Foreign Currency will be the U.S. dollar value of
that currency on the date of such sale or retirement (or, in certain
circumstances, on the settlement date of the transaction).
As a general rule (with the exception, among other things, of amounts
attributable to accrued but unpaid interest, amounts attributable to changes in
exchange rates, and amounts received with respect to certain Short-Term Notes),
gain or loss recognized on the sale or retirement of a Note will be capital gain
or loss and will be long-term capital gain or loss if the Note was held for more
than one year. In the case of non-corporate holders, such long-term capital gain
generally will be subject to a maximum tax rate of 20% if the Note was held for
more than one year. Gain or loss recognized by a holder on the sale or
retirement of a Note denominated in a Foreign Currency will be treated as
ordinary income or loss to the extent such gain or loss is attributable to
changes in exchange rates. However, exchange gain or loss is taken into account
only to the extent of total gain or loss realized on the transaction.
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On January 17, 2000, the Treasury Department finalized proposed regulations
regarding debt instruments denominated in a hyperinflationary currency. These
regulations require that certain United States Holders apply mark-to-market
treatment to a Note denominated in certain hyperinflationary currencies for
purposes of determining foreign currency gain or loss. These regulations are
effective for transactions entered into on or after February 14, 2000. A foreign
currency note will be considered to be a debt instrument denominated in a
hyperinflationary currency if it is denominated in a specified currency of a
country in which there is a cumulative inflation of at least 100% during the 36
calendar month base period specified in the regulations.
If the remainder of the Treasury Regulations proposed on March 17, 1992 are
finalized in their current form, certain United States Holders will be able to
elect to apply mark-to-market treatment to certain foreign currency denominated
financial transactions they enter into, including a Note denominated in certain
Foreign Currency, for purposes of determining the amount and timing of foreign
currency gain or loss to be recognized on the Notes.
EXCHANGE OF AMOUNTS IN FOREIGN CURRENCY
Foreign Currency received on the sale or retirement of a Note will
generally have a tax basis equal to the U.S. dollar value of that currency at
the time of such sale or retirement. Foreign Currency received as interest on a
Note will have a tax basis equal to its U.S. dollar value on the date such
interest was received. Foreign Currency that is purchased generally will have a
tax basis equal to the U.S. dollar cost of acquisition. Any gain or loss
recognized on a sale or other disposition of Foreign Currency (including its use
to purchase Notes or upon exchange for U.S. dollars) will be ordinary income or
loss.
BACKUP WITHHOLDING
A holder of a Note may be subject to backup withholding at a rate of 31%
with respect to payments of principal and any premium or interest (including
original issue discount) made on the Note or the proceeds of a sale or exchange
of the Note unless such holder (a) is a corporation or comes within certain
other exempt categories and, when required, demonstrates this fact, or (b)
provides a taxpayer identification number, certifies that the holder is not
subject to backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A holder of a Note that does not
provide Countrywide Home Loans, or its agent, with a correct taxpayer
identification number or an adequate basis for exemption may be subject to
penalties imposed by the Internal Revenue Service. The backup withholding tax is
not an additional tax and will generally be credited against a holder's United
States federal income tax liability provided the required information is
furnished to the Internal Revenue Service.
On October 6, 1997, the Treasury Department issued new regulations that
make certain modifications to the backup withholding and information reporting
rules. These regulations attempt to unify certification requirements and modify
reliance standards. These regulations will generally be effective for payments
made after December 31, 2000, subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding these
regulations.
PLAN OF DISTRIBUTION OF NOTES
Under the terms of a Selling Agency Agreement (the "Agency Agreement"), the
Notes are offered on a continuous basis by Countrywide Home Loans through Lehman
Brothers Inc., Banc of America Securities LLC, Chase Securities Inc., Deutsche
Bank Securities Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, J.P. Morgan Securities Inc., Morgan Stanley & Co.
Incorporated, Salomon Smith Barney Inc. and Countrywide Securities Corporation
(the "Agents"), each of which has agreed to use its reasonable best efforts to
solicit purchases of the Notes. Countrywide Home Loans will pay to each Agent a
commission, in the form of a discount, ranging from .125% to .750% of the
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principal amount of any Note (or in the case of any Original Issue Discount
Security, the price to the public), depending on its maturity, sold through such
Agent, except that the commission payable by Countrywide Home Loans to the
Agents with respect to Notes with maturities of greater than 30 years will be
negotiated at the time Countrywide Home Loans issues such Notes. Each Agent will
have the right, in its discretion reasonably exercised, to reject in whole or in
part any offer to purchase Notes received by such Agent.
Countrywide Home Loans will have the sole right to accept offers to
purchase Notes and may reject any such offer in whole or in part. Countrywide
Home Loans also may sell Notes to an Agent, acting as principal, at a discount
to be agreed upon at the time of sale, for resale to one or more investors or
other purchasers at varying prices related to prevailing market prices at the
time of such resale, as determined by such Agent or, if so specified in the
applicable Pricing Supplement, for resale at a fixed public offering price.
Countrywide Home Loans reserves the right to sell Notes from time to time
directly on its own behalf to investors or through other agents, dealers or
underwriters; if Countrywide Home Loans grants any discount or pays any
commission to such persons, such discount or commission will be disclosed in the
applicable Pricing Supplement.
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and such discount allowed to any dealer may be all or part of the
discount to be received by such Agent from Countrywide Home Loans. Unless
otherwise indicated in the applicable Pricing Supplement, any Note sold to an
Agent as principal will be purchased by such Agent at a price equal to 100% of
the principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Note of identical maturity, and may be resold
by the Agent to investors and other purchasers from time to time in one or more
transactions, including negotiated transactions, at fixed prices or at varying
prices as described above. After the initial public offering of Notes to be
resold to investors and other purchasers, the public offering price (in the case
of Notes to be resold on a fixed price basis), concession and discount may be
changed.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in The City of New York on the date of settlement.
See "Description of Notes -- General."
Until the distribution of the Notes is completed, rules of the Securities
and Exchange Commission may limit the ability of the Agents and certain selling
group members to bid for and purchase the Notes. As an exception to these rules,
the Agents are permitted to engage in certain transactions that stabilize the
price of the Notes. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Notes.
If the Agents create a short position in the Notes in connection with the
offering (i.e., if they sell more Notes than are set forth on the cover page of
this Prospectus Supplement or the applicable Pricing Supplement) the Agents may
reduce that short position by purchasing Notes in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
None of Countrywide Home Loans, Countrywide Credit Industries or any of the
Agents makes any representation or prediction as to the direction or magnitude
or any effect that the transactions described above may have on the price of the
Notes. In addition, none of Countrywide Home Loans, Countrywide Credit
Industries or any of the Agents makes any representation that the Agents will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). Countrywide Home
Loans and Countrywide Credit Industries have agreed to indemnify each Agent
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments an Agent may be required to make in respect thereof.
Countrywide Home
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Loans and Countrywide Credit Industries have agreed to reimburse the Agents for
certain expenses, including fees and disbursements of counsel to the Agents.
Countrywide Home Loans has been advised by the Agents that they may from
time to time purchase and sell Notes in the secondary market, but that they are
not obligated to do so. No assurance can be given that there will be a secondary
market for the Notes or liquidity in the secondary market if one develops.
The distribution of the Notes will conform to the requirements set forth in
the applicable sections of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc.
Certain of the Agents or their affiliates may engage from time to time in
various general financing and banking transactions with Countrywide Home Loans
and Countrywide Credit Industries.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for Countrywide Credit
Industries and Countrywide Home Loans by Munger, Tolles & Olson LLP, Los
Angeles, California. The statements under "Certain Federal Income Tax
Consequences," to the extent they constitute statements of law, are set forth
herein in reliance upon the opinion of Munger, Tolles & Olson LLP, Los Angeles,
California. Brown & Wood LLP, New York, New York will serve as counsel to the
Agents. Brown & Wood LLP also serves as counsel for CWMBS, Inc. and CWABS, Inc.,
each a wholly owned subsidiary of 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-34
<PAGE> 35
PROSPECTUS
COUNTRYWIDE CREDIT INDUSTRIES, INC.
[COUNTRYWIDE CREDIT INDUSTRIES, INC. LOGO]
COMMON STOCK, PREFERRED STOCK, STOCK PURCHASE CONTRACTS
AND DEBT SECURITIES
COUNTRYWIDE HOME LOANS, INC.
DEBT SECURITIES
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST UNCONDITIONALLY GUARANTEED
BY
COUNTRYWIDE CREDIT INDUSTRIES, INC.
------------------------
Through this prospectus, we may periodically offer:
- shares of our common stock;
- shares of our preferred stock;
- contracts to purchase shares of our common stock or preferred stock;
and/or
- our debt securities,
and our subsidiary, Countrywide Home Loans, may periodically offer its debt
securities.
The prices and other terms of the securities that we or Countrywide Home
Loans will offer will be determined at the time of their offering.
We will guarantee all payments of principal of and any premium and interest
on any debt securities offered by Countrywide Home Loans.
The offering price of all securities issued under this prospectus may not
exceed $3,000,000,000.
Our common stock trades on the New York Stock Exchange under the symbol
"CCR." We will list any shares of our common stock sold under this prospectus on
the New York Stock Exchange.
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 June 8, 2000.
<PAGE> 36
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND IN ANY PROSPECTUS SUPPLEMENT ACCOMPANYING THIS
PROSPECTUS AND THAT WE OR COUNTRYWIDE HOME LOANS HAVE REFERRED YOU TO. NEITHER
WE NOR COUNTRYWIDE HOME LOANS 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.
------------------------
References in this prospectus to "Countrywide Credit Industries," "we,"
"us" and "our" are to Countrywide Credit Industries, Inc.
References in this prospectus to "Countrywide Home Loans" are to
Countrywide Home Loans, Inc.
------------------------
ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file 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. Our 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 us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until all the securities offered under this prospectus are
sold. This prospectus is part of the registration statement we filed with the
SEC.
1. Annual Report on Form 10-K for the year ended February 29, 2000.
2. Current Report on Form 8-K, dated June 1, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning us at Countrywide Credit Industries, Inc., 4500 Park Granada,
Calabasas, California 91302, telephone (818) 225-3000, Attention: Investor
Relations.
2
<PAGE> 37
COUNTRYWIDE CREDIT INDUSTRIES AND COUNTRYWIDE HOME LOANS
COUNTRYWIDE CREDIT INDUSTRIES, INC.
Through Countrywide Home Loans, our principal subsidiary, we originate,
purchase, securitize, sell and service mortgage loans. Our mortgage loans are
principally prime credit quality first-lien mortgage loans secured by
single-(one- to four-) family residences. We also offer home equity loans either
with newly produced prime credit quality mortgage loans or as a separate
product. In addition, we offer sub-prime credit quality first-lien single-family
mortgage loans.
Through our other subsidiaries, we also offer products and services that
complement our mortgage banking business. Through Countrywide Insurance
Services, Inc., we act as an agent for the sale of homeowners, fire, flood,
earthquake, life, disability and other types of insurance. We also issue life
insurance policies through Balboa Life Insurance Company and property and
casualty insurance polices through Balboa Insurance Company. Through LandSafe,
Inc., we act as a title insurance agent and provide settlement, escrow,
appraisal, credit reporting, flood zone determination and home appraisal
services, and we also provide property profiles to realtors, builders,
consumers, mortgage brokers and other financial institutions. Through Second
Charter Reinsurance Company, we partially reinsure some mortgage loans
originated by Countrywide Home Loans and insured by mortgage insurance
companies. Through CTC Real Estate Services, we serve as trustee under deeds of
trust in connection with foreclosures on loans in our servicing portfolio. We
also provide services through Countrywide Tax Services Corporation to ensure
that property taxes are paid when due during the terms of the loans that we
originate and/or service. Through Countrywide Servicing Exchange, a national
servicing brokerage and consulting firm, we facilitate transactions between
buyers and sellers of bulk servicing contracts. We also trade securities,
including mortgage-backed securities and other mortgage-related assets, with
broker-dealers and institutional investors through Countrywide Securities
Corporation, a registered securities broker-dealer. We also have two
subsidiaries, CWMBS, Inc. and CWABS, Inc., through which we issue mortgage- and
asset-backed securities that are backed by prime credit quality mortgage loans,
sub-prime credit quality loans or home equity loans.
We are a Delaware corporation, originally incorporated in New York under
the name of OLM Credit Industries, Inc. Our principal executive offices are
located at 4500 Park Granada, Calabasas, California 91302, and our telephone
number is (818) 225-3000.
COUNTRYWIDE HOME LOANS, INC.
As described above in "-- Countrywide Credit Industries, Inc.," Countrywide
Home Loans originates, purchases, securitizes, sells and services mortgage loans
that are principally prime credit quality mortgage loans. Countrywide Home Loans
also offers home equity loans and sub-prime credit quality loans. The principal
sources of Countrywide Home Loans' revenue are: (1) loan origination fees; (2)
any gains from the sale of loans; (3) interest earned on mortgage loans during
the period that they are held by Countrywide Home Loans pending sale, net of
interest paid on funds borrowed to finance those mortgage loans; (4) loan
servicing fees; and (5) interest benefit derived from the custodial balances
associated with Countrywide Home Loans' servicing portfolio.
Countrywide Home Loans produces mortgage loans through three separate
divisions. The Consumer Markets Division originates prime credit quality
mortgage loans and home equity loans through referrals from real estate agents
and 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 credit quality mortgage loans and home
equity loans through mortgage brokers and other financial intermediaries.
Through the Correspondent Division, Countrywide Home Loans purchases loans from
other mortgage bankers, commercial banks, savings and loan associations, credit
unions and other financial intermediaries. Countrywide Home Loans customarily
sells substantially all loans that it originates or purchases. To guarantee
timely and full payment of principal and interest on Fannie Mae securities,
3
<PAGE> 38
Freddie Mac securities and Ginnie Mae securities and to transfer credit risk of
the loans, Countrywide Home Loans pays guarantee fees to these agencies.
Countrywide Home Loans services on a non-recourse basis substantially all
of the mortgage loans that it originates or purchases under servicing agreements
with Fannie Mae, Freddie Mac, Ginnie Mae and various investors. In addition,
Countrywide Home Loans 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. Countrywide Home Loans receives a fee for
servicing mortgage loans ranging generally from 1/4% to 1/2% annually on the
declining principal balances of the loans. Countrywide Home Loans has sold, and
may sell in the future, a portion of its portfolio of loan servicing rights to
other mortgage servicers.
Countrywide Home Loans' principal financing needs are the financing of its
mortgage loan inventory and the investment in mortgage servicing rights. To meet
these needs, Countrywide Home Loans currently utilizes commercial paper
supported by its revolving credit facility, medium-term notes, mortgage
repurchase agreements, pre-sale funding facilities, an optional cash purchase
feature in the dividend reinvestment plan, redeemable capital trust pass-through
securities and cash flows from operations. In the past, Countrywide Home Loans
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 public offerings of preferred
and common stock.
Countrywide Home Loans 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.
USE OF PROCEEDS
Except as we may otherwise state in any prospectus supplement, we and/or
Countrywide Home Loans intend to use the net proceeds from the sale of the
securities described in this prospectus for general corporate purposes,
including the retirement of debt and the investment in servicing rights through
the current production of loans and the bulk acquisition of contracts to service
loans, and for acquisitions.
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<PAGE> 39
SELECTED CONSOLIDATED FINANCIAL DATA
Our selected consolidated financial data set forth below as of the end of
and for each of the five fiscal years in the period ended February 29, 2000 have
been derived from, and should be read together with, our related audited
financial statements and accompanying notes incorporated by reference in this
prospectus. See "Additional Information."
<TABLE>
<CAPTION>
YEARS ENDED FEBRUARY 29, (28)
------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
(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................................ $ 406,458 $ 623,531 $ 301,389 $ 193,079 $ 199,724
Gain on sale of loans................................ 557,743 699,433 417,427 247,450 92,341
------------ ------------ ------------ ------------ ------------
Loan production revenue............................ 964,201 1,322,964 718,816 440,529 292,065
Interest earned...................................... 998,646 1,029,066 584,076 457,005 364,531
Interest charges..................................... (930,294) (983,829) (568,359) (423,447) (337,655)
------------ ------------ ------------ ------------ ------------
Net interest income................................ 68,352 45,237 15,717 33,558 26,876
Loan servicing income................................ 1,192,789 1,023,700 907,674 773,715 620,835
Amortization and impairment/recovery of mortgage
servicing rights, net of servicing hedge........... (445,138) (600,766) (328,845) (226,686) (142,676)
------------ ------------ ------------ ------------ ------------
Net loan administration income..................... 747,651 422,934 578,829 547,029 478,159
Commissions, fees and other income................... 234,047 187,867 138,217 91,346 63,642
Gain on sale of subsidiary........................... 4,424 -- 57,381 -- --
------------ ------------ ------------ ------------ ------------
Total revenues................................... 2,018,675 1,979,002 1,508,960 1,112,462 860,742
------------ ------------ ------------ ------------ ------------
Expenses:
Salaries and related expenses........................ 689,768 669,686 424,321 286,884 229,668
Occupancy and other office expenses.................. 276,802 270,483 182,335 129,877 106,298
Guarantee fees....................................... 195,928 181,117 172,692 159,360 121,197
Marketing expenses................................... 72,930 64,510 42,320 34,255 27,115
Other operating expenses............................. 152,049 161,401 121,746 80,188 50,264
------------ ------------ ------------ ------------ ------------
Total expenses................................... 1,387,477 1,347,197 943,414 690,564 534,542
------------ ------------ ------------ ------------ ------------
Earnings before income taxes........................... 631,198 631,805 565,546 421,898 326,200
Provision for income taxes............................. 220,955 246,404 220,563 164,540 130,480
------------ ------------ ------------ ------------ ------------
Net earnings........................................... $ 410,243 $ 385,401 $ 344,983 $ 257,358 $ 195,720
------------ ------------ ------------ ------------ ------------
Per Share Data(2):
Basic(3)............................................. $ 3.63 $ 3.46 $ 3.21 $ 2.50 $ 1.99
Diluted(3)........................................... 3.52 3.29 3.09 2.44 1.95
Cash dividends per share............................. 0.40 0.32 0.32 0.32 0.32
Weighted Average Shares Outstanding:
Basic................................................ 113,083,000 111,414,000 107,491,000 103,112,000 98,352,000
Diluted.............................................. 116,688,000 117,045,000 111,526,000 105,677,000 100,270,000
SELECTED BALANCE SHEET DATA AT END OF PERIOD(1):
Mortgage loans and mortgage-backed securities held for
sale................................................. $ 2,653,183 $ 6,231,220 $ 5,292,191 $ 2,579,972 $ 4,740,087
Total assets........................................... 15,822,328 15,648,256 12,183,211 7,689,090 8,321,652
Short-term debt........................................ 2,911,410 5,065,934 4,043,774 2,567,420 4,423,738
Long-term debt......................................... 7,253,323 5,953,324 4,195,732 2,367,661 1,911,800
Common shareholders' equity............................ 2,887,879 2,518,885 2,087,943 1,611,531 1,319,755
OPERATING DATA (DOLLAR AMOUNTS IN MILLIONS):
Loan servicing portfolio(4)............................ $ 250,192 $ 215,489 $ 182,889 $ 158,585 $ 136,835
Volume of loans originated............................. 66,740 92,881 48,772 37,811 34,584
Ratio of earnings to fixed charges(5).................. 1.66 1.63 1.98 1.98 1.95
</TABLE>
------------
(1) Certain amounts in the consolidated financial statements of Countrywide
Credit Industries have been reclassified to conform to the fiscal year
February 29, 2000 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).
5
<PAGE> 40
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is not complete and is
qualified in its entirety by reference to our restated certificate of
incorporation and to any certificate of designations that we will file with the
SEC if we offer preferred stock under this prospectus. We have filed a copy of
our restated certificate of incorporation as an exhibit to the registration
statement of which this prospectus is part.
COMMON STOCK
We have authorized under our restated certificate of incorporation
240,000,000 shares of common stock, par value $.05 per share. As of February 29,
2000, 113,463,424 shares of our common stock were issued and outstanding and
were held by 2630 record holders. Each record holder of our common stock is
entitled to cast one vote per share on all matters submitted to a vote of our
stockholders. We may pay dividends to the record holders of our common stock
only when, as and if declared by our board of directors, out of funds legally
available for those dividends. Each share of our common stock shares equally in
those dividends and in other distributions to holders of our common stock,
including distributions made if we liquidate, dissolve or wind up our affairs.
Our common stock carries no preemptive, conversion, subscription, redemption,
sinking fund or cumulative voting rights.
PREFERRED STOCK PURCHASE RIGHTS
In February 1988, our board of directors declared a dividend of one
preferred stock purchase right for each outstanding share of our common stock.
As the result of stock splits and stock dividends, 0.399 of a stock purchase
right is presently associated with each outstanding share of our common stock,
and 0.399 of a stock purchase right will be associated with each share of our
common stock that is issued prior to the Distribution Date (as defined below).
Each stock purchase right, when exercisable, allows its holder to purchase from
us one one-hundredth of a share of our Series A Participating Preferred Stock,
par value $0.05 per share, at a price of $145, subject to adjustments in some
instances to prevent dilution.
These stock purchase rights are evidenced by our common stock certificates
and may not be exercised or transferred apart from our common stock until of the
earlier of the date (the "Distribution Date") of a public announcement that a
person or group without our prior consent has acquired 20% or more of our common
stock (an "Acquiring Person") or the date that is ten days (subject to extension
by our board of directors) after a tender offer for our common stock is
commenced without our prior consent.
If any person becomes an Acquiring Person, each stock purchase right
(except those owned by the Acquiring Person) will allow its holder to purchase,
at the then current exercise price of the stock purchase right, the number of
shares of our common stock, or their equivalent, that, at the time of the
transaction, would have a market value of two times the exercise price of the
stock purchase right. Our board of directors may delay the exercisability of the
stock purchase rights during the period in which they are exercisable only for
our Series A Participating Preferred Stock (and not our common stock).
If after a person has become an Acquiring Person we are acquired in a
merger or other business combination, each stock purchase right (except those
held by the Acquiring Person) will entitle its holder to purchase, at the then
current exercise price of the stock purchase right, the number of shares of our
common stock, or their equivalent, of the other party (or its publicly traded
parent company) to the merger or business combination that at the time of the
transaction would have a market value of two times the exercise price of the
stock purchase right. The stock purchase rights expire on the earliest of
February 28, 2002, the date certain merger transactions close or the date we
elect to redeem the stock purchase rights before any person becomes an Acquiring
Person.
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<PAGE> 41
PREFERRED STOCK
We have authorized under our restated certificate of incorporation
1,500,000 shares of preferred stock, par value $.05 per share. We will describe
the specific terms of any series of preferred stock we offer under this
prospectus in a prospectus supplement relating to that series of preferred
stock. Our board of directors is authorized to provide for the issuance of
preferred stock in one or more series with the distinctive designations as may
be stated in the resolution or resolutions providing for the issuance of that
preferred stock. At the time that it authorizes any series of preferred stock,
our board of directors will determine the number of shares constituting that
series and its designation and fix the dividend rights, any conversion rights,
any voting rights, redemption provisions, liquidation preferences and any other
rights, preferences, privileges and restrictions of that series.
At this time, our board of directors has authorized only one series of
preferred stock for issuance, and that series has been designated our Series A
Preferred Stock which is issuable upon the exercise of our stock purchase
rights. See "-- Preferred Stock Purchase Rights" above. Our board of directors
could, without stockholder approval, cause us to issue preferred stock that has
voting, conversion and other rights that could adversely affect the holders of
our common stock or make it more difficult to cause a change in control of our
company. The preferred stock could be used to dilute the stock ownership of
persons seeking to obtain control of our company and thereby hinder a possible
takeover attempt which, if stockholders were offered a premium over the market
value of their shares, might be viewed as being beneficial to our stockholders.
In addition, the preferred stock could be issued with voting, conversion and
other rights and preferences that would adversely affect the voting power and
other rights of holders of our common stock.
OTHER PROVISIONS OF OUR RESTATED CERTIFICATE OF INCORPORATION AND OUR BYLAWS
In addition to the stock purchase rights described above under
"-- Preferred Stock Purchase Rights" and the terms of any preferred stock that
we may determine to issue as described above under "-- Preferred Stock," other
provisions of our restated certificate of incorporation and our bylaws may make
it more difficult for a third party to acquire, or may discourage a third party
from attempting to acquire, control of our company. Our restated certificate of
incorporation includes the following provisions:
(1) It provides for a three-year staggered board of directors, vacancies on
which may be filled by the board of directors and whose members may be
removed only for cause and only by the vote of the holders of
two-thirds of the outstanding shares of our common stock.
(2) It limits our power to purchase shares of our voting stock from a five
percent holder at a price exceeding its fair market value, unless the
purchase is approved by holders of a majority of those voting shares
(unless applicable law requires a greater vote), without the vote of
that five percent holder. Voting stock is defined as capital stock that
has the right to vote generally on matters relating to our company and
any security which is convertible into that stock.
(3) It prohibits action by written consent of our stockholders.
(4) It provides that our bylaws may be amended by our board of directors
or, with some exceptions, by a vote of two-thirds of our voting shares
and further provides that a two-thirds vote of all of our voting shares
is required to amend the provisions of our restated certificate of
incorporation that are described in this section, unless the amendment
has been approved by two-thirds of our board of directors and a
majority of our continuing directors. Continuing directors are
directors who became members of our board of directors before any
stockholder who beneficially owns ten percent of the outstanding shares
first became a ten percent stockholder.
Our bylaws provide that special meetings of the stockholders may be called
only by our directors and limits the business that may be transacted at those
meetings to those matters set forth in the request of the proposed meeting.
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<PAGE> 42
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is The Bank of New
York.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Unless we otherwise indicate in the applicable prospectus supplement, we
may issue stock purchase contracts, including contracts that would require
holders to purchase from us and for us to sell to them, a specified number of
shares of our common stock or preferred stock at a future date or dates. We may
fix what the consideration per share of common stock or preferred stock will be
when we issue the stock purchase contracts, and this consideration may be
determined by a formula that is described in the stock purchase contracts. We
may issue the stock purchase contracts separately or as part of stock purchase
units consisting of a stock purchase contract and debt securities, preferred
stock or debt obligations of third parties, including U.S. Treasury securities,
that secure the holders' obligations to purchase our common stock or preferred
stock under the stock purchase contracts. The stock purchase contracts may
require us to make periodic payments to the holders of the stock purchase units
or vice versa, and those payments may be unsecured or prefunded on some basis.
The stock purchase contracts may require holders to secure their obligations
under the stock purchase contracts in a specified manner.
PLEDGED SECURITIES AND PLEDGE AGREEMENT
The securities subject to the stock purchase contracts (the "Pledged
Securities") will be pledged to a collateral agent, for our benefit, under the
terms of a pledge agreement. The Pledged Securities will secure the obligations
of holders of stock purchase contracts to purchase shares of our common stock or
preferred stock under the stock purchase contracts. The rights of holders of
stock purchase contracts to the related Pledged Securities will be subject to
our security interest therein created by the pledge agreement. No holder of
stock purchase contracts may withdraw the underlying pledged securities from the
pledge arrangement except upon the termination or early settlement of the stock
purchase contracts. Subject to that security interest and the terms of a
purchase contract agreement and the pledge agreement, each holder of a stock
purchase contract will keep full beneficial ownership of the related pledged
securities.
Except as we may describe in the applicable prospectus supplement, the
collateral agent will, upon receipt of distributions on the pledged securities,
distribute those payments to us or to the purchase contract agent, as provided
in the pledge agreement. The purchase contract agent will in turn distribute
payments it receives as provided in the purchase contract agreement.
We will describe the terms of any stock purchase contracts or stock
purchase units that we offer under this prospectus in a prospectus supplement.
The description in the prospectus supplement will not necessarily be complete
and will be qualified in its entirety by reference to the stock purchase
contracts and, if applicable, collateral arrangements and depositary
arrangements, relating to such stock purchase contracts or stock purchase units.
DESCRIPTION OF DEBT SECURITIES OF COUNTRYWIDE CREDIT INDUSTRIES
The following description summarizes some of the general terms and
conditions of the debt securities that we may issue under this prospectus. We
will describe the particular terms of any debt securities that we offer and the
extent to which the general provisions below will apply to those debt securities
in a prospectus supplement relating to those debt securities.
We will issue these debt securities under a senior debt indenture or a
subordinated debt indenture. The Bank of New York will serve as the trustee
under both indentures. The terms of the debt securities will include those
stated in the applicable indenture and those made part of that indenture by
reference to the Trust Indenture Act. The debt securities will be subject to all
those terms, and we refer the holders of
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<PAGE> 43
the debt securities to the applicable indenture and the Trust Indenture Act for
a statement of those terms. Unless we otherwise indicate, capitalized terms have
the meanings given them in that indenture.
The applicable prospectus supplement will specify whether the debt
securities we issue will be senior, senior subordinated or subordinated
(including, if applicable, junior subordinated) debt. The debt securities may be
convertible into shares of our preferred stock or common stock or may be issued
as part of units of debt securities and other securities that we may offer under
this prospectus. If we issue debt securities as part of units consisting of debt
securities and other securities we may issue under this prospectus or in
exchange for shares of our preferred stock, we will describe any applicable
material federal income tax consequences to holders in the applicable prospectus
supplement.
The following summaries of various provisions of the indentures and the
debt securities are not complete. Except to the extent we specify in the
prospectus supplement relating to a particular issue of debt securities, the
indentures are substantially identical, except for the subordination provisions,
including the provision that the debt securities issued under the senior debt
indenture ("senior debt securities") will rank senior to the debt securities
issued under the subordinated debt indenture ("subordinated debt securities").
GENERAL
The indentures will not limit the amount of additional indebtedness that we
or any of our subsidiaries may incur, except as we may provide in the applicable
prospectus supplement. The debt securities will be senior or subordinated
obligations as described in the applicable prospectus supplement.
We will indicate in the applicable prospectus supplement the following
terms of and information concerning any debt securities we issue (to the extent
those terms apply to those debt securities and have not been otherwise
described):
(1) the specific title, aggregate principal amount, denomination and form;
(2) the date of maturity (or the method by which that date may be
determined or extended);
(3) any interest rate or rates, whether fixed or floating (or the method
by which that rate or those rates will be determined);
(4) the date from which interest will accrue (or the method by which that
date may be determined or reset), the dates on which that interest
will be payable and the record date for any interest payable on the
interest payment date and the basis upon which interest will be
calculated if other than that of a 360-day year of twelve 30-day
months;
(5) the place or places where the principal of and any premium and any
interest on the debt securities will be payable, or where those debt
securities may be surrendered for registration of transfer or
exchange, if not the corporate trust office of the trustee for those
debt securities;
(6) the portion of the principal amount of debt securities of the series
payable upon certain declarations of acceleration or the method by
which that portion shall be determined;
(7) the denominations and the currency, currencies, currency units or
composite currencies in which the debt securities will be issuable;
(8) the currency, currencies, currency units or composite currencies in
which payments on the debt securities will be made, if not U.S.
dollars;
(9) whether the debt securities are senior debt securities or subordinated
debt securities, and if subordinated debt securities, the terms of the
subordination;
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<PAGE> 44
(10) any redemption, repayment or sinking fund provisions, including the
period or periods within which, the currency, currencies, currency
units or composite currencies in which and the other terms and
conditions upon which we may redeem the debt securities;
(11) the ability of a holder of a debt security to renew all or any portion
of a debt security;
(12) whether the debt securities are convertible into or exchangeable for
our common stock or preferred stock and the terms of the security into
which they are convertible or exchangeable (see "Description of
Capital Stock"), the conversion price or exchange ratio, other terms
related to conversion and exchange and any anti-dilution protections;
(13) whether the debt securities will be sold as part of units consisting
of debt securities and other securities that we may offer under this
prospectus;
(14) if the amount of payments of principal of or any premium or interest
on any debt securities of the series may be determined by reference to
an index, formula or other method, the index, formula or other method
by which those amounts will be determined;
(15) whether and by what method the debt securities of the series (or
certain covenants under the related indenture) may be defeased and
discharged by us;
(16) whether the debt securities of the series shall be issued in whole or
in part as book-entry securities;
(17) any applicable material federal income tax consequences; and
(18) any other material specific terms of the debt securities, including
any material additional events of default or covenants provided for
and any material terms that may be required by or advisable under
applicable laws or regulations.
Unless we otherwise indicate in the applicable prospectus supplement, we
will issue debt securities only in fully registered form without coupons. The
debt securities denominated in U.S. dollars will be issued in denominations of
$1,000 or integral multiples of $1,000 unless we otherwise provide in the
applicable prospectus supplement. The prospectus supplement relating to a series
of debt securities denominated in a foreign currency or currency unit will
specify the denominations in which those debt securities may be issued.
The indentures do not contain any provisions that would limit our ability
or the ability of any of our affiliates to incur indebtedness (secured or
unsecured) or that would afford holders of the debt securities protection in the
event of a highly leveraged transaction, restructuring, change in control,
merger or similar transaction involving us that may adversely affect holders of
the debt securities.
Unless we otherwise indicate in the applicable prospectus supplement, the
principal of, and any premium or interest on, any series of debt securities will
be payable, and those debt securities will be exchangeable and transfers of them
will be registerable, at the corporate trust office of the trustee, initially at
101 Barclay Street, New York, New York 10286. However, we may elect to make
interest payments by check mailed to the address of the person entitled to them
as that address appears in the security register for those debt securities.
None of the debt securities will be entitled to any benefit under the
applicable indenture or be valid or obligatory for any purpose unless there
appears on the debt security a certificate of authentication substantially in
the form provided in that indenture that is duly executed by the trustee, and
that certificate will be conclusive evidence and the only evidence that the debt
security has been duly authenticated and delivered under and is entitled to the
benefits of that indenture.
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SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Our obligations under the debt securities will be subordinate in right of
payment to all present and future senior indebtedness to the extent provided in
the indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with our insolvency or
bankruptcy, the holders of senior indebtedness will first be entitled to receive
payment in full of that senior indebtedness before the holders of the debt
securities will be entitled to receive or retain any payment.
No payments on account of principal of or any premium or interest on the
debt securities (including payments on exercise of debt security put options)
may be made if a default in any payment on senior indebtedness has occurred and
is continuing, or an event of default on any senior indebtedness resulting in
the acceleration of its maturity has occurred, or if any judicial proceeding is
pending with respect to any such default.
In the event the maturity of the debt securities is accelerated, the
holders of all senior indebtedness outstanding at the time of the acceleration
will first be entitled to receive payment in full of all amounts due in respect
of that senior indebtedness before the holders of the debt securities will be
entitled to receive or retain any payment related to the debt securities.
Amounts that would be due and payable by us to holders of units in the
absence of the foregoing subordination provisions, however, may be applied by
those holders to offset their obligations under their respective purchase
contracts.
Any subordinated debt securities will be subordinate and junior in right of
payment, to the extent and in the manner described in the indenture, to all of
our, "senior indebtedness." Unless we otherwise indicate in the prospectus
supplement, "senior indebtedness" means:
(1) the principal, premium, if any, and interest in respect of indebtedness
for money borrowed and indebtedness evidenced by securities,
debentures, bonds or other similar instruments;
(2) all capital lease obligations;
(3) all obligations issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under
any title retention agreement, excluding trade accounts payable arising
in the ordinary course of business;
(4) all obligations for the reimbursement on any letter of credit, any
banker's acceptance, any security purchase facility, any repurchase
agreement or similar arrangement, any interest rate swap, any other
hedging arrangement, any obligation under options or any similar credit
or other transaction;
(5) all obligations of the type referred to in clauses (1) through (4)
above of others, the payment of which we are responsible or liable as
obligor, guarantor or otherwise; and
(6) all obligations of the type referred to in clauses (1) through (5)
above of others secured by any lien on any of our properties or assets,
whether or not the obligation is assumed by us,
except for:
(a) any indebtedness that states, or is issued under a deed, indenture
or other instrument that states, that it is subordinate to or ranks
equally with the debt securities;
(b) any indebtedness between or among us and any of our affiliates;
(c) the indebtedness represented by our guarantee of the 8% Junior
Subordinated Deferrable Interest Debentures due December 15, 2026 of
Countrywide Home Loans; and
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(d) the indebtedness represented by our guarantee of the 8.05% Junior
Subordinated Debentures due June 15, 2027 of Countrywide Home Loans.
REDEMPTION
If and to the extent we provide in the applicable prospectus supplement, we
will have the right to redeem the debt securities, in whole or from time to time
in part, after the date and at the redemption prices set forth in the applicable
prospectus supplement.
EVENTS OF DEFAULT
The indentures define an event of default for the debt securities of any
series as:
(1) failure to pay principal (or premium) on any debt security of that
series at maturity;
(2) failure to pay interest on any debt security of that series within 30
days of the date when due;
(3) failure to deposit any sinking fund payment when due for that series
within 30 days of the date when due;
(4) failure to perform for 90 days after notice any of the other covenants
in the indentures;
(5) certain events of bankruptcy, insolvency or reorganization;
(6) failure to pay the put price when due upon exercise of a debt security
put option;
(7) default resulting in the acceleration of maturity of any other
indebtedness for money borrowed by us or by any of our direct or
indirect subsidiaries in an amount exceeding $10,000,000 and that
acceleration not being rescinded or annulled for a period of 10 days
after written notice of the default by the trustee or the holders of at
least 25% in aggregate principal amount of the then outstanding debt
securities of that series; and
(8) any other event of default provided for debt securities of that series.
The indentures provide that if any event of default affecting outstanding
debt securities of any series occurs and is continuing, either the trustee or
the holders of at least 25% in principal amount of the outstanding debt
securities of that series may declare the principal amount (or, if the debt
securities of that series are original issue discount securities or indexed
securities, the portion of the principal amount of those debt securities as
specified by their terms) of all debt securities of that series to be due and
payable immediately. However, under certain circumstances the holders of a
majority in principal amount of the outstanding debt securities of that series
on behalf of the holders of all debt securities of that series may annul a
declaration and waive past defaults (except, unless previously cured, a default
in payment of principal of or any premium or any interest on the debt securities
of that series and other specified defaults).
We refer you to the prospectus supplement relating to each series of debt
securities that are original issue discount securities for the particular
provisions regarding acceleration of the maturity of a portion of the principal
amount of those original issue discount securities if an event of default occurs
and continues.
The agreements governing our outstanding indebtedness contain provisions
that would characterize some events of default under the indentures as "events
of default" under those agreements that could in turn result in, among other
things, an acceleration of indebtedness under those agreements.
The indentures contain a provision entitling the trustee, subject to its
duty to act with the required standard of care during a default under any series
of debt securities, to be indemnified by the holders of debt securities of that
series before exercising any right or power under the indentures at the request
of the holders of the debt securities of that series.
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The indentures provide that no holder of debt securities of any series may
institute proceedings, judicial or otherwise, to enforce the applicable
indenture except if the trustee fails to act for 60 days after it receives a
written request to enforce that indenture by the holders of at least 25% in
aggregate principal amount of the then outstanding debt securities of that
series and an offer of reasonable indemnity. This provision will not prevent any
holder of debt securities from enforcing payment of the principal of and any
premium and interest on those debt securities when due. The holders of a
majority in aggregate principal amount of the debt securities of any series
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 those debt securities. However, the trustee may
refuse to follow any direction that it determines would be illegal or would
conflict with the indentures or involve it in personal liability or which would
unjustly prejudice holders of the debt securities of that series not joining the
proceeding.
The indentures provide that the trustee will, within 90 days after a
default occurs that affects the outstanding debt securities of any series, give
to the holders of those debt securities notice of that default, unless that
default has been cured or waived. Except in the case of a default in the payment
of principal of, or any premium or interest on, any debt securities or payment
of any sinking fund installment, the trustee will be protected in withholding of
that notice if it determines in good faith that the withholding of that notice
is in the interest of the holders of the debt securities of that series.
We 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.
DEFEASANCE OF DEBT SECURITIES OR SOME COVENANTS
DEFEASANCE AND DISCHARGE. Unless we otherwise indicate in the applicable
prospectus supplement, the debt securities of any series will provide that we
will be discharged from all obligations under the debt securities of that series
(except for obligations to register the transfer or exchange of debt securities
of that series, to replace stolen, lost or mutilated debt securities of that
series, to maintain paying agencies and to hold moneys for payment in trust)
once we deposit with the trustee, in trust, money and/or U.S. government
obligations, which through the payment of interest and principal, will provide a
sufficient amount of money to pay and discharge the principal of (and any
premium) and any interest on, and any mandatory sinking fund payments that apply
to, the debt securities of that series on the stated maturity of those payments.
This discharge may occur only if, among other things, we deliver to the trustee
an opinion of counsel stating that we have received from, or there has been
published by, the IRS a ruling, or there has been a change in tax law, that
would cause the discharge not to be deemed, or result in, a taxable event for
the holders of the debt securities of that series.
DEFEASANCE OF SOME COVENANTS. Unless we otherwise provide in the applicable
prospectus supplement, the debt securities of any series will permit us not to
comply with some restrictive covenants, including those relating to
consolidation and merger in the indentures, if we satisfy certain conditions. We
will be able to defease those covenants if, among other things:
(1) we deposit with the trustee money and/or U.S. government obligations,
which, through the payment of interest and principal, will provide a
sufficient amount of money to pay the principal of (and any premium)
and any interest on, and any mandatory sinking fund payments applicable
to, the debt securities of that series on the stated maturity of those
payments; and
(2) we deliver to the trustee an opinion of counsel stating that the
deposit and related covenant defeasance will not cause the holders of
the debt securities of that series to recognize income, gain or loss
for federal income tax purposes.
If we elect to defease the covenants of a series of debt securities and
those debt securities are declared due and payable because an event of default
has occurred, the amount of money and/or U.S. government obligations on deposit
with the trustee will be sufficient to pay amounts due on those debt
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securities at their stated maturity but may not be sufficient to pay amounts due
on those debt securities at the time of the acceleration. However, we will
remain liable for those payments.
We will state in the prospectus supplement for any particular series of
debt securities if any defeasance provisions will apply to those debt
securities.
MODIFICATION OF THE INDENTURE AND WAIVER OF COVENANTS
The indentures permit us and the trustee, with the consent of the holders
of at least a majority in principal amount of outstanding debt securities of
each series affected, to execute supplemental indentures adding provisions to or
changing or eliminating provisions of the indentures or modifying the rights of
the holders of outstanding debt securities of that series, except that no
supplemental indenture may, without the consent of the holder of each
outstanding debt security affected:
(1) change the stated maturity, or reduce the principal amount, any premium
on or the rate of payment of any interest on, of any debt security of
any series;
(2) reduce the percentage of outstanding debt securities of any series, the
consent of the holders of which is required for any supplemental
indenture or for waiver of compliance with certain provisions of the
indenture or certain defaults thereunder; or
(3) effect various other changes.
The indentures also allow us not to comply with certain covenants in the
indentures upon waiver by the holders of a majority in principal amount of
outstanding debt securities of the series affected.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The indentures allow us, without the consent of the holders of any of the
outstanding debt securities, to consolidate with or merge into any other
corporation or transfer or lease our assets substantially as an entirety to any
person if:
(1) the successor is a corporation organized under the laws of any domestic
jurisdiction;
(2) the successor corporation assumes our obligations on the debt
securities and under the indentures;
(3) after giving effect to the transaction no event of default, and no
event which, after notice or lapse of time, would become an event of
default, shall have happened and be continuing; and
(4) certain other conditions are met.
CONCERNING THE TRUSTEE
The Bank of New York is the trustee under each of the senior debt indenture
and the subordinated debt indenture. We and Countrywide Home Loans 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 Countrywide Home Loans and serves as transfer agent and
registrar for our common stock.
GOVERNING LAW
Unless we otherwise specify in the applicable prospectus supplement, the
indentures for the debt securities and the debt securities will be governed by
New York law.
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DESCRIPTION OF DEBT SECURITIES OF COUNTRYWIDE HOME LOANS AND RELATED GUARANTEES
OF COUNTRYWIDE CREDIT INDUSTRIES
The following description summarizes some of the general terms and
conditions of the debt securities that Countrywide Home Loans may issue under
this prospectus (the "CHL debt securities"). Countrywide Home Loans will
describe the particular terms of any CHL debt securities that it offers and the
extent to which the general provisions below will apply to those CHL debt
securities in a prospectus supplement relating to those CHL debt securities.
Countrywide Home Loans will issue CHL debt securities either (1) under an
Indenture, dated as of January 1, 1992, as amended by Supplemental Indenture No.
1, dated as of June 15, 1995 (as it may be further amended or supplemented, the
"CHL senior indenture"), among Countrywide Home Loans, Countrywide Credit
Industries, as guarantor (the "Guarantor"), and The Bank of New York, as trustee
(the "CHL senior trustee"), or (2) under a subordinated debt indenture (the "CHL
subordinated indenture") to be entered into among Countrywide Home Loans, the
Guarantor and The Bank of New York, as trustee (the "CHL subordinated trustee").
Any series of CHL debt securities that Countrywide Home Loans issues under the
CHL senior indenture will constitute unsubordinated debt of Countrywide Home
Loans ("CHL senior debt securities") and will rank senior to any series of CHL
debt securities that Countrywide Home Loans issues under the CHL subordinated
indenture ("CHL subordinated debt securities").
Countrywide Home Loans will issue each series of CHL debt securities under
the terms of an amendment or supplement to the applicable CHL indenture that
takes the form of a supplemental indenture or an officers' certificate delivered
under the authority of resolutions adopted by Countrywide Home Loans' board of
directors and the terms of that CHL indenture. The terms of any CHL debt
securities will include those stated in the applicable CHL indenture and those
made part of that CHL indenture by reference to the Trust Indenture Act. The CHL
debt securities will be subject to all those terms, and we refer the holders of
CHL debt securities to the applicable CHL indenture and the Trust Indenture Act
for a statement of those terms.
The following summaries of various provisions of the CHL indentures and the
CHL debt securities are not complete and are qualified in their entirety by
reference to the provisions of the CHL indentures, including the definitions of
capitalized terms used in this section without definition. Unless we otherwise
indicate, capitalized terms have the meanings given them in the applicable CHL
indenture.
The applicable prospectus supplement will specify whether the CHL debt
securities that Countrywide Home Loans issues will be senior, senior
subordinated or subordinated (including, if applicable, junior subordinated)
debt. The CHL debt securities may be issued as part of units consisting of CHL
debt securities and securities that we may offer under this prospectus. If
Countrywide Home Loans issues debt securities as part of units of CHL debt
securities and securities that we may issue under this prospectus, we and
Countrywide Home Loans will describe any applicable material federal income tax
consequences to holders in the applicable prospectus supplement.
SENIOR INDENTURE
GENERAL
The CHL senior indenture does not limit the aggregate principal amount of
CHL senior debt securities that Countrywide Home Loans may issue periodically in
series.
The CHL senior debt securities will be unsecured and unsubordinated
indebtedness of Countrywide Home Loans and will rank equally in right of payment
with Countrywide Home Loans' other unsecured and unsubordinated indebtedness. A
substantial portion of the assets of Countrywide Home Loans may be pledged under
various credit agreements among Countrywide Home Loans and various lending
institutions.
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We refer you to the prospectus supplement and any pricing supplement
relating to any particular series of CHL senior debt securities offered by
Countrywide Home Loans for a description of the terms of those CHL senior debt
securities, including, where applicable:
(1) the title of those CHL senior debt securities;
(2) any limit on the aggregate principal amount of those CHL senior debt
securities;
(3) the date or dates (or any method or methods by which that date or
those dates will be determined or extended) on which the principal of
those CHL senior debt securities is payable;
(4) any places other than the Countrywide Home Loans' office or agency in
The City of New York where those CHL senior debt securities will be
payable or surrendered for registration of transfer or exchange;
(5) the denominations in which those CHL senior debt securities will be
issuable;
(6) the currency in which those CHL senior debt securities may be
denominated, which may be U.S. dollars or any foreign currency or
currency unit, and, if applicable, other information regarding that
foreign currency or currency unit;
(7) the designation of the currency or currencies in which payment of the
principal of and any premium and interest on those CHL senior debt
securities will be made and whether payment of the principal of or any
premium or the interest on CHL senior debt securities designated in a
foreign currency or currency unit, at the holder's election, may
instead be payable in U.S. dollars and the terms and conditions upon
which that election may be made;
(8) any rate or rates (which may be fixed or floating) at which those CHL
senior debt securities will bear interest (or any method or methods by
which that rate or those rates are to be determined or reset), any
date or dates from which that interest will accrue (or any method or
methods by which that date or those dates will be determined or
reset), the dates on which that interest will be payable, the record
date for the interest payable on any interest payment date, and the
basis upon which interest will be calculated if other than that of a
360-day year of twelve 30-day months;
(9) any terms and conditions on which those CHL senior debt securities may
be redeemed at Countrywide Home Loans' option or repaid at the
holders' option;
(10) any obligation of Countrywide Home Loans to redeem, repay or purchase
those CHL senior debt securities under the terms of any sinking fund
or analogous provisions, and the terms and conditions on which those
CHL senior debt securities will be redeemed, repaid or purchased, in
whole or in part, under the terms of that obligation;
(11) if other than the principal amount, the portion of the principal
amount of those CHL senior debt securities that will be payable upon
declaration of acceleration of the maturity of those CHL senior debt
securities;
(12) any provisions for the defeasance of those debt securities;
(13) any ability a holder of a CHL senior debt security may have to renew
all or any portion of a CHL senior debt security;
(14) any additional Events of Default or restrictive covenants applicable
to those CHL senior debt securities;
(15) any other terms not inconsistent with the CHL senior indenture,
including any terms which may be required by or advisable under United
States laws or regulations;
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(16) if those CHL senior 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
CHL Indenture, the definition of the "Exchange Rate"; and
(17) the form of those CHL senior debt securities and, if in global form,
the name of the depositary and the terms upon which and the
circumstances under which those CHL senior debt securities may be
exchanged.
Unless Countrywide Home Loans otherwise indicates in the applicable
prospectus supplement, Countrywide Home Loans will issue CHL senior debt
securities only in fully registered form without coupons. CHL senior debt
securities denominated in U.S. dollars will be issued in denominations of $1,000
or integral multiples of $1,000 unless Countrywide Home Loans otherwise provides
in the applicable prospectus supplement. The prospectus supplement relating to a
series of CHL senior debt securities denominated in a foreign currency or
currency unit will specify the denominations in which those CHL senior debt
securities may be issued.
The CHL senior indenture does not contain any provisions that would limit
the ability of Countrywide Home Loans or any of its affiliates to incur
indebtedness (secured or unsecured) or that would afford holders of CHL senior
debt securities protection in the event of a highly leveraged transaction,
restructuring, change in control, merger or similar transaction involving
Countrywide Home Loans that may adversely affect holders of the CHL senior debt
securities.
Countrywide Home Loans may sell one or more series of CHL senior debt
securities at a substantial discount below their stated principal amount, and
those CHL senior debt securities may bear no interest or interest at a rate that
at the time of issuance is below market rate. One or more series of CHL senior
debt securities may be floating rate debt securities and may be exchangeable for
fixed rate debt securities. Countrywide Home Loans will describe any federal
income tax consequences and special considerations applicable to any particular
series in the applicable prospectus supplement.
Unless Countrywide Home Loans otherwise indicates in the applicable
prospectus supplement, the principal of, and any premium or interest on, any
series of CHL senior debt securities will be payable, and those CHL senior debt
securities will be exchangeable and transfers of them will be registerable, at
the Corporate Trust Office of the CHL senior trustee, initially at 101 Barclay
Street, New York, New York 10286. However, Countrywide Home Loans may elect to
make interest payments by check mailed to the address of the person entitled to
them as that address appears in the security register for those CHL senior debt
securities.
No CHL senior debt security will be entitled to any benefit under the CHL
senior indenture or be valid or obligatory for any purpose unless there appears
on that CHL senior debt security a certificate of authentication substantially
in the form provided in the CHL senior indenture that is duly executed by the
CHL senior trustee, and that certificate will be conclusive evidence and the
only evidence that CHL senior debt security has been duly authenticated and
delivered under and is entitled to the benefits of the CHL senior indenture.
EVENTS OF DEFAULT
The CHL senior indenture provides that the following are "Events of
Default" that apply to any series of CHL senior debt securities:
(1) default in payment of principal of (or any premium on) any CHL senior
debt security of that series at maturity;
(2) default for 30 days in payment of interest on any CHL senior debt
security of that series when due;
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(3) default in the deposit of any sinking fund payment on any CHL senior
debt security of that series when due;
(4) default in the performance or breach of any other covenant or warranty
of Countrywide Home Loans or the Guarantor in the CHL senior indenture,
the CHL senior debt securities or the related Guarantees, continued for
60 days after written notice of default by the CHL senior trustee or
the holders of at least 25% in aggregate principal amount of the then
outstanding CHL senior debt securities of that series;
(5) default resulting in acceleration of maturity of any other indebtedness
for borrowed money of Countrywide Home Loans, the Guarantor or any
direct or indirect subsidiary of the Guarantor in an amount exceeding
$10,000,000 and that acceleration shall not be rescinded or annulled
for a period of 10 days after written notice of the default by the CHL
senior trustee or the holders of at least 25% in aggregate principal
amount of the then outstanding CHL senior debt securities of that
series;
(6) certain events of bankruptcy, insolvency or reorganization; and
(7) any other Event of Default applicable to that series of CHL senior debt
securities.
No Event of Default applicable to a particular series of CHL senior debt
securities necessarily constitutes an Event of Default applicable to any other
series of CHL senior debt securities.
The CHL senior indenture provides that if an Event of Default occurs and
continues, either the CHL senior trustee or the holders of at least 25% in
aggregate principal amount of the CHL senior debt securities of that series then
outstanding may declare the principal amount of those CHL senior debt securities
(or, if they are Original Issue Discount Securities, the amount as provided in
the terms of those Original Issue Discount Securities) to be due and payable
immediately upon written notice of acceleration to Countrywide Home Loans. In
some cases, the holders of a majority in aggregate principal amount of the
outstanding CHL senior debt securities of that series may, on behalf of the
holders of all those CHL senior debt securities, rescind and annul that
declaration of acceleration. "Original Issue Discount Security" means, except as
otherwise defined in a CHL senior debt security, any CHL senior debt security
that is issued with original issue discount within the meaning of Section
1273(a) of the Internal Revenue Code of 1986 and related regulations.
The agreements governing certain of Countrywide Home Loans' outstanding
indebtedness contain provisions that would characterize some Events of Default
under the CHL senior indenture as events of default under those agreements that
could in turn result in, among other things, an acceleration of the indebtedness
under those agreements.
The CHL senior indenture contains a provision entitling the CHL senior
trustee, subject to its duty to act with the required standard of care during
default under any series of CHL senior debt securities, to be indemnified by the
holders of the CHL senior debt securities of that series before exercising any
right or power under the CHL senior indenture at the request of the holders of
CHL senior debt securities of that series. The CHL senior indenture provides
that no holders of CHL senior debt securities of any series may institute any
proceedings, judicial or otherwise, to enforce the CHL senior indenture except
if the CHL senior trustee fails to act for 60 days after it receives a written
request to enforce the CHL senior indenture by the holders of at least 25% in
aggregate principal amount of the then outstanding CHL senior debt securities of
that series and an offer of reasonable indemnity. This provision will not
prevent any holder of CHL senior debt securities from enforcing payment of the
principal thereof and any premium and interest on those CHL senior debt
securities when due. The holders of a majority in aggregate principal amount of
the CHL senior debt securities of any series then outstanding may direct the
time, method and place of conducting any proceeding for any remedy available to
the CHL senior trustee or exercising any trust or power conferred on it with
respect to those CHL senior debt securities. However, the CHL senior trustee may
refuse to follow any direction that it determines would be illegal or would
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conflict with the CHL senior indenture or involve it in personal liability or
that would unjustly prejudice holders of the CHL senior debt securities of that
series not joining the proceeding.
The CHL senior indenture provides that the CHL senior trustee will, within
90 days after a default occurs that affects the outstanding CHL senior debt
securities of any series, give to the holders of those CHL senior debt
securities notice of that default, unless that default has been cured or waived.
Except in the case of a default in the payment of principal of, or any premium
or interest on any CHL senior debt securities or payment of any sinking fund
installment, the CHL senior trustee will be protected in the withholding of that
notice if it determines in good faith that the withholding of that notice is in
the interest of the holders of the CHL senior debt securities of that series.
Countrywide Home Loans will be required to file with the CHL senior trustee
annually an officers' certificate as to the absence of certain defaults under
the terms of the CHL senior indenture.
MODIFICATION AND WAIVER
Countrywide Home Loans, the Guarantor and the CHL senior trustee may modify
or amend the CHL senior indenture with the consent of the holders of a majority
in aggregate principal amount of the outstanding CHL senior debt securities of
each series affected by that modification or amendment; provided, however, that
no modification or amendment may, without the consent of the holder of each
outstanding CHL senior debt security affected:
(1) except as the CHL Indenture otherwise permits for CHL senior debt
securities for which the Stated Maturity is extendible, change the
Stated Maturity of the principal of, or any installment of interest
on, that CHL senior debt security;
(2) reduce the principal amount of, or, except as the CHL Indenture
otherwise permits for CHL senior debt securities for which the
interest rate may be reset, interest on, or any premium payable upon
redemption or repayment of, that CHL senior debt security;
(3) reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of its Maturity;
(4) adversely affect the right of repayment at the option of a holder of
that CHL senior debt security;
(5) reduce the amount of, or postpone the date fixed for, any payment
under any sinking fund or analogous provisions of that CHL senior debt
security;
(6) change the place or currency or currency unit of payment of the
principal of or any premium or interest on that CHL senior debt
security;
(7) change or eliminate the rights of a holder to receive payment in a
designated currency;
(8) impair the right to institute suit for the enforcement of any required
payment on or with respect to that CHL senior debt security;
(9) reduce the percentage of the aggregate principal amount of the
outstanding CHL senior debt securities of any series the consent of
whose holders is required to modify or amend the CHL senior indenture,
to waive compliance with certain provisions of the CHL senior
indenture, or to waive certain defaults;
(10) modify any of the provisions of Section 613 (described below) except
to increase the percentage or to provide that some other provisions of
the CHL Indenture cannot be modified or waived without the consent of
the holder of each outstanding CHL senior debt security affected by
the modification or waiver; or
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(11) modify or affect the terms and conditions of the related Guarantees in
a manner adverse to the interests of the holders of the CHL senior
debt securities.
The CHL senior indenture also contains provisions permitting Countrywide
Home Loans, the Guarantor and the CHL senior trustee, without the consent of any
holders of CHL senior debt securities, to enter into supplemental indentures for
any of the following purposes:
(1) to evidence the succession of another corporation to Countrywide Home
Loans or the Guarantor and the assumption by that successor of the
obligations and covenants of Countrywide Home Loans or the Guarantor
contained in the CHL senior indenture, the CHL senior debt securities
and the related Guarantees;
(2) to add to the covenants of Countrywide Home Loans or the Guarantor for
the benefit of the holders of all or any series of CHL senior debt
securities (and if those covenants are to be for the benefit of less
than all series of CHL senior debt securities, stating that those
covenants are expressly being included solely for the benefit of that
series), or to surrender any right or power in the CHL senior
indenture conferred upon Countrywide Home Loans or the Guarantor;
(3) to add any additional Events of Default (and if those Events of
Default will be applied to less than all series of CHL senior debt
securities, stating that those Events of Default are expressly being
included solely to be applied to that series);
(4) to add or change any of the provisions of the CHL senior indenture to
the extent necessary to permit or facilitate the issuance of CHL
senior debt securities in bearer form, registrable or not registrable
as to principal, and with or without interest coupons;
(5) to change or eliminate any provisions of the CHL senior indenture,
provided that any of those changes or eliminations will become
effective only when there is no CHL senior debt security outstanding
of any series created before that supplemental indenture is executed
which is entitled to the benefit of that provision;
(6) to establish the form or terms of CHL senior debt securities of any
series as otherwise permitted by the CHL senior indenture;
(7) to evidence and provide for the acceptance of appointment under the
CHL senior indenture by a successor CHL senior trustee for the CHL
senior debt securities of one or more series issued under the CHL
Indenture and to add to or change any of the provisions of the CHL
senior indenture necessary to provide for or facilitate the
administration of the trusts under the CHL senior indenture by more
than one CHL senior trustee consistent with the requirements of the
CHL senior indenture;
(8) to secure the CHL senior debt securities issued under the CHL senior
indenture;
(9) to cure any ambiguity, to correct or supplement any provision in the
CHL senior indenture which may be defective or inconsistent with any
other provision of the CHL senior indenture, or to make any other
provisions regarding matters or questions arising under the CHL senior
indenture which will not be inconsistent with any provision of the CHL
senior indenture, provided those other provisions will not adversely
affect the interests of the holders of CHL senior debt securities of
any series issued under the CHL senior indenture in any material
respect;
(10) to modify, eliminate or add to the provisions of the CHL senior
indenture to the extent necessary to qualify the CHL senior indenture
under the Trust Indenture Act or under any similar federal statute
subsequently enacted and to add to the CHL senior indenture other
provisions as may be expressly required under the Trust Indenture Act;
or
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(11) to enable the Guarantor or one of its subsidiaries to assume the
payment obligations under the CHL senior debt securities and the
performance of every covenant to be performed or observed by
Countrywide Home Loans under the CHL senior indenture.
The holders of a majority in aggregate principal amount of the outstanding
CHL senior debt securities of each series may, on behalf of all holders of CHL
senior debt securities of that series, waive any past default under the CHL
senior indenture affecting the CHL senior debt securities of that series except
a default in the payment of the principal of (or any premium), or interest on,
any CHL senior debt security of that series and a default in the compliance of a
covenant or provision if the consent of the holder of each outstanding CHL
senior debt security of that series would be required to modify or amend that
covenant or provision.
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
Under the CHL senior indenture, neither Countrywide Home Loans nor the
Guarantor may consolidate with or merge into any corporation, or transfer its
assets substantially as an entirety to any person, unless:
(1) the successor corporation or transferee assumes Countrywide Home Loans'
or the Guarantor's obligations on the CHL senior debt securities or the
related Guarantees, as applicable, and under the CHL senior indenture,
and in the case of a consolidation or merger of Countrywide Home Loans,
the Guarantor delivers an affirmation of the continuance of its
obligations to the CHL senior trustee;
(2) after giving effect to the transaction, no Event of Default and no
event that, after notice or lapse of time or both, would become an
Event of Default will have occurred and be continuing; and
(3) some other conditions are met.
SATISFACTION, DISCHARGE AND DEFEASANCE
The CHL senior indenture, with respect to any series of CHL senior debt
securities (except for some specified surviving obligations, including (1) any
rights of registration of transfer and exchange and (2) rights to receive the
principal, any premium and interest on the CHL senior debt securities), will be
discharged and cancelled upon the satisfaction of certain conditions, including
the following:
(1) all CHL senior debt securities of that series not previously delivered
to the CHL senior 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
(2) the deposit with the CHL senior trustee of an amount in the Specified
Currency sufficient to pay the principal, any premium and interest to
the Maturity of all CHL senior debt securities of that series.
If Countrywide Home Loans so specifies in the prospectus supplement
relating to CHL senior debt securities of any series, Countrywide Home Loans at
its option:
(1) will be discharged from any and all obligations under the CHL senior
debt securities of that series (except for obligations to register the
transfer or exchange of CHL senior debt securities of that series,
replace stolen, lost or mutilated CHL senior debt securities of that
series, maintain offices or agencies in each Place of Payment and hold
moneys for payment in trust); or
(2) will not be subject to provisions of the CHL Indenture described above
under "Consolidation, Merger and Transfer of Assets" for the debt
securities of that series,
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if Countrywide Home Loans irrevocably deposits with the CHL senior trustee, in
trust, money or U.S. government obligations, which through interest and
principal payments will provide a sufficient amount of money (in the opinion of
independent public accountants) to pay all the principal (including any
mandatory sinking fund payments) of, and any premium and interest on, the CHL
senior debt securities of that series on the dates those payments are due
consistent with the terms of those CHL senior debt securities. To exercise
either option, Countrywide Home Loans must deliver to the CHL senior trustee:
(1) an opinion of counsel stating that;
(a) the deposit and related defeasance would not cause the holders of
the CHL senior debt securities of that series to recognize income,
gain or loss for federal income tax purposes;
(b) the exercise of that option will not cause any violation of the
Investment Company Act of 1940; and
(c) if the CHL senior debt securities of that series are then listed on
the New York Stock Exchange, those CHL senior debt securities would
not be delisted as a result of the exercise of that option; and
(2) if CHL senior debt securities of that series are 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 CHL senior debt securities of that series to
recognize income, gain or loss for federal income tax purposes.
GUARANTEES
The Guarantor will unconditionally guarantee (the "Guarantees") the payment
of principal of and any premium and interest on the CHL senior debt securities
when due and payable, whether at their Stated Maturity or upon redemption,
repayment or otherwise. The Guarantees will rank equally in right of payment
with all other unsecured and unsubordinated obligations of the Guarantor,
including any debt securities issued by the Guarantor under this prospectus.
The obligations of the Guarantor under the Guarantees will be unconditional
regardless of the enforceability of the CHL senior debt securities or the CHL
senior indenture and will not be discharged until all obligations under those
CHL senior debt securities and the CHL senior indenture are satisfied. Holders
of the CHL senior debt securities may proceed directly against the Guarantor if
an Event of Default affecting those CHL senior debt securities occurs without
first proceeding against Countrywide Home Loans.
Because the Guarantor is a holding company, the rights of its creditors
(including the holders of the CHL senior debt securities if the Guarantees are
enforced) to share in the distribution of the assets of any subsidiary upon that
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.
GLOBAL SECURITIES
Countrywide Home Loans may issue CHL senior debt securities of any series
in whole or in part in the form of one or more global securities that will be
deposited with, or on behalf of, a depositary identified in the prospectus
supplement relating to that 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
CHL senior debt securities in definitive form, a global security may not be
transferred except as a whole by the depositary for that global security to a
nominee of that depositary or by a nominee of that depositary to that depositary
or another nominee of that depositary or by that depositary or that nominee to a
successor of that depositary or a nominee of that
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successor. Countrywide Home Loans will describe the specific terms of the
depositary arrangement for a series of CHL senior debt securities in the
prospectus supplement relating to that series.
CONCERNING THE TRUSTEE
The Bank of New York is the trustee under the CHL senior indenture.
Countrywide Home Loans and the Guarantor maintain banking relationships in the
ordinary course of business with the CHL senior trustee. Among other things, The
Bank of New York is a lending bank under an existing revolving credit facility
of Countrywide Home Loans.
GOVERNING LAW
Unless Countrywide Home Loans otherwise specifies in the applicable
prospectus supplement, the CHL senior indenture and the CHL senior debt
securities will be governed by New York law.
SUBORDINATED INDENTURE
GENERAL
The CHL subordinated indenture will not limit the amount of additional
indebtedness that Countrywide Home Loans or any of its subsidiaries may incur,
except as Countrywide Home Loans may provide in the applicable prospectus
supplement. The CHL debt securities issued under the CHL subordinated indenture
will be subordinated obligations as described in the applicable prospectus
supplement.
Countrywide Home Loans will indicate in the applicable prospectus
supplement the following terms of and information concerning any CHL
subordinated debt securities that Countrywide Home Loans issues (to the extent
those terms apply to those CHL subordinated debt securities and have not been
otherwise described):
(1) the specific title, aggregate principal amount, denomination and form;
(2) the date of maturity (or the method by which that date may be
determined or extended);
(3) any interest rate or rates, whether fixed or floating (or the method by
which that rate or those rates will be determined);
(4) the date from which interest will accrue (or the method by which that
date may be determined or reset), the dates on which that interest will
be payable and the record date for any interest payable on the interest
payment date and the basis upon which interest will be calculated if
other than that of a 360-day year of twelve 30-day months;
(5) the place or places where the principal of and any premium and any
interest on the CHL subordinated debt securities will be payable, or
where those CHL subordinated debt securities may be surrendered for
registration of transfer or exchange, if not the corporate trust office
of the CHL subordinated trustee for those CHL subordinated debt
securities;
(6) the portion of the principal amount of CHL subordinated debt securities
of the series payable upon certain declarations of acceleration or the
method by which that portion shall be determined;
(7) the denominations and the currency, currencies, currency units or
composite currencies in which the CHL subordinated debt securities will
be issuable;
(8) the currency, currencies, currency units or composite currencies in
which payments on the CHL subordinated debt securities will be made, if
not U.S. dollars;
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(9) additional or different subordination terms of the CHL subordinated
debt securities;
(10) any redemption, repayment or sinking fund provisions, including the
period or periods within which, the currency, currencies, currency
units or composite currencies in which and the other terms and
conditions upon which Countrywide Home Loans may redeem the CHL
subordinated debt securities;
(11) the ability of a holder of a CHL subordinated debt security to renew
all or any portion of a CHL subordinated debt security;
(12) whether the CHL subordinated debt securities are convertible into or
exchangeable for other securities of Countrywide Home Loans and the
terms of the security into which they are convertible or exchangeable,
the conversion price or exchange ratio, other terms related to
conversion and exchange and any anti-dilution protections;
(13) whether the CHL subordinated debt securities will be sold as part of
units consisting of CHL subordinated debt securities and securities
that Countrywide Credit Industries may offer under this prospectus;
(14) if the amount of payments of principal of or any premium or interest
on any CHL subordinated debt securities of the series may be
determined by reference to an index, formula or other method, the
index, formula or other method by which those amounts will be
determined;
(15) whether and by what method the CHL subordinated debt securities of the
series (or certain covenants under the related CHL subordinated
indenture) may be defeased and discharged by Countrywide Home Loans;
(16) whether the CHL subordinated debt securities of the series shall be
issued in whole or in part as book-entry securities;
(17) any applicable material federal income tax consequences; and
(18) any other material specific terms of the CHL subordinated debt
securities, including any material additional events of default or
covenants provided for and any material terms that may be required by
or advisable under applicable laws or regulations.
Unless Countrywide Home Loans otherwise indicates in the applicable
prospectus supplement, Countrywide Home Loans will issue CHL subordinated debt
securities only in fully registered form without coupons. The CHL subordinated
debt securities denominated in U.S. dollars will be issued in denominations of
$1,000 or integral multiples of $1,000 unless Countrywide Home Loans otherwise
provides in the applicable prospectus supplement. The prospectus supplement
relating to a series of CHL subordinated debt securities denominated in a
foreign currency or currency unit will specify the denominations in which those
CHL subordinated debt securities may be issued.
The CHL subordinated indenture does not contain any provisions that would
limit Countrywide Home Loans' ability or the ability of any of its affiliates to
incur indebtedness (secured or unsecured) or that would afford holders of the
CHL subordinated debt securities protection in the event of a highly leveraged
transaction, restructuring, change in control, merger or similar transaction
involving Countrywide Home Loans that may adversely affect holders of the CHL
subordinated debt securities.
Unless Countrywide Home Loans otherwise indicates in the applicable
prospectus supplement, the principal of, and any premium or interest on, any
series of CHL subordinated debt securities will be payable, and those CHL
subordinated debt securities will be exchangeable and transfers of them will be
registerable, at the corporate trust office of the CHL subordinated trustee,
initially at 101 Barclay Street, New York, New York 10286. However, Countrywide
Home Loans may elect to make interest payments
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by check mailed to the address of the person entitled to them as that address
appears in the security register for those CHL subordinated debt securities.
None of the CHL subordinated debt securities will be entitled to any
benefit under the CHL subordinated indenture or be valid or obligatory for any
purpose unless there appears on the CHL subordinated debt security a certificate
of authentication substantially in the form provided in that CHL subordinated
indenture that is duly executed by the trustee, and that certificate will be
conclusive evidence and the only evidence that the CHL subordinated debt
security has been duly authenticated and delivered under and is entitled to the
benefits of the CHL subordinated indenture.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Countrywide Home Loans' obligations under the CHL subordinated debt
securities will be subordinate in right of payment to all present and future
senior indebtedness of Countrywide Home Loans to the extent provided in the CHL
subordinated indenture. Upon any payment or distribution of assets to creditors
upon any liquidation, dissolution, winding up, reorganization, assignment for
the benefit of creditors, marshaling of assets or any bankruptcy, insolvency,
debt restructuring or similar proceedings in connection with the insolvency or
bankruptcy of Countrywide Home Loans, the holders of senior indebtedness of
Countrywide Home Loans will first be entitled to receive payment in full of
senior indebtedness before the holders of the CHL subordinated debt securities
will be entitled to receive or retain any payment.
No payments on account of principal of or any premium or interest on the
CHL subordinated debt securities (including payments on exercise of CHL
subordinated debt security put options) may be made if a default in any payment
on senior indebtedness has occurred and is continuing, or an event of default on
any senior indebtedness resulting in the acceleration of its maturity has
occurred, or if any judicial proceeding is pending with respect to any such
default.
In the event the maturity of the CHL subordinated debt securities is
accelerated, the holders of all senior indebtedness of Countrywide Home Loans
outstanding at the time of the acceleration will first be entitled to receive
payment in full of all amounts due in respect of that senior indebtedness before
the holders of the CHL subordinated debt securities will be entitled to receive
or retain any payment related to the CHL subordinated debt securities.
Amounts that would be due and payable by Countrywide Home Loans to holders
of units in the absence of the foregoing subordination provisions, however, may
be applied by those holders to offset their obligations under their respective
purchase contracts.
Any subordinated CHL subordinated debt securities will be subordinate and
junior in right of payment, to the extent and in the manner described in the CHL
subordinated indenture, to all "senior indebtedness" of Countrywide Home Loans.
Unless Countrywide Home Loans otherwise indicates in the prospectus supplement,
"senior indebtedness" means:
(1) the principal, premium, if any, and interest in respect of indebtedness
for money borrowed and indebtedness evidenced by securities,
debentures, bonds or other similar instruments;
(2) all capital lease obligations;
(3) all obligations issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under
any title retention agreement, excluding trade accounts payable arising
in the ordinary course of business;
(4) all obligations for the reimbursement on any letter of credit, any
banker's acceptance, any security purchase facility, any repurchase
agreement or similar arrangement, any interest rate swap, any other
hedging arrangement, any obligation under options or any similar credit
or other transaction;
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(5) all obligations of the type referred to in clauses (1) through (4)
above of others, the payment of which Countrywide Home Loans is
responsible or liable as obligor, guarantor or otherwise; and
(6) all obligations of the type referred to in clauses (1) through (5)
above of others secured by any lien on any of the properties or assets
of Countrywide Home Loans, whether or not the obligation is assumed by
Countrywide Home Loans,
except for:
(a) any indebtedness that states, or is issued under a deed, indenture
or other instrument that states, that it is subordinate to or ranks
equally with the CHL subordinated debt securities;
(b) any indebtedness between or among Countrywide Home Loans and any of
its affiliates;
(c) the indebtedness represented by the 8% Junior Subordinated
Deferrable Interest Debentures due December 15, 2026 of Countrywide
Home Loans; and
(d) the indebtedness represented by the 8.05% Junior Subordinated
Debentures due June 15, 2027 of Countrywide Home Loans.
REDEMPTION
If and to the extent Countrywide Home Loans provides in the applicable
prospectus supplement, Countrywide Home Loans will have the right to redeem the
CHL subordinated debt securities, in whole or from time to time in part, after
the date and at the redemption prices set forth in the applicable prospectus
supplement.
EVENTS OF DEFAULT
The CHL subordinated indenture defines an event of default for the CHL
subordinated debt securities of any series as:
(1) failure to pay principal (or premium) on any CHL subordinated debt
security of that series at maturity;
(2) failure to pay interest on any CHL subordinated debt security of that
series within 30 days of the date when due;
(3) failure to deposit any sinking fund payment when due for that series
within 30 days of the date when due;
(4) failure to perform for 90 days after notice any of the other covenants
in the CHL subordinated indenture;
(5) certain events of bankruptcy, insolvency or reorganization;
(6) failure to pay the put price when due upon exercise of a CHL
subordinated debt security put option;
(7) default resulting in the acceleration of maturity of any other
indebtedness for money borrowed by Countrywide Home Loans or by any
direct or indirect subsidiary of Countrywide Home Loans in an amount
exceeding $10,000,000 and that acceleration not being rescinded or
annulled for a period of 10 days after written notice of the default by
the trustee or the holders of at least 25% in aggregate principal
amount of the then outstanding CHL subordinated debt securities of that
series; and
(8) any other event of default provided for CHL subordinated debt
securities of that series.
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The CHL subordinated indenture provides that if any event of default
affecting outstanding CHL subordinated debt securities of any series occurs and
is continuing, either the CHL subordinated trustee or the holders of at least
25% in principal amount of the outstanding CHL subordinated debt securities of
that series may declare the principal amount (or, if the CHL subordinated debt
securities of that series are original issue discount securities or indexed
securities, the portion of the principal amount of those CHL subordinated debt
securities as specified by their terms) of all CHL subordinated debt securities
of that series to be due and payable immediately. However, under certain
circumstances the holders of a majority in principal amount of the outstanding
CHL subordinated debt securities of that series on behalf of the holders of all
CHL subordinated debt securities of that series may annul a declaration and
waive past defaults (except, unless previously cured, a default in payment of
principal of or any premium or any interest on the CHL subordinated debt
securities of that series and other specified defaults).
Countrywide Home Loans refers you to the prospectus supplement relating to
each series of CHL subordinated debt securities that are original issue discount
securities for the particular provisions regarding acceleration of the maturity
of a portion of the principal amount of those original issue discount securities
if an event of default occurs and continues.
The agreements governing the outstanding indebtedness of Countrywide Home
Loans contain provisions that would characterize some events of default under
the CHL subordinated indenture as "events of default" under those agreements
that could in turn result in, among other things, an acceleration of
indebtedness under those agreements.
The CHL subordinated indenture contains a provision entitling the CHL
subordinated trustee, subject to its duty to act with the required standard of
care during a default under any series of CHL subordinated debt securities, to
be indemnified by the holders of CHL subordinated debt securities of that series
before exercising any right or power under the CHL subordinated indenture at the
request of the holders of the CHL subordinated debt securities of that series.
The CHL subordinated indenture provides that no holder of CHL subordinated
debt securities of any series may institute proceedings, judicial or otherwise,
to enforce the CHL subordinated indenture except if the CHL subordinated trustee
fails to act for 60 days after it receives a written request to enforce the CHL
subordinated indenture by the holders of at least 25% in aggregate principal
amount of the then outstanding CHL subordinated debt securities of that series
and an offer of reasonable indemnity. This provision will not prevent any holder
of CHL subordinated debt securities from enforcing payment of the principal of
and any premium and interest on those CHL subordinated debt securities when due.
The holders of a majority in aggregate principal amount of the CHL subordinated
debt securities of any series 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 those CHL
subordinated debt securities. However, the CHL subordinated trustee may refuse
to follow any direction that it determines would be illegal or would conflict
with the CHL subordinated indenture or involve it in personal liability or which
would unjustly prejudice holders of the CHL subordinated debt securities of that
series not joining the proceeding.
The CHL subordinated indenture provides that the trustee will, within 90
days after a default occurs that affects the outstanding CHL subordinated debt
securities of any series, give to the holders of those CHL subordinated debt
securities notice of that default, unless that default has been cured or waived.
Except in the case of a default in the payment of principal of, or any premium
or interest on, any CHL subordinated debt securities or payment of any sinking
fund installment, the CHL subordinated trustee will be protected in withholding
of that notice if it determines in good faith that the withholding of that
notice is in the interest of the holders of the CHL subordinated debt securities
of that series.
Countrywide Home Loans will be required to file with the CHL subordinated
trustee annually an officers' certificate as to the absence of certain defaults
under the terms of the CHL subordinated indenture.
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DEFEASANCE OF DEBT SECURITIES OR SOME COVENANTS
DEFEASANCE AND DISCHARGE. Unless Countrywide Home Loans otherwise indicates
in the applicable prospectus supplement, the CHL subordinated debt securities of
any series will provide that Countrywide Home Loans will be discharged from all
obligations under the CHL subordinated debt securities of that series (except
for obligations to register the transfer or exchange of CHL subordinated debt
securities of that series, to replace stolen, lost or mutilated CHL subordinated
debt securities of that series, to maintain paying agencies and to hold moneys
for payment in trust) once Countrywide Home Loans deposits with the CHL
subordinated trustee, in trust, money and/or U.S. government obligations, which
through the payment of interest and principal, will provide a sufficient amount
of money to pay and discharge the principal of (and any premium) and any
interest on, and any mandatory sinking fund payments that apply to, the CHL
subordinated debt securities of that series on the stated maturity of those
payments. This discharge may occur only if, among other things, Countrywide Home
Loans delivers to the CHL subordinated trustee an opinion of counsel stating
that Countrywide Home Loans has received from, or there has been published by,
the IRS a ruling, or there has been a change in tax law, that would cause the
discharge not to be deemed, or result in, a taxable event for the holders of the
CHL subordinated debt securities of that series.
DEFEASANCE OF SOME COVENANTS. Unless Countrywide Home Loans otherwise
provides in the applicable prospectus supplement, the CHL subordinated debt
securities of any series will permit Countrywide Home Loans not to comply with
some restrictive covenants, including those relating to consolidation and merger
in the CHL subordinated indenture, if Countrywide Home Loans satisfies certain
conditions. Countrywide Home Loans will be able to defease those covenants if,
among other things:
(1) Countrywide Home Loans deposits with the CHL subordinated trustee money
and/or U.S. government obligations, which, through the payment of
interest and principal, will provide a sufficient amount of money to
pay the principal of (and any premium) and any interest on, and any
mandatory sinking fund payments applicable to, the CHL subordinated
debt securities of that series on the stated maturity of those
payments; and
(2) Countrywide Home Loans delivers to the CHL subordinated trustee an
opinion of counsel stating that the deposit and related covenant
defeasance will not cause the holders of the CHL subordinated debt
securities of that series to recognize income, gain or loss for federal
income tax purposes.
If Countrywide Home Loans elects to defease the covenants of a series of
CHL subordinated debt securities and those CHL subordinated debt securities are
declared due and payable because an event of default has occurred, the amount of
money and/or U.S. government obligations on deposit with the CHL subordinated
trustee will be sufficient to pay amounts due on those CHL subordinated debt
securities at their stated maturity but may not be sufficient to pay amounts due
on those CHL subordinated debt securities at the time of the acceleration.
However, Countrywide Home Loans will remain liable for those payments.
Countrywide Home Loans will state in the prospectus supplement for any
particular series of CHL subordinated debt securities if any defeasance
provisions will apply to those CHL subordinated debt securities.
MODIFICATION OF THE INDENTURE AND WAIVER OF COVENANTS
The CHL subordinated indenture permits Countrywide Home Loans and the CHL
subordinated trustee, with the consent of the holders of at least a majority in
principal amount of outstanding CHL subordinated debt securities of each series
affected, to execute supplemental indentures adding provisions to or changing or
eliminating provisions of the CHL subordinated indenture or modifying the rights
of the holders of outstanding CHL subordinated debt securities of that series,
except that no supplemental CHL
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subordinated indenture may, without the consent of the holder of each
outstanding CHL subordinated debt security affected:
(1) change the stated maturity, or reduce the principal amount, any premium
on or the rate of payment of any interest on, of any CHL subordinated
debt security of any series;
(2) reduce the percentage of outstanding CHL subordinated debt securities
of any series, the consent of the holders of which is required for any
supplemental indenture or for waiver of compliance with certain
provisions of the CHL subordinated indenture or certain defaults
thereunder; or
(3) effect various other changes.
The CHL subordinated indenture also allows Countrywide Home Loans not to
comply with certain covenants in the CHL subordinated indenture upon waiver by
the holders of a majority in principal amount of outstanding CHL subordinated
debt securities of the series affected.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The CHL subordinated indenture allows Countrywide Home Loans, without the
consent of the holders of any of the outstanding CHL subordinated debt
securities, to consolidate with or merge into any other corporation or transfer
or lease Countrywide Home Loans' assets substantially as an entirety to any
person if:
(1) the successor is a corporation organized under the laws of any domestic
jurisdiction;
(2) the successor corporation assumes Countrywide Home Loans' obligations
on the CHL subordinated debt securities and under the CHL subordinated
indenture;
(3) after giving effect to the transaction no event of default, and no
event which, after notice or lapse of time, would become an event of
default, shall have happened and be continuing; and
(4) certain other conditions are met.
GUARANTEES
The Guarantor will unconditionally guarantee (the "subordinated
guarantees") the payment of principal of and any premium and interest on the CHL
subordinated debt securities when due and payable, whether at their stated
maturity or upon redemption, repayment or otherwise. The subordinated guarantees
will be subordinated in right of payment to all present and future senior
indebtedness of the Guarantor on terms comparable to the subordination of the
CHL subordinated debt securities.
The obligations of the Guarantor under the subordinated guarantees will be
unconditional regardless of the enforceability of the CHL subordinated debt
securities or the CHL subordinated indenture and will not be discharged until
all obligations under those CHL subordinated debt securities and the CHL
subordinated indenture are satisfied. Holders of the CHL subordinated debt
securities may proceed directly against the Guarantor if an event of default
affecting those CHL subordinated debt securities occurs without first proceeding
against Countrywide Home Loans.
Because the Guarantor is a holding company, the rights of its creditors
(including the holders of the CHL subordinated debt securities if the
subordinated guarantees are enforced) to share in the distribution of the assets
of any subsidiary upon that 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.
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GLOBAL SECURITIES
Countrywide Home Loans may issue CHL subordinated debt securities of any
series in whole or in part in the form of one or more global securities that
will be deposited with, or on behalf of, a depositary identified in the
prospectus supplement relating to that 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 CHL subordinated debt securities in definitive form, a global
security may not be transferred except as a whole by the depositary for that
global security to a nominee of that depositary or by a nominee of that
depositary to that depositary or another nominee of that depositary or by that
depositary or that nominee to a successor of that depositary or a nominee of
that successor. Countrywide Home Loans will describe the specific terms of the
depositary arrangement for a series of CHL subordinated debt securities in the
prospectus supplement relating to that series.
CONCERNING THE TRUSTEE
The Bank of New York is the trustee under each of the CHL senior indenture
and the CHL subordinated indenture. Countrywide Home Loans maintains banking
relationships in the ordinary course of business with the CHL trustee. Among
other things, The Bank of New York is a lending bank under an existing revolving
credit facility of Countrywide Home Loans.
GOVERNING LAW
Unless Countrywide Home Loans otherwise specifies in the applicable
prospectus supplement, the CHL subordinated indenture and the CHL subordinated
debt securities will be governed by New York law.
PLAN OF DISTRIBUTION
We or Countrywide Home Loans may sell securities issuable under this
prospectus to or through one or more underwriters or dealers and also may sell
those securities directly to institutional investors or other purchasers, or
through agents.
We or Countrywide Home Loans may distribute the securities periodically in
one or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to those
prevailing market prices or at negotiated prices.
In connection with the sale of any securities under this prospectus,
underwriters or agents may receive compensation from us or Countrywide Home
Loans or from purchasers of securities for whom they may act as agents in the
form of discounts, concessions or commissions. Underwriters may sell the
securities to or through dealers, and those dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agents. Underwriters,
dealers and agents that participate in the distribution of the securities may be
deemed to be underwriters, and any discounts or commissions received by them
from us or Countrywide Home Loans and any profit on the resale of those
securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act. Any of those underwriters or agents will be
identified, and any compensation received from us or Countrywide Home Loans will
be described, in the related prospectus supplement.
Under agreements that we and/or Countrywide Home Loans may enter into,
underwriters and agents who participate in the distribution of securities
issuable under this prospectus may be entitled to indemnification by us and/or
Countrywide Home Loans against certain liabilities, including liabilities under
the Securities Act.
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If we or Countrywide Home Loans so indicate in the related prospectus
supplement, we or Countrywide Home Loans will authorize underwriters or other
persons acting as our or Countrywide Home Loans' agents to solicit offers by
some institutions to purchase securities from us or Countrywide Home Loans under
contracts providing for payment and delivery on a future date. Institutions with
whom we or Countrywide Home Loans would enter into those contracts include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all cases
those institutions must be approved by us or Countrywide Home Loans. The
obligations of any purchaser under a contract will be subject to the condition
that the purchase of the securities will not at the time of delivery be
prohibited under the laws of the jurisdiction to which that purchaser is
subject. The underwriters and those other agents will not have any
responsibility as to the validity or performance of those contracts.
If underwriters or dealers are used in the sale, until the distribution of
the securities is completed, rules of the SEC may limit the ability of
underwriters and some selling group members to bid for and purchase the
securities. As an exception to these rules, underwriters may engage in some
transactions that stabilize the price of the securities. Those transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the securities.
If any underwriters create a short position in the securities in connection
with any offering, that is, if they sell more securities than are set forth on
the cover page of any prospectus supplement accompanying this prospectus, the
underwriters may reduce that short position by purchasing securities in the open
market.
Underwriters may also impose a penalty bid on some selling group members.
This means that if the underwriters purchase securities in the open market to
reduce the underwriters' short position or to stabilize the price of the
securities, they may reclaim the amount of the selling concession from the
selling group members that sold those securities as part of that offering. In
general, purchases of a security for the purpose of stabilization or to reduce a
short position could cause the price of the security to be higher than it might
be in the absence of such purchases. The imposition of a penalty bid may also
affect the price of the securities to the extent that it discourages resales of
the securities.
Some of the underwriters or agents and their associates may engage in
transactions with and perform services for us, Countrywide Home Loans or our or
Countrywide Home Loans' affiliates in the ordinary course of business.
The securities may or may not be listed on a national securities exchange
(other than our common stock, which is listed on the New York Stock Exchange and
the Pacific Stock Exchange). Any shares of our common stock sold under a
prospectus supplement will be listed on the New York Stock Exchange and the
Pacific Stock Exchange, subject to official notice of issuance. Neither we nor
Countrywide Home Loans can assure you that there will be an active trading
market for any of the securities sold under this prospectus.
We or Countrywide Home Loans may designate Countrywide Securities
Corporation to be an underwriter, agent or dealer of one or more series of the
securities issuable under this prospectus. The distribution of securities of any
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 securities issuable under this prospectus will be
passed upon for us and Countrywide Home Loans by Munger, Tolles & Olson LLP, Los
Angeles, California. 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 one of our wholly owned subsidiaries, in
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connection with offerings of mortgage-backed and asset-backed securities, and
from time to time also serves as our counsel on other matters.
EXPERTS
Our consolidated financial statements incorporated by reference in the
registration statement, of which this prospectus forms a part, have been audited
by Grant Thornton LLP, independent certified public accountants, for the periods
and to the extent indicated in their report thereon, and have been so
incorporated in reliance upon the authority of said firm as experts in
accounting and auditing.
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$3,000,000,000
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES I
UNCONDITIONALLY GUARANTEED BY
[Countrywide Credit Industries, Inc. Logo]
---------------------------
PROSPECTUS SUPPLEMENT
June 15, 2000
---------------------------
LEHMAN BROTHERS
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
DEUTSCHE BANC ALEX. BROWN
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
COUNTRYWIDE SECURITIES CORPORATION
[LOGO]
