<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 29, 1996
REGISTRATION NOS. 333-14111, 333-14111-01, 333-14111-02 AND 333-14111-03
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COUNTRYWIDE CAPITAL I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE C/O COUNTRYWIDE CREDIT INDUSTRIES, INC. APPLIED FOR
(STATE OR OTHER 155 NORTH LAKE AVENUE (I.R.S. EMPLOYER
JURISDICTION PASADENA, CA 91101 IDENTIFICATION NO.)
OF INCORPORATION OR (818) 304-8400
ORGANIZATION)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
COUNTRYWIDE CAPITAL II
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE C/O COUNTRYWIDE CREDIT INDUSTRIES, INC. APPLIED FOR
(STATE OR OTHER 155 NORTH LAKE AVENUE (I.R.S. EMPLOYER
JURISDICTION PASADENA, CA 91101 IDENTIFICATION NO.)
OF INCORPORATION OR (818) 304-8400
ORGANIZATION)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
COUNTRYWIDE HOME LOANS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 155 NORTH LAKE AVENUE 13-2631719
(STATE OR OTHER PASADENA, CA 91101 (I.R.S. EMPLOYER
JURISDICTION (818) 304-8400 IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 155 NORTH LAKE AVENUE 13-2641992
(STATE OR OTHER PASADENA, CA 91101 (I.R.S. EMPLOYER
JURISDICTION (818) 304-8400 IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
---------------
DAVID S. LOEB
DIRECTOR
COUNTRYWIDE HOME LOANS, INC.
AND
PRESIDENT AND CHAIRMAN OF THE BOARD
COUNTRYWIDE CREDIT INDUSTRIES, INC.
155 NORTH LAKE AVENUE
PASADENA, CA 91101
(818) 304-8400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
KENNETH R. BLACKMAN EDWARD J. FINE
FRIED, FRANK, HARRIS, SHRIVER & BROWN & WOOD LLP
JACOBSON ONE WORLD TRADE CENTER
ONE NEW YORK PLAZA NEW YORK, NEW YORK 10048
NEW YORK, NEW YORK 10004-1980 (212) 839-5300
(212) 859-8000
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a) MAY DETERMINE.
(Continued on next page)
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<PAGE>
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(Continued from previous page)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS +
+SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY +
+NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
NOVEMBER 25, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated , 1996)
$
COUNTRYWIDE CAPITAL I
% CAPITAL TRUST PASS-THROUGH SECURITIES SM (TRUPS SM)*
(LIQUIDATION AMOUNT $1,000 PER SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED AS TO DISTRIBUTIONS AND OTHER PAYMENTS BY
[LOGO] COUNTRYWIDE(SM)
- ---------------------
CREDIT INDUSTRIES, INC.
THE PROCEEDS OF WHICH ARE TO BE INVESTED IN
% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE DECEMBER 1, 2026 OF
COUNTRYWIDE HOME LOANS, INC.
The % Capital Trust Pass-through Securities SM* (the "Capital Securities")
offered hereby represent undivided beneficial interests in the assets of
Countrywide Capital I, a statutory business trust formed under the laws of the
State of Delaware ("Countrywide Capital Trust" or the "Trust"). Countrywide
Credit Industries, Inc., a Delaware corporation ("CCI"), will own all the
common securities (the "Common Securities" and, together with the Capital
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE CAPITAL SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE
SUBORDINATED DEBT SECURITIES AND THE CAPITAL SECURITIES MAY BE DEFERRED AND THE
RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT TRUST(1)(3)
<S> <C> <C> <C>
Per Capital Security....................... $ (2) $
Total(s)................................... $ (2) $
</TABLE>
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(1) Plus accrued distributions, if any, from , 1996.
(2) In view of the fact that the proceeds of the sale of the Capital Securities
will be invested in the Subordinated Debt Securities, the Company has
agreed to pay to the Underwriter as compensation (the "Underwriter's
Compensation") for its arranging the investment therein of such proceeds
$ per Capital Security (or $ in the aggregate). See "Underwriting."
(3) Before deducting expenses payable by the Company estimated to be $ .
The Capital Securities are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter's right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Capital Securities will be made through the
facilities of The Depository Trust Company on or about , 1996.
- -----
* Salomon Brothers Inc has filed applications with the United States Patent and
Trademark Office for the registration of the Capital Trust Pass-through
Securities and TruPS service marks.
----------------------
SALOMON BROTHERS INC
-----------------------------------------------------------------------
The date of this Prospectus Supplement is , 1996.
<PAGE>
(continued from previous page)
Countrywide Capital Trust. Countrywide Capital Trust exists for the sole
purpose of issuing the Trust Securities and investing the gross proceeds
thereof in % Junior Subordinated Deferrable Interest Debentures due December
1, 2026 (the "Subordinated Debt Securities") of Countrywide Home Loans, Inc.,
a New York corporation and wholly-owned subsidiary of CCI ("CHL" or the
"Company"), and the Debt Guarantee (as defined below). The Subordinated Debt
Securities are fully and unconditionally guaranteed (the "Debt Guarantee") on
a subordinated basis as to payment of principal, premium, if any, and interest
by CCI. The Subordinated Debt Securities, the Debt Guarantee, the Capital
Securities and the Capital Securities Guarantee (as defined below) in respect
of which this Prospectus Supplement is being delivered shall be referred to
herein as the "Offered Securities." The Subordinated Debt Securities when
issued will be unsecured obligations of the Company and will be subordinate
and junior in right of payment to certain other indebtedness of the Company,
as described herein. Upon an event of default under the Declaration (as
defined herein), the holders of Capital Securities will have a preference over
the holders of the Common Securities with respect to payments in respect of
distributions and payments upon redemption, liquidation and otherwise.
Holders of the Capital Securities are entitled to receive cumulative cash
distributions at a rate of percent per annum of the liquidation amount of
$1,000 per Capital Security, accruing from , 1996 and payable
semiannually in arrears on June 1 and December 1 of each year, commencing June
1, 1997 ("distributions"). The payment of distributions out of moneys held by
Countrywide Capital Trust, payments on liquidation of Countrywide Capital
Trust and payments upon the redemption of Capital Securities, as set forth
below, are guaranteed by CCI (the "Capital Securities Guarantee") as described
herein and under "Description of the Capital Securities Guarantees" in the
accompanying Prospectus. The Capital Securities Guarantee covers payments of
distributions and other payments on the Capital Securities only if and to the
extent that Countrywide Capital Trust has funds available therefor, which
funds will not be available except to the extent the Company has made payments
of interest or principal or other payments on the Subordinated Debt Securities
or CCI has made such payments pursuant to the Debt Guarantee held by
Countrywide Capital Trust as its sole assets. The Capital Securities
Guarantee, when taken together with the Company's obligations under the
Subordinated Debt Securities and the Indenture (as defined herein), including
its obligations to pay costs, expenses, debts and other obligations of
Countrywide Capital Trust (other than with respect to the Trust Securities),
and CCI's obligations under the Debt Guarantee, the Indenture and the
Declaration, provide a full and unconditional guarantee on a subordinated
basis by CCI of amounts due on the Capital Securities. See "Risk Factors--
Capital Securities Guarantee Cover Distributions and Other Payments Only to
the Extent the Trust Has Available Funds; Related Remedies" herein. The
obligations of CCI under the Capital Securities Guarantee are subordinate and
junior in right of payment to all present and future liabilities of CCI,
including the Debt Guarantee. The obligations of the Company under the
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness (as defined herein) of the Company,
which aggregated approximately $5.5 billion at August 31, 1996, and rank pari
passu with the obligations to or rights of the Company's other general
unsecured creditors. The obligations of CCI under the Debt Guarantee are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of CCI and are also effectively subordinate to claims of
creditors of CCI's subsidiaries (including the Company). CCI had $200 million
of Senior Indebtedness as of August 31, 1996 (excluding indebtedness of
subsidiaries guaranteed by CCI), and the indebtedness of CCI's subsidiaries
(including the Senior Indebtedness and other indebtedness of the Company)
aggregated approximately $5.5 billion at August 31, 1996. There are no terms
in the Subordinated Debt Securities, the Debt Guarantee, the Capital
Securities or the Capital Securities Guarantee that limit the ability of CCI
or its subsidiaries (including the Company) to incur additional indebtedness,
including indebtedness that ranks senior to the Subordinated Debt Securities,
the Debt Guarantee and the Capital Securities Guarantee. The Subordinated Debt
Securities purchased by the Trust may be subsequently distributed pro rata to
holders of the Capital Securities and Common Securities in connection with the
dissolution of the Trust, upon the occurrence of certain events.
S-2
<PAGE>
The distribution rate and the distribution payment dates and other payment
dates for the Capital Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Subordinated Debt
Securities, which, together with the Debt Guarantee, will be the sole assets
of the Trust. As a result, if no principal or interest is paid on the
Subordinated Debt Securities, and no payments are made under the Debt
Guarantee, no amounts will be paid on the Capital Securities. If the Company
does not make principal or interest payments on the Subordinated Debt
Securities and CCI does not make such payments under the Debt Guarantee, the
Trust will not have sufficient funds to make distributions on the Capital
Securities, and the Capital Securities Guarantee will not apply to
distributions for which the Trust has insufficient funds available.
So long as the Company is not in default in the payment of interest that has
become due and payable on the Subordinated Debt Securities and no accrued
interest from a prior, completed Extension Period is unpaid, the Company has
the right to defer payments of interest on the Subordinated Debt Securities by
extending the interest payment period on the Subordinated Debt Securities at
any time and from time to time for up to 10 consecutive semiannual periods
(each such interest payment extension period, an "Extension Period"). If
interest payments are so deferred, distributions on the Capital Securities
will also be deferred. During any such Extension Period, distributions will
continue to accrue at the distribution rate equal to % per annum compounded
semiannually (to the extent permitted by applicable law), and holders of
Capital Securities will be subject to United States federal income tax on the
deferred amounts in advance of receipt of cash distributions with respect to
such deferred interest payments. There could be multiple Extension Periods of
varying lengths, each up to 10 consecutive semiannual periods, throughout the
term of the Subordinated Debt Securities. See "Description of the Subordinated
Debt Securities and the Debt Guarantee--Option to Extend Interest Payment
Period," "Risk Factors--Option to Extend Interest Payment Period For Up to
Five Years and Consequent Deferral of Distributions on Capital Securities" and
"United States Federal Income Taxation--US Holders--Original Issue Discount."
The Subordinated Debt Securities are redeemable by the Company at par, plus
accrued and unpaid interest to the date of redemption, in whole or in part,
from time to time, on or after December 1, 2006, or at any time in certain
circumstances upon the occurrence of a Tax Event (as defined herein). If the
Company redeems Subordinated Debt Securities, the Trust must redeem on a pro
rata basis Trust Securities having an aggregate liquidation amount equal to
the aggregate principal amount of the Subordinated Debt Securities so redeemed
at a redemption price per Capital Security of $1,000 plus accrued and unpaid
distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Capital Securities--Mandatory Redemption."
The Capital Securities will be redeemed upon maturity of the Subordinated Debt
Securities, whereupon the Trust will be dissolved. In addition, upon the
occurrence of a Tax Event arising from a change in law or a change in legal
interpretation regarding tax matters, the Trust will be dissolved, with the
result that, unless the Subordinated Debt Securities are redeemed in the
limited circumstances described herein, the Subordinated Debt Securities,
together with the Debt Guarantee, will be distributed to the holders of the
Capital Securities, on a pro rata basis, in lieu of a cash distribution in
liquidation of the Trust. See "Description of the Capital Securities--Tax
Event Redemption or Distribution" and "Description of the Subordinated Debt
Securities and the Debt Guarantee."
In the event of the involuntary or voluntary dissolution, winding up or
termination of the Trust, the holders of the Capital Securities will be
entitled to receive for each Capital Security a liquidation amount of $1,000
plus accrued and unpaid distributions thereon to the date of payment, unless,
in connection with such dissolution, the Subordinated Debt Securities are
distributed to the holders of the Capital Securities. See "Description of the
Capital Securities--Liquidation Distribution Upon Dissolution."
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-3
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement.
COUNTRYWIDE CAPITAL TRUST
Countrywide Capital I is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of October 14, 1996, executed
by CCI, as sponsor (the "Sponsor") and the trustees of Countrywide Capital
Trust (the "Countrywide Trustees") and (ii) the filing of a certificate of
trust with the Secretary of State of the State of Delaware on October 15, 1996.
Countrywide Capital Trust exists for the exclusive purposes of (i) issuing the
Trust Securities representing undivided beneficial interests in the assets of
the Trust, (ii) investing the gross proceeds from the sale of the Trust
Securities in the Subordinated Debt Securities and the Debt Guarantee and (iii)
engaging in only those other activities necessary or incidental thereto.
Countrywide Capital Trust's registered office in the State of Delaware is c/o
The Bank of New York (Delaware), 400 White Clay Center, Route 273, Newark,
Delaware 19711, Attn: Corporate Trust Administration. The principal place of
business of the Trust is c/o Countrywide Credit Industries, Inc., 155 North
Lake Avenue, P.O. Box 7137, Pasadena, California 91109-7137, and its telephone
number is (818) 304-8400.
THE COMPANY
Countrywide Home Loans, Inc. (formerly Countrywide Funding Corporation), the
principal subsidiary of CCI, is engaged primarily in the mortgage banking
business and as such originates, purchases, sells and services mortgage loans.
The Company is a New York corporation, originally incorporated in 1969. Its
principal executive offices are located at 155 North Lake Avenue, P.O. Box
7137, Pasadena, California 91109-7137, and its telephone number is (818) 304-
8400.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
Countrywide Credit Industries, Inc. is a holding company which through its
principal subsidiary, Countrywide Home Loans, Inc., is engaged primarily in the
mortgage banking business. CCI, through its other wholly-owned subsidiaries,
offers products and services complementary to its mortgage banking business.
CCI is a Delaware corporation, and was originally incorporated in New York
under the name of OLM Credit Industries, Inc. in 1969. Its principal executive
offices are located at 155 North Lake Avenue, P.O. Box 7137, Pasadena,
California 91109-7137, and its telephone number is (818) 304-8400.
THE OFFERING
SECURITIES OFFERED...... $ aggregate liquidation amount of % Capital
Trust Pass-through Securities (liquidation amount
$1,000 per Capital Security).
OFFERING PRICE.......... $ per Capital Security, plus accrued
distributions, if any.
DISTRIBUTIONS........... Holders of the Capital Securities are entitled to
receive cumulative cash distributions at a rate of
percent per annum
S-4
<PAGE>
of the stated liquidation amount of $1,000 per
Capital Security, accruing from , 1996 and
payable semiannually in arrears on June 1 and
December 1 of each year commencing June 1, 1997.
Distributions in arrears for more than one
semiannual period will accrue at the distribution
rate per annum of % thereof compounded
semiannually. See "Description of the Capital
Securities--Distributions."
EXTENSION PERIODS....... Distributions on Capital Securities will be
deferred for the duration of any Extension Period
elected by the Company with respect to the payment
of interest on the Subordinated Debt Securities. No
Extension Period will exceed 10 consecutive
semiannual periods or extend beyond the maturity of
the Subordinated Debt Securities. See "--
Subordinated Debt Securities" below, "Risk
Factors--Option to Extend Interest Payment Period
For Up to Five Years and Consequent Deferral on
Distributions on Capital Securities," "Description
of the Subordinated Debt Securities and the Debt
Guarantee--Option to Extend Interest Payment
Period" and "United States Federal Income
Taxation--US Holders--Original Issue Discount."
REDEMPTION..............
The Trust Securities are subject to mandatory
redemption (i) at the stated maturity of the
Subordinated Debt Securities upon repayment
thereof, (ii) at any time on or after December 1,
2006 contemporaneously with the optional redemption
by the Company of the Subordinated Debt Securities
or (iii) at any time in certain circumstances upon
the occurrence of a Tax Event. See "Description of
the Capital Securities--Mandatory Redemption" and
"--Tax Event Redemption or Distribution."
LIQUIDATION $1,000 per Capital Security, plus an amount equal
PREFERENCE.............. to any accrued and unpaid distributions to the date
of payment. See "Description of the Capital
Securities--Liquidation Distribution Upon
Dissolution".
CAPITAL SECURITIES The payment of distributions out of moneys held by
GUARANTEE............... the Trust, payments on liquidation of the Trust and
payments upon the redemption of Capital Securities
are guaranteed by CCI as described herein under
"Description of the Capital Securities Guarantee"
and under "Description of the Capital Securities
Guarantees" in the accompanying Prospectus. The
Capital Securities Guarantee covers payments of
distributions and other payments on the Capital
Securities only if and to the extent that the Trust
has funds available therefor, which funds will not
be available except to the extent the Company has
made payments of interest or principal or other
payments on the Subordinated Debt Securities or CCI
has made such payments pursuant to the Debt
Guarantee. The Capital Securities Guarantee, when
taken together with the Company's obligations under
the Subordinated Debt Securities and the Indenture,
including its liabilities to pay costs, expenses,
debts and other liabilities of Countrywide Capital
Trust (other than with respect to the Trust
Securities), and CCI's
S-5
<PAGE>
obligations under the Debt Guarantee, the Indenture
and the Declaration, provide a full and
unconditional guarantee on a subordinated basis by
CCI of amounts due on the Capital Securities. See
"Risk Factors--Capital Securities Guarantee Covers
Distributions and Other Payments Only to the Extent
the Trust Has Available Funds; Related Remedies"
and "Description of the Capital Securities
Guarantee" herein and "Description of the Capital
Securities Guarantees" in the accompanying
Prospectus.
SUBORDINATED DEBT The Subordinated Debt Securities will mature on
SECURITIES.............. December 1, 2026, and will bear interest at the
rate of % per annum, payable semiannually in
arrears on June 1 and December 1 of each year,
commencing June 1, 1997. So long as the Company is
not in default in the payment of interest that has
become due and payable on the Subordinated Debt
Securities and no accrued interest from a prior,
completed Extension Period is unpaid, such payment
period may be extended from time to time by the
Company (during which period interest would
continue to accrue and compound semiannually) for a
period of up to 10 consecutive semiannual periods.
Prior to the termination of any Extension Period of
less than 10 consecutive semiannual periods, the
Company may further extend the interest payment
period as long as such Extension Period, as further
extended, does not exceed 10 consecutive semiannual
periods and does not extend beyond the maturity of
the Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment
of all amounts then due, the Company may select a
new Extension Period, subject to the terms stated
above. No interest shall be due during an Extension
Period until the end of such period. If the Company
extends an interest payment period or CCI is in
default with respect to its payment of any
obligations under the Capital Securities Guarantee
or the Common Securities Guarantee (as defined in
the Indenture), the Company and CCI will be
prohibited from paying cash dividends or
distributions on their respective capital stock and
making certain other payments until semiannual
interest payments are resumed and all accrued and
unpaid interest (including any interest payable to
effect semiannual compounding) on the Subordinated
Debt Securities is brought current. The obligations
of the Company under the Subordinated Debt
Securities will be subordinated and junior in right
of payment to all present and future Senior
Indebtedness of the Company and rank pari passu
with obligations to or rights of the Company's
other general unsecured creditors. See "Description
of the Subordinated Debt Securities and the Debt
Guarantee" and "Risk Factors--Option to Extend
Interest Payment Period for Up to Five Years and
Consequent Deferral of Distributions on Capital
Securities" herein and "Description of the
Subordinated Debt Securities and the Debt
Guarantees" in the accompanying Prospectus.
DEBT GUARANTEE..........
The Subordinated Debt Securities are fully and
unconditionally guaranteed on a subordinated basis
as to payment of principal, premium, if any, and
interest by CCI. See "Description of the
Subordinated Debt Securities and the Debt
Guarantee" herein and "Description of the
Subordinated Debt Securities and the
S-6
<PAGE>
Debt Guarantees--Debt Guarantees" in the
accompanying Prospectus.
RANKING.................
The Common Securities will rank pari passu, and
payments will be made thereon on a pro rata basis,
with the Capital Securities, except that upon the
occurrence and during the continuance of a
Declaration Event of Default, the rights of the
holders of the Common Securities to receive payment
of periodic distributions and payments upon
liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the
Capital Securities. See "Description of the Capital
Securities--General." The Capital Securities
Guarantee will rank subordinate and junior in right
of payment to all present and future liabilities of
CCI, including the Debt Guarantee. The Subordinated
Debt Securities will be subordinated and junior in
right of payment to the extent and in the manner
set forth in the Indenture to all Senior
Indebtedness of the Company. The Debt Guarantee
will constitute an unsecured obligation of the
Company and will rank subordinate and junior in
right of payment to the extent and in the manner
set forth in the Debt Guarantee to all Senior
Indebtedness of CCI. See "Description of the
Subordinated Debt Securities and the Debt
Guarantee" herein and "Description of the
Subordinated Debt Securities and the Debt
Guarantees" in the accompanying Prospectus.
ERISA CONSIDERATIONS....
Prospective purchasers must carefully consider the
restrictions on purchase set forth under "ERISA
Considerations."
ABSENCE OF MARKET FOR
THE CAPITAL
SECURITIES.............. The Capital Securities will be a new issue of
securities for which there is currently no market.
Although the Underwriter has informed the Trust,
the Company and CCI that it currently intends to
make a market in the Capital Securities, the
Underwriter is not obligated to do so, and any such
market making may be discontinued at any time
without notice. Accordingly, there can be no
assurance as to the development or liquidity of any
market for the Capital Securities. See
"Underwriting" herein.
USE OF PROCEEDS.........
The Trust will use the gross proceeds received from
the sale of the Trust Securities to purchase
Subordinated Debt Securities from the Company. The
Company intends to use the net proceeds (after
payment of the expenses of the offering and
Underwriter's Compensation) from the sale of the
Subordinated Debt Securities for general corporate
purposes, principally for investment in servicing
rights. Initially, the net proceeds will be used to
repay short-term commercial paper with interest
rates ranging from approximately 5 1/4% to 5 1/2%
per annum.
For additional information regarding the Capital Securities, see "Description
of the Capital Securities," "Description of the Capital Securities Guarantee,"
"Description of the Subordinated Debt Securities and the Debt Guarantee," and
"United States Federal Income Taxation" herein and "Description of the Capital
Securities," "Description of the Capital Securities Guarantees," and
"Description of the Subordinated Debt Securities and the Debt Guarantees" in
the accompanying Prospectus.
RISK FACTORS
Prospective investors should carefully consider the matters set forth under
"Risk Factors."
S-7
<PAGE>
COUNTRYWIDE CREDIT INDUSTRIES, INC.
SUMMARY HISTORICAL FINANCIAL INFORMATION
The consolidated financial data with respect to CCI set forth below for each
of the five fiscal years in the period ended February 29, 1996 has been derived
from, and should be read in conjunction with, the related audited financial
statements and accompanying notes incorporated by reference herein. The
consolidated financial information presented below as of and for the six month
periods ended August 31, 1996 and August 31, 1995 is unaudited; however, in the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation have been included. The results
of operations for the six month period ended August 31, 1996 are not
necessarily indicative of the results of operations that may be expected for
the full year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31, YEARS ENDED FEBRUARY 28 (29),
---------------------- ----------------------------------------------------------
1996 1995 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF EARNINGS
DATA:
Revenues:
Loan origination fees.. $ 101,546 $ 94,906 $ 199,724 $ 203,426 $ 379,533 $ 241,584 $ 91,933
Gain (loss) on sale of
loans................. 105,491 32,014 92,341 (41,342) 88,212 67,537 38,847
---------- ---------- ---------- ---------- ---------- ---------- ----------
Loan production
revenue.............. 207,037 126,920 292,065 162,084 467,745 309,121 130,780
Interest earned........ 200,426 165,614 354,226 280,917 320,217 191,389 103,014
Interest charges....... (153,309) (135,417) (281,573) (205,464) (219,898) (128,612) (68,760)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income... 47,117 30,197 72,653 75,453 100,319 62,777 33,254
Loan servicing income.. 342,874 268,513 575,058 428,994 307,477 177,291 94,830
Add (less) amortization
and
impairment/recovery of
servicing assets...... 13,662 (199,421) (342,811) (95,768) (242,177) (151,362) (53,768)
Servicing hedge
(expense) benefit..... (118,151) 135,080 200,135 (40,030) 73,400 74,075 17,000
Less write-off of
servicing hedge....... -- -- -- (25,600) -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net loan
administration
income............... 238,385 204,172 432,382 267,596 138,700 100,004 58,062
Commissions, fees and
other income.......... 41,558 26,984 63,642 40,650 48,816 33,656 19,714
Gain on sale of
servicing............. -- -- -- 56,880 -- -- 4,302
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues........ 534,097 388,273 860,742 602,663 755,580 505,558 246,112
---------- ---------- ---------- ---------- ---------- ---------- ----------
Expenses:
Salaries and related
expenses.............. 136,989 106,608 229,668 199,061 227,702 140,063 72,654
Occupancy and other
office expenses....... 61,313 51,083 106,298 102,193 101,691 64,762 36,645
Guarantee fees......... 76,864 54,281 121,197 85,831 57,576 29,410 13,622
Marketing expenses..... 17,922 12,540 27,115 23,217 26,030 12,974 5,015
Other operating
expenses.............. 39,171 21,881 50,264 37,016 43,481 24,894 17,849
Branch and
administrative office
consolidation costs... -- -- -- 8,000 -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total expenses........ 332,259 246,393 534,542 455,318 456,480 272,103 145,785
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings before income
taxes.................. 201,838 141,880 326,200 147,345 299,100 233,455 100,327
Provision for income
taxes.................. 78,717 56,752 130,480 58,938 119,640 93,382 40,131
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings............ $ 123,121 $ 85,128 $ 195,720 $ 88,407 $ 179,460 $ 140,073 $ 60,196
========== ========== ========== ========== ========== ========== ==========
SELECTED BALANCE SHEET
DATA AT END OF PERIOD:
Mortgage loans shipped
and held for sale...... $3,650,611 $4,320,918 $4,740,087 $2,898,825 $3,714,261 $2,316,297 $1,585,392
Total assets............ 8,747,269 7,593,689 8,657,653 5,710,182 5,631,061 3,369,499 2,474,625
Short-term debt......... 3,703,795 4,078,760 4,423,738 2,664,006 3,111,945 1,579,689 1,046,289
Long-term debt.......... 2,036,500 1,542,700 1,911,800 1,499,306 1,197,096 734,762 383,065
Convertible preferred
stock.................. -- -- -- -- -- 25,800 37,531
Common shareholders'
equity................. 1,434,301 1,218,820 1,319,755 942,558 880,137 693,105 558,617
OPERATING DATA (DOLLAR
AMOUNTS IN MILLIONS):
Volume of loans
produced............... $ 20,172 $ 15,635 $ 34,584 $ 27,866 $ 52,459 $ 32,388 $ 12,156
Loan servicing portfolio
(at period end)(1)..... 148,623 126,415 136,835 113,111 84,678 54,484 27,546
Ratio of earnings to
fixed charges(2)....... 2.29 2.02 2.13 1.69 2.32 2.76 2.38
</TABLE>
- --------
(1) Includes warehoused loans and loans under subservicing agreements.
(2) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before federal income taxes, plus fixed charges.
Fixed charges include interest expense on debt and the portion of rental
expenses which is considered to be representative of the interest factor
(one-third of operating leases).
S-8
<PAGE>
RISK FACTORS
Prior to making an investment decision, prospective purchasers of Capital
Securities should carefully review the information contained elsewhere in this
Prospectus Supplement and in the accompanying Prospectus and should
particularly consider the following matters.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE CAPITAL SECURITIES GUARANTEE,
SUBORDINATED DEBT SECURITIES AND DEBT GUARANTEE
CCI's obligations under the Capital Securities Guarantee are subordinate and
junior in right of payment to all present and future liabilities of CCI,
including the Debt Guarantee. The obligations of the Company under the
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness of the Company and rank pari passu
with obligations to or rights of the Company's other general unsecured
creditors. The obligations of CCI under the Debt Guarantee are subordinate and
junior in right of payment to all present and future Senior Indebtedness of
CCI and are also effectively subordinate to claims of creditors of CCI's
subsidiaries (including the Company). No payment of principal of (including
redemption payments, if any) or premium, if any, or interest on the
Subordinated Debt Securities may be made if (i) any Senior Indebtedness of the
Company is not paid when due and any applicable grace period with respect to
such default has ended with such default not having been cured or waived or
ceasing to exist or (ii) the maturity of any Senior Indebtedness of the
Company has been accelerated because of a default. In addition, no payment by
CCI in respect of any obligation due under the Debt Guarantee may be made if
(i) any Senior Indebtedness of CCI is not paid when due and any applicable
grace period with respect to such default has ended with such default not
having been cured or waived or ceasing to exist or (ii) the maturity of any
Senior Indebtedness of CCI has been accelerated because of a default. As of
August 31, 1996, CCI had $200 million of Senior Indebtedness (excluding
indebtedness of subsidiaries guaranteed by CCI), Senior Indebtedness of the
Company aggregated approximately $5.5 billion, and the indebtedness of CCI's
subsidiaries (including the Senior Indebtedness and other indebtedness of the
Company) aggregated approximately $5.5 billion. There are no terms in the
Capital Securities, the Subordinated Debt Securities, the Capital Securities
Guarantee or the Debt Guarantee that limit the ability of CCI or its
subsidiaries (including the Company) to incur additional indebtedness,
including indebtedness that ranks senior to the Subordinated Debt Securities,
the Capital Securities Guarantee and the Debt Guarantee. See "Description of
the Capital Securities Guarantees--Status of the Capital Securities
Guarantees" and "Description of the Subordinated Debt Securities and the Debt
Guarantees" in the accompanying Prospectus, and "Description of the
Subordinated Debt Securities and the Debt Guarantee--Subordination" herein.
CAPITAL SECURITIES GUARANTEE COVERS DISTRIBUTIONS AND OTHER PAYMENTS ONLY TO
THE EXTENT THE TRUST HAS AVAILABLE FUNDS; RELATED REMEDIES
The Capital Securities Guarantee will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Bank
of New York will act as indenture trustee under the Capital Securities
Guarantee for the purposes of compliance with the provisions of the Trust
Indenture Act (the "Capital Guarantee Trustee"). The Capital Guarantee Trustee
will hold the Capital Securities Guarantee for the benefit of the holders of
the Capital Securities.
The Capital Securities Guarantee guarantees to the holders of the Capital
Securities the payment of (i) any accrued and unpaid distributions that are
required to be paid on the Capital Securities, to the extent the Trust has
funds available therefor, (ii) the Redemption Price, including all accrued and
unpaid distributions to the date of redemption with respect to Capital
Securities called for redemption by the Trust, to the extent the Trust has
funds available therefor, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Subordinated Debt Securities to the holders of
Capital Securities upon the redemption
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<PAGE>
of all the Capital Securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Capital
Securities to the date of the payment, to the extent the Trust has funds
available therefor and (b) the amount of assets of the Trust remaining
available for distribution to holders of the Capital Securities in liquidation
of the Trust. The holders of a majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Capital Guarantee Trustee or to
direct the exercise of any trust or power conferred upon the Capital Guarantee
Trustee under the Capital Securities Guarantee. A holder of record of Capital
Securities may institute a legal proceeding directly against CCI to enforce
the Capital Guarantee Trustee's rights under the Capital Securities Guarantee
without first instituting any legal proceeding against the Trust, the Capital
Guarantee Trustee or any other person or entity. If the Company were to
default on its obligation to pay amounts payable on the Subordinated Debt
Securities and CCI were to default on its obligations under the Debt
Guarantee, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Capital Securities or
otherwise, and, in such event, holders of the Capital Securities would not be
able to rely upon the Capital Securities Guarantee for payment of such
amounts. Instead, each holder of Capital Securities would rely on the
enforcement (1) by the Institutional Trustee (as defined herein) of its rights
as registered holder of the Subordinated Debt Securities against the Company
pursuant to the terms of the Subordinated Debt Securities and against CCI
under the Debt Guarantee or (2) by such holder of Capital Securities of its
right against the Company to enforce payments of principal and interest on
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of Capital Securities of such holder and against
CCI to enforce such payments on the Debt Guarantee. See "Description of the
Capital Securities Guarantees" and "Description of the Subordinated Debt
Securities and the Debt Guarantees" in the accompanying Prospectus. The
Declaration provides that each holder of Capital Securities, by acceptance
thereof, agrees to the provisions of the Capital Securities Guarantee,
including the subordination provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Capital Securities would, except as provided
below, rely on the enforcement by the Institutional Trustee of its rights as
holder of the Subordinated Debt Securities and the Debt Guarantee against the
Company and CCI. The holders of a majority in liquidation amount of the
Capital Securities will have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee or to direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee to exercise the remedies available to it as holder of
the Subordinated Debt Securities and the Debt Guarantee. If the Institutional
Trustee fails to enforce its rights under the Subordinated Debt Securities or
the Debt Guarantee after the holders of a majority in liquidation amount of
the Capital Securities have so directed the Institutional Trustee, a holder of
record of Capital Securities may institute a legal proceeding directly against
the Company or CCI to enforce the Institutional Trustee's rights under the
Subordinated Debt Securities or the Debt Guarantee, as the case may be,
without first instituting any legal proceeding against the Institutional
Trustee or any other person or entity including, in the case of the Debt
Guarantee, against the Company. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to (i) the failure of the Company to pay interest or principal on
the Subordinated Debt Securities on the respective dates such interest or
principal is payable (or in the case of redemption, on the redemption date) or
(ii) the failure of CCI to pay any obligation in respect thereof under the
Debt Guarantee, then a holder of record of Capital Securities may institute a
proceeding directly against the Company or CCI, as the case may be, for
enforcement of payment, on or after the respective due dates specified in the
Subordinated Debt Securities, to such holder directly of the principal of or
interest on Subordinated Debt Securities having an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Securities of such
holder (a "Direct Action"). In connection with such Direct Action, the Company
and CCI will be
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<PAGE>
subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment made by the Company or CCI, as the
case may be, to such holder of Capital Securities in such Direct Action;
provided, however, that no such subrogation right may be exercised so long as
a Declaration Event of Default has occurred and is continuing. The holders of
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Debt Securities or the Debt
Guarantee. See "Description of the Capital Securities--Declaration Events of
Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD FOR UP TO FIVE YEARS AND CONSEQUENT
DEFERRAL OF DISTRIBUTIONS ON CAPITAL SECURITIES
So long as the Company is not in default in the payment of interest that has
become due and payable on the Subordinated Debt Securities and no accrued
interest from a prior, completed Extension Period is unpaid, the Company has
the right under the Indenture to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment period at any
time, and from time to time, for Extension Periods, each up to 10 consecutive
semiannual periods. During each such Extension Period, semiannual
distributions on the Capital Securities would also be deferred (but would
continue to accrue, despite such deferral, with interest thereon compounded
semiannually) by the Trust. In the event that the Company exercises this right
to defer interest payments and such deferral is continuing, or if there shall
have occurred and be continuing any event of default under the Indenture or if
the Guarantor shall be in default with respect to the payment of its
obligations under the Capital Securities Guarantee, (a) CCI and the Company
shall not declare or pay dividends on, or make a distribution with respect to,
or redeem, purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in
connection with the satisfaction by CCI or the Company, respectively, of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of CCI's or the Company's capital stock or rights to acquire
such capital stock or the exchange or conversion of one class or series of
CCI's or the Company's capital stock or rights to acquire such capital stock
for another class or series of CCI's or the Company's capital stock or rights
to acquire such capital stock, (iii) the purchase of fractional interests in
shares of CCI's or the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged or (iv) dividends and distributions made on CCI's or the Company's
capital stock or rights to acquire such capital stock with CCI's or the
Company's capital stock or rights to acquire such capital stock) or make any
guarantee payments with respect to the foregoing and (b) CCI and the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by CCI or the Company
that rank pari passu with or junior to the Subordinated Debt Securities. Prior
to the termination of any such Extension Period, the Company may further
extend the interest payment period; provided that each such Extension Period,
together with all such previous and further extensions thereof, may not exceed
10 consecutive semiannual periods or extend beyond the maturity of the
Subordinated Debt Securities. Upon the termination of any Extension Period and
the payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. See "Description of the Capital
Securities--Distributions" and "Description of the Subordinated Debt
Securities and the Debt Guarantee--Option to Extend Interest Payment Period"
and "Description of the Subordinated Debt Securities and the Debt Guarantees--
Certain Covenants" in the accompanying Prospectus.
During each Extension Period, if any, each holder of Capital Securities will
continue to accrue income (as original issue discount ("OID")) in respect of
the deferred interest (plus annual portions of de minimis OID on the
Subordinated Debt Securities allocable to its Capital Securities for United
States federal income tax purposes. In such event, each holder of Capital
Securities will recognize income for United States federal income tax purposes
in advance of the receipt of cash, and will not receive cash related to such
income from Countrywide Capital Trust if such holder disposes of its Capital
Securities prior to the record date for payment of such deferred interest. See
"United States Federal Income Taxation--US Holders--Original Issue Discount."
S-11
<PAGE>
The Company has no current intention of exercising its right to defer
payments of interest on the Subordinated Debt Securities. However, should the
Company determine to exercise such right in the future, the market price of
the Capital Securities is likely to be affected. A holder that disposes of its
Capital Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Capital Securities. In addition, as a result of the existence of the Company's
right to defer interest payments, the market price of the Capital Securities
(which represent undivided beneficial interests in the Subordinated Debt
Securities) may be more volatile than other securities on which OID accrues
that do not have such rights.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "Proposed Legislation") if such debt obligations have a maximum term
in excess of twenty years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement")
indicating their intent that certain legislative proposals initiated by the
Clinton administration, including the Proposed Legislation, that may be
adopted by either of the tax-writing committees of Congress would have an
effective date that is no earlier than the date of "appropriate Congressional
action." Based upon the Joint Statement, it is expected that if the Proposed
Legislation were to be enacted, such legislation would not apply to the
Subordinated Debt Securities. There can be no assurance, however, that the
effective date guidance contained in the Joint Statement will be incorporated
into the Proposed Legislation, if enacted, or that other legislation enacted
after the date hereof will not otherwise adversely affect the ability of the
Company to deduct the interest payable on the Subordinated Debt Securities.
Accordingly, there can be no assurance that a Tax Event will not occur. See
"--Tax Event Redemption or Distribution" below, "Description of the
Subordinated Debt Securities and the Debt Guarantee--Proposed Tax Legislation"
herein and "Description of the Capital Securities--Proposed Tax Legislation"
in the accompanying Prospectus.
TAX EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Tax Event, Countrywide Capital Trust will be
dissolved, except in the limited circumstances described below, with the
result that, after satisfaction of liabilities to creditors of the Trust (to
the extent not paid by the Company or CCI), the Subordinated Debt Securities,
together with the Debt Guarantee, would be distributed to the holders of the
Trust Securities in connection with the liquidation of the Trust. In certain
circumstances, the Company will have the right to redeem the Subordinated Debt
Securities, in whole or in part, in lieu of a distribution of the Subordinated
Debt Securities and the Debt Guarantee by the Trust, in which event the Trust
will redeem on a pro rata basis the Trust Securities to the same extent as the
Subordinated Debt Securities are redeemed by the Company. See "Description of
the Capital Securities--Tax Event Redemption or Distribution".
Under current United States federal income tax law, a distribution of
Subordinated Debt Securities, together with the Debt Guarantee, upon the
dissolution of Countrywide Capital Trust would not be a taxable event to
holders of the Capital Securities. Upon the occurrence of a Tax Event,
however, a dissolution of Countrywide Capital Trust in which holders of the
Capital Securities receive cash would be a taxable event to such holders. See
"United States Federal Income Taxation--US Holders--Receipt of Subordinated
Debt Securities (and the Debt Guarantee) or Cash Upon Liquidation of
Countrywide Capital Trust."
There can be no assurance as to the market prices for the Capital Securities
or the Subordinated Debt Securities that may be distributed in exchange for
Capital Securities if a dissolution or liquidation of the Trust were to occur.
Accordingly, the Capital Securities that an investor may purchase, whether
pursuant to the offering made hereby or in the secondary market, or the
Subordinated Debt Securities that a holder of Capital Securities may receive
on dissolution and liquidation of the Trust, may trade at
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<PAGE>
a discount to the price paid to purchase the Capital Securities offered
hereby. Because the ability of the Trust to pay amounts due on the Capital
Securities is wholly dependent upon the Company's making payments on the
Subordinated Debt Securities as and when required, or CCI's making payments on
the Debt Guarantee as and when required, and because holders of Capital
Securities may receive Subordinated Debt Securities and the Debt Guarantee
upon the occurrence of a Tax Event, prospective purchasers of Capital
Securities are also making an investment decision with regard to the
Subordinated Debt Securities and the Debt Guarantee and should carefully
review all the information regarding the Subordinated Debt Securities and the
Debt Guarantee contained herein and in the accompanying Prospectus and
evaluate the credit risk of the Company and CCI. See "Description of the
Capital Securities--Tax Event Redemption or Distribution" and "Description of
the Subordinated Debt Securities and the Debt Guarantee--General."
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
Neither the Indenture nor the Debt Guarantee contains provisions that afford
holders of the Subordinated Debt Securities protection in the event of a
highly leveraged transaction, including a change of control, or other similar
transactions involving the Company or CCI that may adversely affect such
holders. See "Description of the Subordinated Debt Securities and the Debt
Guarantee--General."
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights and will not
be entitled to vote to appoint, remove or replace, or to increase or decrease
the number of, Countrywide Trustees (as defined herein), of which the Regular
Trustees (as defined herein) will be persons who are employees or officers of,
or who are affiliated with, CCI. Such voting rights with respect to the
Countrywide Trustees are vested exclusively in the holder of the Common
Securities which will be CCI. See "Description of the Capital Securities--
Voting Rights."
ABSENCE OF PRIOR PUBLIC MARKET
Prior to this offering, there has been no public market for the Capital
Securities. There can be no assurance that an active public market will
develop for the Capital Securities or that, if such market develops, the
market price will equal or exceed the public offering price set forth on the
cover page of this Prospectus Supplement. The public offering price for the
Capital Securities has been determined through negotiations among the Company,
CCI and the Underwriter. Trading prices for the Capital Securities will be
determined in the marketplace and may be influenced by many factors, including
the liquidity of the market for the Capital Securities, investor perceptions
of the Company and CCI and general industry and economic conditions.
POSSIBLE DECLINE OF TRADING PRICE
The Capital Securities are expected to trade at a price per Capital Security
plus accrued and unpaid distributions, if any, to the date of settlement.
Because the Capital Securities pay distributions at a fixed rate based upon
the fixed interest rate payable on the Subordinated Debt Securities, the
trading price of the Capital Securities may decline if interest rates rise.
ERISA CONSIDERATIONS
GENERAL
A fiduciary of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), should consider
fiduciary standards under ERISA in the
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<PAGE>
context of the particular circumstances of such plan before authorizing an
investment in the Capital Securities. Such fiduciary should consider whether
the investment satisfies ERISA's diversification and prudence requirements,
whether the investment constitutes unauthorized delegation of fiduciary
authority and whether the investment is in accordance with the documents and
instruments governing the plan. In addition, ERISA and the Code prohibit a
wide range of transactions ("Prohibited Transactions") involving the assets of
a plan subject to ERISA or the assets of an individual retirement account or
plan subject to Section 4975 of the Code (hereinafter, an "ERISA Plan") and
persons who have certain specified relationships to the ERISA Plan ("parties
in interest," within the meaning of ERISA, and "disqualified persons," within
the meaning of the Code). Such transactions may require "correction" and may
cause the ERISA Plan fiduciary to incur certain liabilities and the parties in
interest or disqualified persons to be subject to excise taxes.
Governmental plans and certain church plans (each as defined under ERISA)
are not subject to the Prohibited Transaction rules. Such plans may, however,
be subject to federal, state or local laws or regulations which may affect
their investment in the Capital Securities. Any fiduciary of such a
governmental or church plan considering an investment in the Capital
Securities should determine the need for, and the availability, if necessary,
of any exemptive relief under such laws or regulations.
The discussion herein of ERISA is general in nature and is not intended to
be all inclusive. Any fiduciary of an ERISA Plan, governmental plan or church
plan considering an investment in the Capital Securities should consult with
its legal advisors regarding the consequences of such investment.
TRUST ASSETS AS "PLAN ASSETS"
The Department of Labor has issued final regulations (the "Regulations") as
to what constitutes assets of an employee benefit plan ("plan assets") under
ERISA. The Regulations provide that, as a general rule, when an ERISA Plan
acquires an equity interest in an entity and such interest does not represent
a "publicly offered security" nor a security issued by an investment company
registered under the Investment Company Act of 1940, the ERISA Plan's assets
include both the equity interest and an undivided interest in each of the
underlying assets of the entity, unless it is established either that the
entity is an operating company or that equity participation in the entity by
"benefit plan investors" is not "significant". For purposes of the
Regulations, the Trust will not be an investment company nor an operating
company and the Capital Securities will not constitute a "publicly offered
security".
Under the Regulations, equity participation by benefit plan investors will
not be considered "significant" on any date only if, immediately after the
most recent acquisition of Capital Securities, the aggregate interest in the
Capital Securities held by benefit plan investors will be less than 25% of the
value of the Capital Securities. Although it is possible that the equity
participation by benefit plan investors on any date will not be "significant"
for purposes of the Regulations, such result cannot be assured. Consequently,
if ERISA Plans purchase the Capital Securities, the Trust's assets could be
deemed to be "plan assets" of such ERISA Plans for purposes of the fiduciary
responsibility and Prohibited Transaction provisions of ERISA and the Code.
Under ERISA, any person who exercises any authority or control respecting the
management or disposition of the assets of an ERISA Plan is considered to be a
fiduciary of such ERISA Plan. For example, the Institutional Trustee could
therefore become a fiduciary of the ERISA Plans that invest in the Capital
Securities and be subject to the general fiduciary requirements of ERISA in
exercising its authority with respect to the management of the assets of the
Trust. However, the Institutional Trustee will have only limited discretionary
authority with respect to the Trust's assets and the remaining functions and
responsibilities performed by the Institutional Trustee will be for the most
part custodial and ministerial in nature. Inasmuch as the Institutional
Trustee or another person with authority or control respecting the management
or disposition of the Trust assets may become a fiduciary with respect to the
ERISA Plans that will
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<PAGE>
purchase the Capital Securities, there may be an improper delegation by such
ERISA Plans of the responsibility to manage plan assets.
PROHIBITED TRANSACTIONS
The Company or any of its affiliates, and the Institutional Trustee may be a
party in interest or a disqualified person with respect to an ERISA Plan
investing in the Capital Securities and, therefore, such investment by an
ERISA Plan may give rise to a Prohibited Transaction. Consequently, any person
who is, or who in acquiring such Capital Securities is using the assets of, an
ERISA Plan may do so only if one of the following class exemptions from the
Prohibited Transaction rules is applicable to such person's investment in the
Capital Securities: Prohibited Transaction Class Exemption ("PTE") 90-1,
regarding investments by insurance company pooled separate accounts; PTE 91-
38, regarding investments by bank collective investment funds; PTE 84-14,
regarding transactions effected by qualified professional asset managers; PTE
96-23, regarding transactions effected by in-house asset managers; or PTE 95-
60, regarding investments by insurance company general accounts.
The acquisition of Capital Securities by any person who is using for such
acquisition the assets of an ERISA Plan shall constitute a representation by
such person to the Trust that (i) such person is eligible for exemptive relief
available pursuant to one of the class exemptions from the Prohibited
Transaction rules under ERISA and the Code described above (PTE 90-1, 91-38,
84-14, 96-23 or 95-60) with respect to the acquisition and holding of such
Capital Securities, and (ii) neither the Company nor CCI is a "fiduciary",
within the meaning of Section 3(21) of ERISA and the regulations thereunder,
with respect to such person's interest in the Capital Securities or the
Subordinated Debt Securities.
THE COMPANY
Countrywide Home Loans, Inc. (formerly Countrywide Funding Corporation), the
principal subsidiary of Countrywide Credit Industries, Inc., is engaged
primarily in the mortgage banking business and as such originates, purchases,
sells and services mortgage loans. The Company is a New York corporation,
originally incorporated in 1969. Its principal executive offices are located
at 155 North Lake Avenue, P. O. Box 7137, Pasadena, California 91109-7137, and
its telephone number is (818) 304-8400.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
Countrywide Credit Industries, Inc. is a holding company which through its
principal subsidiary, Countrywide Home Loans, Inc., is engaged primarily in
the mortgage banking business. CCI, through its other wholly-owned
subsidiaries, offers products and services complementary to its mortgage
banking business. CCI is a Delaware corporation, and was originally
incorporated in New York under the name of OLM Credit Industries, Inc. in
1969. Its principal executive offices are located at 155 North Lake Avenue, P.
O. Box 7137, Pasadena, California 91109-7137, and its telephone number is
(818) 304-8400.
COUNTRYWIDE CAPITAL TRUST
Countrywide Capital I is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust, dated as of October 14, 1996,
executed by CCI, as sponsor, and the Countrywide Trustees and (ii) the filing
of a certificate of trust with the Secretary of State of the State of Delaware
on October 15, 1996. Such declaration will be amended and restated in its
entirety (the "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying
S-15
<PAGE>
Prospectus form a part. The Declaration will be qualified as an indenture
under the Trust Indenture Act. Upon issuance of the Capital Securities, the
purchasers thereof will own all of the Capital Securities. See "Description of
the Capital Securities-- Book-Entry Only Issuance--The Depository Trust
Company." CCI will acquire Common Securities in an aggregate liquidation
amount equal to 3% of the total capital of Countrywide Capital Trust.
Countrywide Capital Trust exists for the exclusive purposes of (i) issuing the
Trust Securities representing undivided beneficial interests in the assets of
the Trust, (ii) investing the gross proceeds from the sale of the Trust
Securities in the Subordinated Debt Securities and the Debt Guarantee and
(iii) engaging in only those other activities necessary or incidental thereto.
Pursuant to the Declaration, the number of Countrywide Trustees will
initially be five. Three of the Countrywide Trustees (the "Regular Trustees")
will be persons who are employees or officers of, or who are affiliated with,
CCI. The fourth trustee will be a financial institution that is unaffiliated
with CCI, which trustee will serve as institutional trustee under the
Declaration and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Institutional Trustee").
Initially, The Bank of New York, a New York banking corporation, will be the
Institutional Trustee until removed or replaced by the holder of the Common
Securities. The Bank of New York will also act as trustee under the Capital
Securities Guarantee and as Debt Trustee (as defined herein) under the
Indenture. The fifth trustee will be an entity that maintains its principal
place of business in the State of Delaware (the "Delaware Trustee").
Initially, The Bank of New York (Delaware), an affiliate of the Institutional
Trustee, will act as Delaware Trustee. See "Description of the Capital
Securities Guarantees" in the accompanying Prospectus and "Description of the
Capital Securities--Voting Rights" herein.
The Institutional Trustee will hold title to the Subordinated Debt
Securities and the Debt Guarantee for the benefit of the holders of the Trust
Securities, and the Institutional Trustee will have the power to exercise all
rights, powers and privileges under the Indenture as the holder of the
Subordinated Debt Securities and the Debt Guarantee. In addition, the
Institutional Trustee will maintain exclusive control of a segregated non-
interest bearing bank account (the "Property Account") to hold all payments
made in respect of the Subordinated Debt Securities and the Debt Guarantee for
the benefit of the holders of the Trust Securities. The Institutional Trustee
will make payments of distributions and payments on liquidation, redemption
and otherwise to the holders of record of the Trust Securities out of funds
from the Property Account. The Capital Guarantee Trustee will hold the Capital
Securities Guarantee for the benefit of the holders of the Capital Securities.
CCI, as holder of all the Common Securities, will have the right, subject to
the Trust Indenture Act with respect to the Institutional Trustee and Delaware
law with respect to the Delaware Trustee, to appoint, remove or replace any
Countrywide Trustee and to increase or decrease the number of Countrywide
Trustees. The Company will pay all fees and expenses related to Countrywide
Capital Trust and the offering and sale of the Trust Securities. See
"Description of the Subordinated Debt Securities and the Debt Guarantee--
Miscellaneous."
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act, as amended (the "Trust Act"),
and the Trust Indenture Act. See "Description of the Capital Securities."
Countrywide Capital Trust's registered office in the State of Delaware is
c/o The Bank of New York (Delaware), 400 White Clay Center, Route 273, Newark,
Delaware 19711, Attn: Corporate Trust Administration. The principal place of
business of the Trust is c/o Countrywide Credit Industries, Inc., 155 North
Lake Avenue, P.O. Box 7137, Pasadena, California 91109-7137, and its telephone
is (818) 304-8400.
S-16
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of CCI at August
31, 1996, and the "As Adjusted" column reflects, on a pro forma basis as of
such date, the application of the estimated net proceeds from the sale of the
Capital Securities. See "Use of Proceeds." The table should be read in
conjunction with CCI's consolidated financial statements and notes thereto
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
--------------- -----------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C>
Long-term debt................................. $ 2,036,500 $
=============== ==============
Company-Obligated Mandatorily Redeemable
Capital Trust Pass-through Securities of
Subsidiary Trust holding solely a Company
Guaranteed Related Subordinated Debt(1)....... $ -- $
Preferred Stock--authorized, 1,500,000 shares
of $.05 par value; issued and outstanding,
none.......................................... -- --
Common Stockholders' equity
Common Stock--authorized, 240,000,000 shares
of $.05 par value; issued and outstanding,
102,699,926 shares(2)....................... 5,135 5,135
Additional paid-in capital..................... 827,969 827,969
Retained earnings.............................. 601,197 601,197
--------------- --------------
Total common stockholders' equity.......... 1,434,301 1,434,301
--------------- --------------
Total Preferred Stock and common stockholders'
equity........................................ $ 1,434,301 $
=============== ==============
</TABLE>
- --------
(1) As described herein, the sole assets of Countrywide Capital Trust, a
subsidiary trust of CCI, will be the % Junior Subordinated Deferrable
Interest Debentures due December 1, 2026 of the Company with an aggregate
principal amount of approximately $ , and upon redemption of such debt,
the Capital Securities will be mandatorily redeemable.
(2) Does not include 13,901,226 shares reserved for issuance upon exercise of
stock options of which options for 3,926,880 shares were exercisable as of
August 31, 1996.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of CCI
for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
AUGUST 31, YEARS ENDED FEBRUARY 28 (29),
----------- -----------------------------
1996 1995 1996 1995 1994 1993 1992
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges........................ 2.29 2.02 2.13 1.69 2.32 2.76 2.38
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income before federal income taxes, plus fixed charges. Fixed
charges include interest expense on debt and the portion of rental expenses
which is considered to be representative of the interest factor (one-third of
operating leases).
ACCOUNTING TREATMENT
The financial statements of Countrywide Capital Trust will be consolidated
into CCI's consolidated financial statements, with the Capital Securities
shown as "Company-Obligated Mandatorily Redeemable Capital Trust Pass-through
Securities of Subsidiary Trust holding solely a Company Guaranteed Related
Subordinated Debt." The Trust's sole assets will be the Subordinated Debt
Securities and the Debt Guarantee. See "Capitalization."
S-17
<PAGE>
USE OF PROCEEDS
The Trust will use the gross proceeds received from the sale of the Trust
Securities to purchase Subordinated Debt Securities from the Company. The
Company intends to use the net proceeds (after payment of the expenses of the
offering and Underwriter's Compensation) from the sale of the Subordinated
Debt Securities for general corporate purposes, principally for investment in
servicing rights. Initially, the net proceeds will be used to repay short term
commercial paper with interest rates ranging from approximately 5 1/4% to 5
1/2% per annum.
DESCRIPTION OF THE CAPITAL SECURITIES
The Capital Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The Bank of New York, will act as
indenture trustee for the Capital Securities under the Declaration for
purposes of compliance with the provisions of the Trust Indenture Act. The
terms of the Capital Securities will include those stated in the Declaration
and those made part of the Declaration by the Trust Indenture Act. The
following summary of the material terms and provisions of the Capital
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Declaration, a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus Supplement is a
part, the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned by CCI.
The Common Securities will rank pari passu, and payments will be made thereon
on a pro rata basis, with the Capital Securities, except that upon the
occurrence and during the continuance of a Declaration Event of Default, the
rights of the holders of the Common Securities to receive payment of periodic
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Capital Securities. The
Declaration does not permit the issuance by the Trust of any securities other
than the Trust Securities or the incurrence of any indebtedness by the Trust.
Pursuant to the Declaration, the Institutional Trustee will own the
Subordinated Debt Securities and the Debt Guarantee purchased by the Trust for
the benefit of the holders of the Trust Securities. The payment of
distributions out of money held by the Trust, and payments upon redemption of
the Capital Securities or liquidation of the Trust, are guaranteed by CCI as
described under "Description of the Capital Securities Guarantees" in the
accompanying Prospectus. The Capital Securities Guarantee will be held by The
Bank of New York, the Capital Guarantee Trustee, for the benefit of the
holders of the Capital Securities. The Capital Securities Guarantee does not
cover payment of distributions to the extent the Trust does not have available
funds to pay such distributions. In such event, the remedy of holders of
Capital Securities would be, through the vote of holders of a majority in
liquidation amount of the Capital Securities, to direct the Institutional
Trustee to enforce the Institutional Trustee's rights under the Subordinated
Debt Securities and the Debt Guarantee except in the circumstances in which a
holder of Capital Securities may take Direct Action. See "--Voting Rights" and
"--Declaration Events of Default."
DISTRIBUTIONS
Distributions on the Capital Securities will be fixed at a rate per annum of
% of the stated liquidation amount of $1,000 per Capital Security.
Distributions in arrears for more than one semiannual period will accrue at
the distribution rate per annum of % thereof compounded semiannually. The
term "distribution" as used herein includes any such compounded distributions
payable unless otherwise stated. The amount of distributions payable for any
period will be computed
S-18
<PAGE>
on the basis of a 360-day year of twelve 30-day months and the actual number
of days elapsed per 30-day month.
Distributions on the Capital Securities will be cumulative, will accrue from
, 1996 and will be payable semiannually in arrears on June 1 and December
1 of each year, commencing June 1, 1997, when, as and if available for
payment. Distributions will be made by the Institutional Trustee, except as
otherwise described below.
The Company has the right under the Indenture to defer payments of interest
on the Subordinated Debt Securities by extending the interest payment period
at any time and from time to time on the Subordinated Debt Securities, subject
to the conditions described below. If such right is exercised, semiannual
distributions on the Capital Securities will also be deferred (though such
distributions would continue to accrue at the distribution rate of % per
annum, compounded semiannually (to the extent permitted by law) since interest
would continue to accrue on the Subordinated Debt Securities at a rate of %
per annum compounded semiannually) during any Extension Period. Such right to
extend any interest payment period for the Subordinated Debt Securities is
limited to Extension Periods, each not exceeding 10 consecutive semiannual
periods, and no Extension Period may be initiated while accrued interest from
a prior, completed Extension Period is unpaid or while the Company is in
default in the payment of interest that has become due and payable on the
Subordinated Debt Securities, and no Extension Period may extend beyond the
maturity of the Subordinated Debt Securities. In the event that the Company
exercises this right, then during any Extension Period (a) CCI and the Company
shall not declare or pay dividends on, make a distribution with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock or rights to acquire such capital stock (other than
(i) purchases or acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by CCI or the
Company, respectively, of its obligations under any employee benefit plans,
(ii) as a result of a reclassification of CCI's or the Company's capital stock
or rights to acquire such capital stock or the exchange or conversion of one
class or series of CCI's or the Company's capital stock or rights to acquire
such capital stock for another class or series of CCI's or the Company's
capital stock or rights to acquire such capital stock, (iii) the purchase of
fractional interests in shares of CCI's or the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged or (iv) dividends and distributions made
on CCI's or the Company's capital stock or rights to acquire such capital
stock with CCI's or the Company's capital stock or rights to acquire such
capital stock) or make guarantee payments with respect to the foregoing and
(b) CCI and the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued
by CCI or the Company that rank pari passu with or junior to such Subordinated
Debt Securities. Prior to the termination of any such Extension Period, the
Company may further extend the interest payment period; provided that each
such Extension Period, together with all such previous and further extensions
thereof, may not exceed 10 consecutive semiannual periods or extend beyond the
maturity of the Subordinated Debt Securities. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. See
"Description of the Subordinated Debt Securities and the Debt Guarantee--
Interest" and "--Option to Extend Interest Payment Period" herein and
"Description of the Subordinated Debt Securities and the Debt Guarantees--
Certain Covenants" in the accompanying Prospectus. If distributions are
deferred, the distributions due shall be paid on the date that the related
Extension Period terminates to holders of the Capital Securities as they
appear on the books and records of the Trust on the record date immediately
preceding such date.
Distributions on the Capital Securities must be paid on the dates payable
(after giving effect to any Extension Period) to the extent that the Trust has
funds available for the payment of such distributions
S-19
<PAGE>
in the Property Account. The Trust's funds available for distribution to the
holders of the Capital Securities will be limited to payments received from
the Company on the Subordinated Debt Securities and CCI on the Debt Guarantee.
See "Description of the Subordinated Debt Securities and the Debt Guarantee."
The payment of distributions out of moneys held by the Trust is guaranteed by
CCI as set forth under "Description of the Capital Securities Guarantees" in
the accompanying Prospectus.
Distributions on the Capital Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Capital Securities remain in book-entry
only form, will be one Business Day (as defined below) prior to the relevant
payment dates. Such distributions will be paid through the Institutional
Trustee who will hold amounts received in respect of the Subordinated Debt
Securities and the Debt Guarantee in the Property Account for the benefit of
the holders of the Trust Securities. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment will be
made as described under "--Book-Entry Only Issuance--The Depository Trust
Company" below. In the event that the Capital Securities do not continue to
remain in book-entry only form, the Regular Trustees shall select relevant
record dates, which shall be more than one Business Day prior to the relevant
payment dates. In the event that any date on which distributions are to be
made on the Capital Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect
of any such delay) with the same force and effect as if made on such payment
date. A "Business Day" shall mean any day other than Saturday, Sunday or any
other day on which banking institutions in New York City (in the State of New
York) are permitted or required by any applicable law to close.
MANDATORY REDEMPTION
The Subordinated Debt Securities will mature on December 1, 2026 and may be
redeemed at par, plus accrued and unpaid interest to the date of redemption,
in whole or in part, at any time and from time to time on or after December 1,
2006, or at any time in certain circumstances upon the occurrence of a Tax
Event. See "Description of the Subordinated Debt Securities and the Debt
Guarantee." Upon the repayment of the Subordinated Debt Securities, whether at
maturity or upon redemption, the proceeds from such repayment or payment shall
simultaneously be applied to redeem Trust Securities on a pro rata basis
having an aggregate liquidation amount equal to the aggregate principal amount
of the Subordinated Debt Securities so repaid or redeemed; provided that
holders of Trust Securities shall be given not less than 30 nor more than 60
days' notice of such redemption. See "Description of the Subordinated Debt
Securities and the Debt Guarantee--Optional Redemption." In the event that
fewer than all of the outstanding Capital Securities are to be redeemed, the
Capital Securities will be redeemed in accordance with the procedures of DTC
(as defined herein) as described under "--Book-Entry Only Issuance--The
Depository Trust Company" below.
TAX EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, clarification of or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein, (b) any
judicial decision or official administrative pronouncement, ruling, regulatory
procedure, notice or announcement, including any notice or announcement of
intent to adopt such procedures or regulations (an "Administrative Action") or
(c) any amendment to, clarification of or change in the administrative
position or interpretation of any Administrative Action or judicial decision
that differs from the theretofore generally accepted position, in each case,
by any legislative body, court, governmental agency or regulatory body,
irrespective of the manner in which such amendment, clarification or change is
made known, which amendment,
S-20
<PAGE>
clarification or change is effective or such Administrative Action or decision
is announced, in each case, on or after the date of this Prospectus
Supplement, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to interest accrued or received on the Subordinated
Debt Securities or subject to more than a de minimis amount of other taxes,
duties or other governmental charges, (ii) any portion of interest payable by
the Company to the Trust on the Subordinated Debt Securities is not, or within
90 days of the date thereof will not be, deductible by the Company for United
States federal income tax purposes, or (iii) the Company could become liable
to pay, on the next date on which any amount would be payable with respect to
the Subordinated Debt Securities, any Additional Interest (as defined in the
Indenture).
If, at any time, a Tax Event shall occur and be continuing, the Regular
Trustees will, except in the limited circumstances described below, dissolve
the Trust and, after satisfaction of liabilities to creditors, cause
Subordinated Debt Securities held by the Institutional Trustee, having an
aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and accrued
and unpaid interest equal to accrued and unpaid distributions on, and having
the same record date, as the Trust Securities, to be distributed to the
holders of the Trust Securities, together with the Debt Guarantee, in
liquidation of such holders' interests in the Trust on a pro rata basis within
90 days following the occurrence of such Tax Event; provided, however, that
such dissolution and distribution shall be conditioned on the Company being
unable to avoid the adverse effects of such Tax Event within such 90-day
period by taking some ministerial action such as filing a form or making an
election or pursuing some other similar reasonable measure that will have no
adverse effect on the Trust, CCI, the Company or the holders of the Trust
Securities. Furthermore, if after a Tax Event has occurred, the Company
receives an opinion (a "Redemption Tax Opinion") of nationally recognized
independent tax counsel experienced in such matters that, as a result of such
Tax Event, there is more than an insubstantial risk that the Company would be
precluded from deducting the interest on the Subordinated Debt Securities for
United States federal income tax purposes, even if the Subordinated Debt
Securities were distributed to the holders of Trust Securities in liquidation
of such holders' interests in the Trust as described above, the Company shall
have the right within 90 days following the occurrence of such Tax Event, upon
not less than 30 nor more than 60 days' notice, to redeem the Subordinated
Debt Securities, in whole or in part, for cash so long as such Tax Event is
continuing, and, following such redemption, Trust Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Debt Securities so redeemed shall be redeemed on a pro rata basis by the Trust
at a redemption price per Capital Security of $1,000 plus accrued and unpaid
distributions thereon to the date fixed for redemption; provided, however,
that if at the time there is available to the Company or the Trust the
opportunity to eliminate, within such 90-day period and before any such notice
is given, the adverse effects of the Tax Event by taking some ministerial
action, such as filing a form or making an election or pursuing some other
similar reasonable measure that will have no adverse effect on the Trust, CCI,
the Company or the holders of the Trust Securities, the Company or the Trust
will pursue such measure in lieu of redemption.
After the date for any distribution of Subordinated Debt Securities,
together with the Debt Guarantee, upon dissolution of the Trust, (i) the
Capital Securities will be deemed to be no longer outstanding, (ii) the
Depositary (as defined herein) or its nominee, as the record holder of the
Capital Securities, will receive a registered Global Certificate (as defined
herein) or Certificates representing the Subordinated Debt Securities and the
Debt Guarantee to be delivered upon such distribution, and (iii) any
certificates representing Capital Securities not held by the Depositary or its
nominee will be deemed to represent undivided beneficial interests in such of
the Subordinated Debt Securities as have an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to the distribution rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, such Capital Securities until such
certificates are presented to the Company or its agent for transfer or
reissuance.
S-21
<PAGE>
There can be no assurance as to the market prices for either the Capital
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase, whether pursuant to the offering made hereby or in the secondary
market, or the Subordinated Debt Securities that an investor may receive if a
dissolution and liquidation of the Trust were to occur, may trade at a
discount to the price paid to purchase the Capital Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all semiannual distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Capital Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time,
on the redemption date, provided that the Company has paid to the
Institutional Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Subordinated Debt Securities, the Trust
will irrevocably deposit with the Depositary funds sufficient to pay the
applicable Redemption Price and will give the Depositary irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Capital Securities. See "--Book-Entry Only Issuance--The Depository Trust
Company." If notice of redemption shall have been given and funds deposited as
required, then, immediately prior to the close of business on the date of such
deposit, distributions will cease to accrue and all rights of holders of such
Capital Securities so called for redemption will cease, except the right of
the holders of such Capital Securities to receive the Redemption Price but
without interest on such Redemption Price. In the event that any date fixed
for redemption of Capital Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (without any interest or other payment in respect
of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Capital
Securities is improperly withheld or refused and not paid by the Trust, or by
CCI pursuant to the Capital Securities Guarantee, distributions on such
Capital Securities will continue to accrue at the then applicable rate from
the original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, the Capital Securities will be redeemed in accordance with the
procedures of DTC as described below under "--Book-Entry Only Issuance--The
Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), provided the acquiror is not the
holder of the Common Securities or the obligor under the Subordinated Debt
Securities, CCI or its subsidiaries may at any time, and from time to time,
purchase outstanding Capital Securities by tender, in the open market or by
private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the holders of
the Capital Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors of the Trust (to the
extent not paid by the Company or CCI), distributions in an amount equal to
the aggregate of the stated liquidation amount of $1,000 per Capital Security
plus accrued and unpaid distributions thereon to the date of payment (the
"Liquidation Distribution"), unless, in connection with such Liquidation,
Subordinated Debt Securities in an aggregate stated principal amount equal to
the aggregate stated liquidation amount
S-22
<PAGE>
of, with an interest rate identical to the distribution rate of, and bearing
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Capital Securities have been distributed on a pro rata basis to the holders of
the Capital Securities. Upon any Liquidation in which the Subordinated Debt
Securities are distributed, if at the time of such Liquidation the Capital
Securities are rated by at least one nationally recognized statistical rating
organization, the Company will use its best efforts to obtain from at least
one such or other rating organization a rating for the Subordinated Debt
Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Capital Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any
such Liquidation pro rata with the holders of the Capital Securities, except
that if a Declaration Event of Default has occurred and is continuing, the
Capital Securities shall have a preference over the Common Securities with
regard to such distributions.
Pursuant to the Declaration, the Trust shall dissolve (i) on December 31,
2050, the expiration of the term of the Trust, (ii) upon the bankruptcy of CCI
or the Company, (iii) (other than in connection with a merger, consolidation
or similar transaction not prohibited by the Indenture, Declaration, Debt
Guarantee or Capital Securities Guarantee, as the case may be) upon the filing
of a certificate of dissolution or its equivalent with respect to CCI or the
Company, upon the consent of the holders of at least a majority in liquidation
amount of the Trust Securities voting together as a single class to file a
certificate of cancellation with respect to the Trust, or upon the revocation
of the charter of CCI or the Company and the expiration of 90 days after the
date of revocation without a reinstatement thereof, (iv) upon the occurrence
of a Tax Event, except in the limited circumstance described under "--Tax
Event Redemption or Distribution" above, (v) upon the entry of a decree of a
judicial dissolution of CCI, the Company or the Trust, or (vi) upon the
redemption of all the Trust Securities. Pursuant to the Declaration, as soon
as practicable after the dissolution of the Trust and upon completion of the
winding up of the Trust, the Trust shall terminate upon the filing of a
certificate of cancellation.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the
Trust Securities (a "Declaration Event of Default"); provided that pursuant to
the Declaration, the holder of the Common Securities will be deemed to have
waived any Declaration Event of Default with respect to the Common Securities
until all Declaration Events of Default with respect to the Capital Securities
have been cured, waived or otherwise eliminated. Until such Declaration Events
of Default with respect to the Capital Securities have been so cured, waived,
or otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Capital Securities and only the holders
of the Capital Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore
the Indenture. The holders of a majority in liquidation amount of the Capital
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional
Trustee or to direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee to exercise the remedies available to it as holder of
the Subordinated Debt Securities and the Debt Guarantee. If the Institutional
Trustee fails to enforce its rights under the Subordinated Debt Securities or
the Debt Guarantee after the holders of a majority in liquidation amount of
the Capital Securities have so directed the Institutional Trustee, a holder of
record of Capital Securities may institute a legal proceeding against the
Company or CCI to enforce the Institutional Trustee's rights under the
Subordinated Debt Securities or the Debt Guarantee, as the case may be,
without first instituting any legal proceeding against the Institutional
Trustee or any other person or entity including in the case of
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the Debt Guarantee, the Company. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to (i) the failure of the Company to pay interest or principal on
the Subordinated Debt Securities on the respective dates such interest or
principal is payable (or in the case of redemption, the redemption date) or
(ii) the failure of CCI to pay any obligation in respect thereof under the
Debt Guarantee, then a holder of record of Capital Securities may institute
directly against the Company or CCI, as the case may be, a proceeding for
enforcement of payment, on or after the respective due dates specified in the
Subordinated Debt Securities, to such holder directly of the principal of or
interest on Subordinated Debt Securities having an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Securities of such
holder. In connection with such Direct Action, the Company and CCI will be
subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment made by the Company or CCI, as the
case may be, to such holder of Capital Securities in such Direct Action;
provided, however, that no such subrogation right may be exercised so long as
a Declaration Event of Default has occurred and is continuing. The holders of
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Debt Securities or the Debt
Guarantee.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee, so long as it is the sole holder of the Subordinated Debt Securities,
will have the right under the Indenture to declare the principal of and
interest on the Subordinated Debt Securities to be immediately due and
payable. CCI and the Trust are each required to file annually with the
Institutional Trustee an officer's certificate as to its compliance with all
conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act and
under "Description of the Capital Securities Guarantees--Modification of the
Capital Securities Guarantees; Assignment" in the accompanying Prospectus, and
as otherwise required by law and the Declaration, the holders of the Capital
Securities will have no voting rights. The Regular Trustees are required to
call a meeting of the holders of the Capital Securities if directed to do so
by holders of at least 10% in aggregate liquidation amount thereof.
Subject to the requirement of the Institutional Trustee's obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Subordinated Debt Securities and the Debt Guarantee,
to (i) exercise the remedies available to it under the Indenture as a holder
of the Subordinated Debt Securities and the Debt Guarantee, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Subordinated Debt
Securities shall be due and payable or (iv) consent on behalf of all the
holders of the Preferred Securities to any amendment, modification or
termination of the Indenture, the Subordinated Debt Securities or the Debt
Guarantee where such consent shall be required; provided, however, that, where
a consent or action under the Indenture would require the consent or act of
holders of more than a majority in principal amount of the Subordinated Debt
Securities (a "Super-Majority") affected thereby, the Institutional Trustee
may only give such consent or take such action at the written direction of the
holders of at least the proportion in aggregate liquidation amount of the
Capital Securities outstanding which the relevant Super-Majority represents of
the aggregate principal amount of the Subordinated Debt Securities
outstanding. If the Institutional Trustee fails to enforce its rights under
the Subordinated Debt Securities or the Debt Guarantee after the holders of a
majority in liquidation amount of the Capital Securities have so directed the
Institutional Trustee, a holder of record of Capital
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Securities may institute a legal proceeding directly against the Company or
CCI to enforce the Institutional Trustee's rights under the Subordinated Debt
Securities or the Debt Guarantee, as the case may be, without first
instituting any legal proceeding against the Institutional Trustee or any
other person or entity including, in the case of the Debt Guarantee, against
the Company. Notwithstanding the foregoing, if a Declaration Event of Default
has occurred and is continuing and such event is attributable to (a) the
failure of the Company to pay interest or principal on the Subordinated Debt
Securities on the respective dates such interest or principal is payable (or
in the case of redemption, the redemption date) or (b) the failure of CCI to
pay any obligation in respect thereof under the Debt Guarantee, then a holder
of record of Capital Securities may directly institute a proceeding for
enforcement of payment, on or after the respective due dates specified in the
Subordinated Debt Securities, to such holder directly of the principal of or
interest on Subordinated Debt Securities having an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Securities of such
holder. The Institutional Trustee shall notify all holders of the Capital
Securities of any default actually known to the Institutional Trustee with
respect to the Subordinated Debt Securities unless (x) such defaults have been
cured prior to the giving of such notice or (y) the Institutional Trustee
determines in good faith that the withholding of such notice is in the
interest of the holders of the Capital Securities, except where the default
relates to the payment of principal of (or premium, if any) or interest on any
of the Subordinated Debt Securities. Such notice shall state that such
Indenture Event of Default also constitutes a Declaration Event of Default.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of the
actions described in clauses (i), (ii) or (iii) above unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action, the Trust will not be classified as other than a grantor trust
for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Subordinated Debt Securities and the Debt Guarantee, is required under the
Indenture with respect to any amendment, modification or termination of the
Indenture, the Institutional Trustee shall request the direction of the
holders of the Trust Securities with respect to such amendment, modification
or termination and shall vote with respect to such amendment, modification or
termination as directed by a majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however, that where a
consent under the Indenture would require the consent of a Super-Majority, the
Institutional Trustee may only give such consent at the direction of the
holders of at least the proportion in liquidation amount of the Trust
Securities outstanding which the relevant Super-Majority represents of the
aggregate principal amount of the Subordinated Debt Securities outstanding.
The Institutional Trustee shall not take any such action in accordance with
the directions of the holders of the Trust Securities unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action, the Trust will not be classified as other than a grantor trust
for United States federal income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities may be
given at a separate meeting of holders of Capital Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Capital Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents. No
vote or consent of the holders of Capital Securities will be required for the
Trust to redeem and cancel
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Capital Securities or distribute Subordinated Debt Securities and the Debt
Guarantee in accordance with the Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned at such time by CCI or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, CCI, shall not entitle the holders thereof to vote or consent
and shall, for purposes of such vote or consent, be treated as if such Capital
Securities were not outstanding.
The procedures by which holders of Capital Securities may exercise their
voting rights are described below. See "--Book-Entry Only Issuance--The
Depository Trust Company" below.
Holders of the Capital Securities will have no rights to appoint or remove
the Countrywide Trustees, who may be appointed, removed or replaced solely by
CCI as the holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be amended without the consent of the holders of the
Trust Securities to: (i) cure any ambiguity; (ii) correct or supplement any
provision in the Declaration that may be defective or inconsistent with any
other provision of the Declaration; (iii) add to the covenants, restrictions
or obligations of CCI; (iv) conform to any change in Rule 3a-5 under the
Investment Company Act of 1940, as amended (the "1940 Act"), or written change
in interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority, which amendment does not have a
material adverse effect on the rights, preferences or privileges of the
holders of the Trust Securities; and (v) modify, eliminate and add to any
provision of the Declaration to such extent as may be necessary, provided that
no such amendment shall adversely affect the powers, preferences or special
rights of the holders of the Trust Securities.
In addition, the Declaration may be modified and amended if approved by the
Regular Trustees (and in certain circumstances the Institutional Trustee and
the Delaware Trustee), provided that, if any proposed amendment provides for,
or the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or
(ii) the dissolution, winding-up or termination of the Trust other than
pursuant to the terms of the Declaration, then the holders of the Trust
Securities voting together as a single class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of at least a majority in liquidation amount of the
Trust Securities affected thereby; provided that if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital
Securities or the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a majority in liquidation
amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee in contravention of the Trust Indenture Act or (iii)
cause the Trust to be deemed an "investment company" which is required to be
registered under the 1940 Act. Notwithstanding any provision of the
Declaration, Section 316(b) of the Trust Indenture Act provides that the right
of any holder of Capital Securities to receive payment of distributions and
other payments upon redemption or otherwise on or after their respective due
dates, or to institute suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such holder.
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MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, the Institutional
Trustee or the Delaware Trustee, consolidate, amalgamate, merge with or into,
or be replaced by, a trust organized as such under the laws of any State of
the United States; provided that (i) if the Trust is not the survivor, such
successor entity either (x) expressly assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust Securities
other securities having substantially the same terms as the Trust Securities
(the "Successor Securities"), so that the Successor Securities rank the same
as the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly acknowledges
a trustee of such successor entity possessing the same powers and duties as
the Institutional Trustee as the holder of the Subordinated Debt Securities
and CCI expressly acknowledges such trustee of such successor entity as the
holder of the Debt Guarantee, (iii) the Capital Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with another
organization on which the Capital Securities are then listed or quoted, (iv)
such merger, consolidation, amalgamation or replacement does not cause the
Capital Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in such successor entity),
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation or replacement, the Regular
Trustees have received an opinion of a nationally recognized independent
counsel to the Trust experienced in such matters to the effect that (A) such
merger, consolidation, amalgamation or replacement does not adversely affect
the rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in such successor entity),
(B) following such merger, consolidation, amalgamation or replacement, neither
the Trust nor such successor entity will be required to register as an
investment company under the 1940 Act and (C) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such
successor entity will be classified as other than a grantor trust for United
States federal income tax purposes, and (viii) CCI guarantees the obligations
of such successor entity under the Successor Securities at least to the extent
provided by the Capital Securities Guarantee and the Common Securities
Guarantee (as described in the accompanying Prospectus). Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
liquidation amount of the Trust Securities, consolidate, amalgamate, merge
with or into, or be replaced by, any other entity or permit any other entity
to consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or
the successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary (the
"Depositary") for the Capital Securities. The Capital Securities, on original
issuance, will be issued only as fully-registered securities registered in the
name of Cede & Co. (DTC's nominee). One or more fully-registered global
Capital Securities certificates (each, a "Global Certificate"), representing
the total aggregate number of Capital Securities, will be issued and will be
deposited with DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Capital Securities
as represented by a Global Certificate.
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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 (the "Exchange Act"). DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Participants in DTC include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations ("Direct Participants"). DTC is owned by a
number of its Participants and by the New York Stock Exchange, the American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others, such as securities
brokers and dealers, banks and trust companies that clear transactions through
or maintain a direct or indirect 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 Capital Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser
of each Capital Security ("Beneficial Owner") is in turn to be recorded on the
Direct Participants' and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which the Beneficial Owners
purchased Capital Securities. Transfers of ownership interests in the Capital
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 the Capital Securities,
except in the event that use of the book-entry system for the Capital
Securities is discontinued.
To facilitate subsequent transfers, all the Capital Securities deposited by
Participants with DTC will be registered in the name of DTC's nominee, Cede &
Co. The deposit of Capital Securities with DTC and their registration in the
name of Cede & Co. will effect no change in beneficial ownership. DTC will
have no knowledge of the actual Beneficial Owners of the Capital Securities.
DTC's records will reflect only the identity of the Direct Participants to
whose accounts such Capital Securities are credited, which may or may not be
the Beneficial Owners. The Direct Participants and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Capital Securities represented
thereby for all purposes under the Declaration and the Capital Securities. No
Beneficial Owner of an interest in a Global Certificate will be able to
transfer that interest except in accordance with DTC's applicable procedures.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Capital Securities (including the presentation of Capital
Securities for exchange as described below) only at the direction of one or
more Participants to whose accounts the DTC interests in the Global
Certificates are credited and only in respect of such portion of the aggregate
liquidation amount of Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is a
Declaration Event of Default with respect to the Capital Securities, DTC will,
upon notice, exchange the Global Certificates for certificated securities,
which it will distribute to its Participants.
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Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices in respect of the Capital Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Capital Securities are
being redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to Capital Securities. Under its usual procedures, DTC
would mail an Omnibus Proxy to the Trust 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 Capital Securities are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distributions on the Capital Securities held in book-entry form will be made
to DTC in immediately available funds. DTC's practice is to credit Direct
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payments on such payment date. Payments by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by standing instructions and customary practices and will be the
responsibility of such Direct Participants and Indirect Participants and not
of DTC, the Trust, CCI or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of distributions
to DTC is the responsibility of the Trust, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct Participants
and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC, the Direct Participants and the Indirect Participants to exercise any
rights under the Capital Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC,
DTC is under no obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time. Neither the Company, CCI,
the Trust nor the Institutional Trustee will have any responsibility for the
performance by DTC or its Direct Participants or Indirect Participants under
the rules and procedures governing DTC. DTC may discontinue providing its
services as securities depositary with respect to the Capital Securities at
any time by giving notice to the Trust. Under such circumstances, in the event
that a successor securities depositary is not obtained, Capital Security
certificates are required to be printed and delivered. Additionally, the Trust
(with the consent of the Company) may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor depositary) with respect
to the Capital Securities. In that event, certificates for the Capital
Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that CCI, the Company and the Trust believe to
be reliable, but neither CCI, the Company nor the Trust takes responsibility
for the accuracy thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution payment dates or, in the case of
certificated securities in non-book-entry form, such payments shall be made by
check
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mailed to the address of the holder entitled thereto as such address shall
appear on books and records of the Trust. The paying agent for the Trust
Securities (the "Paying Agent") shall initially be The Bank of New York. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Institutional Trustee. In the event that The Bank of New
York shall no longer be the Paying Agent, the Institutional Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company).
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
The Bank of New York will act as registrar, transfer agent and Paying Agent
for the Capital Securities.
Registration of transfers or exchanges of Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment (with
the giving of such indemnity as the Trust or the Company may require) in
respect of any tax or other government charges which may be imposed in
relation to it.
The Trust will not be required to register or cause to be registered the
transfer or exchange of Capital Securities after such Capital Securities have
been called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise such of the rights and
powers vested in it by the Declaration, and use the same degree of care and
skill in their exercise, as a prudent individual would exercise or use in the
conduct of his or her own affairs. Subject to such provisions, the
Institutional Trustee is under no obligation to exercise any of the powers
vested in it by the Declaration at the request of any holder of Capital
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The holders
of Capital Securities will not be required to offer such indemnity in the
event such holders, by exercising their voting rights, direct the
Institutional Trustee to take any action it is empowered to take under the
Declaration following a Declaration Event of Default. The Institutional
Trustee also serves as trustee under the Capital Securities Guarantee and the
Indenture. CCI and certain of its subsidiaries (including the Company) conduct
certain banking transactions with the Institutional Trustee in the ordinary
course of their business.
Whenever in the exercise of its rights or powers or the performance of its
duties under the Declaration the Institutional Trustee shall deem it desirable
to receive instructions with respect to enforcing any remedy or right or
taking any other action thereunder, the Institutional Trustee (i) may request
instructions from the holders of the Capital Securities which instructions may
only be given by the holders of a majority, or such other proportion, in
liquidation amount of the Capital Securities as would be entitled to direct
the Institutional Trustee under the terms of the Capital Securities in respect
of such remedy, right or action, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in accordance
with such instructions.
GOVERNING LAW
The Declaration and the Capital Securities will be governed by, and
construed in accordance with, the laws of the State of Delaware, without
regard to principles of conflict of laws.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an
"investment company" under the 1940 Act nor be
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characterized as other than a grantor trust for United States federal income
tax purposes. The Company is authorized and directed to conduct its affairs so
that the Subordinated Debt Securities will be treated as indebtedness of the
Company for United States federal income tax purposes. In this connection, the
Company, CCI and the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the Declaration or the certificates of
incorporation of the Company and CCI, that each of the Company, CCI and the
Regular Trustees determine in their discretion to be necessary or desirable to
achieve such end, as long as such action does not adversely affect the
interests of the holders of the Capital Securities or vary the terms thereof.
Holders of the Capital Securities have no preemptive rights.
DESCRIPTION OF THE CAPITAL SECURITIES GUARANTEE
Pursuant to the Capital Securities Guarantee, CCI will irrevocably and
unconditionally agree to pay in full to the holders of the Capital Securities
the Guarantee Payments (as defined in the accompanying Prospectus) (except to
the extent paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim which the Trust may have or assert. CCI's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by CCI to the holders of Capital Securities or by causing
the Trust to pay such amounts to such holders. The Capital Securities
Guarantee covers payments of distributions and other payments on the Capital
Securities only if and to the extent that the Trust has funds available
therefor, which funds will not be available except to the extent the Company
has made payments of interest or principal or other payments on the
Subordinated Debt Securities or CCI has made such payments pursuant to the
Debt Guarantee. The Capital Securities Guarantee will be qualified as an
indenture under the Trust Indenture Act. The Bank of New York will act as
indenture trustee under the Capital Securities Guarantee. The terms of the
Capital Securities Guarantee will be those set forth in such Capital
Securities Guarantee and those made part of such Capital Securities Guarantee
by the Trust Indenture Act. The Capital Securities Guarantee will be held by
the Capital Guarantee Trustee for the benefit of the holders of the Capital
Securities. A summary description of the Capital Securities Guarantee appears
in the accompanying Prospectus under the caption "Description of the Capital
Securities Guarantees."
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
AND THE DEBT GUARANTEE
Set forth below is a description of the principal terms of the Subordinated
Debt Securities in which the Trust will invest the proceeds from the issuance
and sale of the Trust Securities. This description supplements the description
of the general terms and provisions of the Subordinated Debt Securities set
forth in the accompanying Prospectus under the caption "Description of the
Subordinated Debt Securities and the Debt Guarantees." The following
description does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the description in the accompanying
Prospectus and the Indenture, dated as of , 1996 (the "Base Indenture"),
among the Company, CCI and The Bank of New York, as trustee (or successor
thereto, in either case the "Debt Trustee"), as supplemented by a First
Supplemental Indenture, dated as of , 1996 (the Base Indenture, as so
supplemented, is hereinafter referred to as the "Indenture"), the forms of
which are filed as exhibits to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part. Certain
capitalized terms used herein are defined in the Indenture. The Indenture will
be qualified as an indenture under the Trust Indenture Act. Initially, The
Bank of New York will be the Debt Trustee.
Under certain circumstances involving the dissolution of the Trust following
the occurrence of a Tax Event, Subordinated Debt Securities and the Debt
Guarantee may be distributed to the holders of the Trust Securities in
liquidation of the Trust. See "Description of the Capital Securities--Tax
Event Redemption or Distribution."
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GENERAL
The Subordinated Debt Securities will be issued as unsecured debt under the
Indenture. The Subordinated Debt Securities will be limited to the sum of the
aggregate stated liquidation amounts of the Capital Securities and the Common
Securities.
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compounded Interest (as defined herein) and
Additional Interest (as defined herein), if any, on December 1, 2026. The
Subordinated Debt Securities will be fully and unconditionally guaranteed on a
subordinated basis as to principal, premium, if any, and interest by CCI. See
"Description of the Subordinated Debt Securities and the Debt Guarantees--Debt
Guarantees" in the accompanying Prospectus.
If Subordinated Debt Securities are distributed to holders of Capital
Securities in liquidation of such holders' interests in the Trust, such
Subordinated Debt Securities will initially be issued as a Global Security. As
described herein, under certain limited circumstances, Subordinated Debt
Securities may be issued in certificated non-book entry form in exchange for a
Global Security. See "--Book-Entry and Settlement" below. In the event that
Subordinated Debt Securities are issued in certificated non-book entry form in
connection with such circumstances, such Subordinated Debt Securities will be
in denominations of $1,000 and integral multiples thereof and may be
transferred or exchanged at the offices described below. Payments on
Subordinated Debt Securities issued as a Global Security will be made to DTC,
a successor depositary or, in the event that no depositary is used, to a
paying agent for the Subordinated Debt Securities. In the event Subordinated
Debt Securities are issued in certificated non-book entry form, principal and
interest will be payable, the transfer of the Subordinated Debt Securities
will be registrable and Subordinated Debt Securities will be exchangeable for
Subordinated Debt Securities of other denominations of a like aggregate
principal amount at the corporate trust office of the Debt Trustee in New
York, New York; provided that payment of interest may be made at the option of
the Company by check mailed to the address of the holder entitled thereto or
by wire transfer to an account appropriately designated by the holder entitled
thereto. Notwithstanding the foregoing, so long as the holder of any
Subordinated Debt Securities is the Institutional Trustee, the payment of
principal and interest on the Subordinated Debt Securities held by the
Institutional Trustee will be made at such place and to such account as may be
designated by the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction or other similar transaction involving the Company or CCI that may
adversely affect such holders.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all present and future Senior
Indebtedness of the Company and that the Debt Guarantee is subordinated and
junior in right of payment to all present and future Senior Indebtedness of
CCI. No payment of principal (including redemption payments), premium, if any,
or interest on the Subordinated Debt Securities and no payment under the Debt
Guarantees may be made if (i) any Senior Indebtedness of the Company or CCI,
as the case may be, is not paid when due and any applicable grace period with
respect to a payment default under such Senior Indebtedness has ended and such
default has not been cured or waived or ceased to exist or (ii) the maturity
of any Senior Indebtedness of the Company or CCI, as the case may be, has been
accelerated because of a default. Upon any distribution of assets of the
Company or CCI, as the case may be, to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings, all
principal, premium, if any, and interest
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due or to become due on all Senior Indebtedness of the Company or CCI, as the
case may be, must be paid in full before the holders of Subordinated Debt
Securities or the Debt Guarantee are entitled to receive or retain any
payment. Upon satisfaction of all claims of all Senior Indebtedness then
outstanding, the rights of the holders of the Subordinated Debt Securities
will be subrogated to the holders of Senior Indebtedness of the Company or
CCI, as the case may be, to receive payments or distributions applicable to
Senior Indebtedness until all amounts owing on the Subordinated Debt
Securities or the Debt Guarantee, as the case may be, are paid in full.
The term "Senior Indebtedness" means, with respect to the Company or CCI, as
the case may be, (i) the principal, premium, if any, and interest in respect
of (A) indebtedness of such obligor for money borrowed and (B) indebtedness
evidenced by securities, debentures, bonds or other similar instruments issued
by such obligor, (ii) all capital lease obligations of such obligor, (iii) all
obligations of such obligor issued or assumed as the deferred purchase price
of property, all conditional sale obligations of such obligor and all
obligations of such obligor under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business), (iv) all
obligations of such obligor 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, (v)
all obligations of the type referred to in clauses (i) through (iv) above of
other persons for the payment of which such obligor is responsible or liable
as obligor, guarantor or otherwise and (vi) all obligations of the type
referred to in clauses (i) through (v) above of other persons secured by any
lien on any property or asset of such obligor (whether or not such obligation
is assumed by such obligor), except for (1) any such indebtedness that
contains express terms, or is issued under a deed, indenture or other
instrument that contains express terms, providing that it is subordinate to or
ranks pari passu with the Subordinated Debt Securities or the Debt Guarantee,
as the case may be, (2) any indebtedness between or among the Company or CCI
or any affiliate of the Company or CCI and (3) all other debt securities and
guarantees in respect of those debt securities, in any case issued by the
Company or CCI to (a) any other Countrywide Trust or a trustee of such trust
and (b) any other trust, or a trustee of such trust, partnership or other
entity affiliated with the Company or CCI that is a financing vehicle of the
Company or CCI (a "financing entity") in connection with the issuance by such
financing entity of securities of a similar nature to the Capital Securities
or of other securities that rank pari passu with, or junior to, the Capital
Securities. Such Senior Indebtedness shall continue to be Senior Indebtedness
and be entitled to the benefits of the subordination provisions irrespective
of any amendment, modification or waiver of any term of such Senior
Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by the Company or CCI. CCI's obligations under the Debt
Guarantee are also effectively subordinate to claims of creditors of CCI's
subsidiaries (including the Company). As of August 31, 1996, CCI had $200
million of Senior Indebtedness (excluding indebtedness of subsidiaries
guaranteed by CCI), Senior Indebtedness of the Company aggregated
approximately $5.5 billion and the indebtedness of CCI's subsidiaries
(including the Senior Indebtedness and other indebtedness of the Company)
aggregated approximately $5.5 billion.
OPTIONAL REDEMPTION
The Company may redeem the Subordinated Debt Securities, without premium or
penalty, in whole or in part, from time to time, on or after December 1, 2006,
or at any time in certain circumstances upon the occurrence of a Tax Event as
described under "Description of the Capital Securities--Tax Event Redemption
or Distribution," upon not less than 30 nor more than 60 days' notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date.
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INTEREST
Each of the Subordinated Debt Securities shall bear interest at the rate of
% per annum from the original date of issuance, payable semiannually in
arrears on June 1 and December 1 of each year (each an "Interest Payment
Date"), commencing June 1, 1997, to the person in whose name such Subordinated
Debt Security is registered, subject to certain exceptions, at the close of
business on the Business Day next preceding such Interest Payment Date. In the
event the Subordinated Debt Securities shall not continue to remain in book-
entry only form, the Company shall select relevant record dates, which shall
be more than one Business Day prior to the relevant Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full semiannual period for which interest is
computed will be computed on the basis of the actual number of days elapsed
per 30-day month. In the event that any date on which interest is payable on
the Subordinated Debt Securities is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is
a Business Day (and without any interest or other payment in respect of any
such delay) with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company is not in default in the payment of interest that has
become due and payable on the Subordinated Debt Securities and no accrued
interest from a prior completed Extension Period is unpaid, the Company shall
have the right to defer payments of interest on the Subordinated Debt
Securities by extending the interest payment period, at any time and from time
to time, for Extension Periods, each not exceeding 10 consecutive semiannual
periods, and on the date on which each such Extension Period ends the Company
shall pay all interest then accrued and unpaid (including any Additional
Interest), together with interest thereon compounded semiannually at the rate
specified for the Subordinated Debt Securities to the extent permitted by
applicable law ("Compounded Interest"); provided that during any Extension
Period (a) CCI and the Company shall not declare or pay dividends on, make any
distribution with respect to, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock or rights to
acquire such capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in
connection with the satisfaction by CCI or the Company, respectively, of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of CCI's or the Company's capital stock or rights to acquire
such capital stock or the exchange or conversion of one class or series of
CCI's or the Company's capital stock or rights to acquire such capital stock
for another class or series of CCI's or the Company's capital stock or rights
to acquire such capital stock, (iii) the purchase of fractional interests in
shares of CCI's or the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged or (iv) dividends and distributions made on CCI's or the Company's
capital stock or rights to acquire such capital stock with CCI's or the
Company's capital stock or rights to acquire such capital stock) or make any
guarantee payments with respect to the foregoing and (b) CCI and the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by CCI or the Company
that rank pari passu with or junior to the Subordinated Debt Securities. Prior
to the termination of any such Extension Period, the Company may further defer
payments of interest by extending the interest payment period; provided,
however, that each such Extension Period, including all such previous and
further extensions thereof, may not exceed 10 consecutive semiannual periods
or extend beyond the maturity of the Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Company may commence a new Extension Period, subject to the terms set
forth in this section. No interest during an Extension Period, except on the
date on which such Extension Period terminates, shall be due and payable. The
Company has no present intention of exercising its right to defer payments of
interest on the
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Subordinated Debt Securities. If the Institutional Trustee shall be the sole
holder of the Subordinated Debt Securities, the Company shall give the Regular
Trustees, the Institutional Trustee and the Debt Trustee notice of its
initiation of any Extension Period one Business Day prior to the earlier of
(i) the next succeeding date distributions on the Capital Securities are
payable or (ii) the date the Regular Trustees are required to give notice to
holders of the Capital Securities (or any national securities exchange or
other organization on which the Capital Securities are listed) of the record
date or the distribution payment date, in each case with respect to
distributions on the Trust Securities the payment of which is being deferred.
The Regular Trustees shall give notice of the Company's initiation of any
Extension Period to the holders of the Capital Securities. If the
Institutional Trustee shall not be the sole holder of the Subordinated Debt
Securities, the Company shall give the holders of the Subordinated Debt
Securities notice of its initiation of such Extension Period 10 Business Days
prior to the earlier of (i) the next succeeding Interest Payment Date or (ii)
the date upon which the Company is required to give notice to holders of the
Subordinated Debt Securities (or any national securities exchange or other
organization on which the Capital Securities are listed) of the record date or
interest payment date, in each case with respect to interest payments the
payment of which is being deferred.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in
any such case, the Company will pay as additional interest ("Additional
Interest") on the Subordinated Debt Securities held by the Institutional
Trustee such additional amounts as shall be required so that the net amounts
received and retained by the Trust after paying any such taxes, duties,
assessments or other governmental charges will equal the amounts the Trust and
the Institutional Trustee would have received had no such taxes, duties,
assessments or other governmental charges been imposed.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed the Proposed Legislation
which, among other things, would generally deny corporate issuers a deduction
for interest in respect of certain debt obligations issued on or after
December 7, 1995, if such debt obligations have a maximum term in excess of
twenty years and are not shown as indebtedness on the issuer's applicable
consolidated balance sheet. On March 29, 1996, Senate Finance Committee
Chairman William V. Roth, Jr. and House Ways and Means Committee Chairman Bill
Archer issued the Joint Statement indicating their intent that certain
legislative proposals initiated by the Clinton administration, including the
Proposed Legislation, that may be adopted by either of the tax-writing
committees of Congress would have an effective date that is no earlier than
the date of "appropriate Congressional action." Based upon the Joint
Statement, it is expected that if the Proposed Legislation were to be enacted,
such legislation would not apply to the Subordinated Debt Securities. There
can be no assurance, however, that the effective date guidance contained in
the Joint Statement will be incorporated into the Proposed Legislation, if
enacted, or that other legislation enacted after the date hereof will not
otherwise adversely affect the ability of the Company to deduct the interest
payable on the Subordinated Debt Securities. Accordingly, there can be no
assurance that a Tax Event will not occur. See "Description of the Capital
Securities--Tax Event Redemption or Distribution."
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Subordinated Debt Securities, will
have the right to declare the principal of and the interest on the
Subordinated Debt Securities (including any Compounded Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable
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and to enforce its other rights as a creditor with respect to the Subordinated
Debt Securities. See "Description of the Subordinated Debt Securities and the
Debt Guarantees--Events of Default, Waiver and Notice" and "--Certain
Covenants" in the accompanying Prospectus for a description of the Indenture
Events of Default and certain consequences thereof. An Indenture Event of
Default also constitutes a Declaration Event of Default. The holders of
Capital Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Subordinated
Debt Securities and the Debt Guarantee. See "Description of the Capital
Securities--Declaration Events of Default" and "--Voting Rights."
Notwithstanding the foregoing, if an Indenture Event of Default has occurred
and is continuing and such event is attributable to (i) the failure of the
Company to pay interest or principal on the Subordinated Debt Securities on
the respective dates such interest or principal is payable (or in the case of
redemption, on the redemption date) or (ii) the failure of CCI to pay any
obligation in respect thereof under the Debt Guarantee, the Company and CCI
acknowledge that a holder of record of Capital Securities may institute a
Direct Action for payment, on or after the respective due dates specified in
the Subordinated Debt Securities, to such holder directly of the principal of
or interest on Subordinated Debt Securities having an aggregate principal
amount equal to the aggregate liquidation amount of the Capital Securities of
such holder. Notwithstanding any payments made to such holder of Capital
Securities by CCI or the Company in connection with a Direct Action, CCI and
the Company shall remain obligated to pay the principal of or interest on the
Subordinated Debt Securities held by the Trust or the Institutional Trustee,
and CCI or the Company, as the case may be, shall be subrogated to the rights
of such holder of such Capital Securities under the Declaration to the extent
of any payments made by CCI or the Company, as the case may be, to such holder
in any Direct Action; provided, however, that no such subrogation right may be
exercised so long as a Declaration Event of Default has occurred and is
continuing. Except to the extent described above under "Description of the
Capital Securities--Declaration Events of Default" and "--Voting Rights," the
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Subordinated Debt Securities and the
Debt Guarantee.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Capital Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust
as a result of the occurrence of a Tax Event, the Subordinated Debt Securities
will be issued in the form of one or more global certificates (each a "Global
Security") registered in the name of the Depositary or its nominee. Except
under the limited circumstances described below, Subordinated Debt Securities
represented by a Global Security will not be exchangeable for, and will not
otherwise be issuable as, Subordinated Debt Securities in definitive form. The
Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor
depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Subordinated
Debt Securities in definitive form and will not be considered the holders (as
defined in the Indenture) thereof for any purpose under the Indenture, and no
Global Security representing Subordinated Debt Securities shall be
exchangeable, except for another Global Security of like denomination and
tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest to exercise any rights of a holder under the Indenture.
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THE DEPOSITARY
If Subordinated Debt Securities are distributed to holders of Capital
Securities in liquidation of such holders' interests in the Trust, DTC will
act as securities Depositary for the Subordinated Debt Securities. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Capital Securities--Book-Entry Only Issuance--The
Depository Trust Company." As of the date of this Prospectus Supplement, the
description herein of DTC's book-entry system and DTC's practices as they
relate to purchases, transfers, notices and payments with respect to the
Capital Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by DTC. The Company may
appoint a successor to DTC or any successor depositary in the event DTC or
such successor depositary is unable or unwilling to continue as the Depositary
for the Global Securities.
None of CCI, the Company, the Trust, the Institutional Trustee, the Debt
Trustee, any paying agent and any other agent of CCI, the Company, the Trust,
the Institutional Trustee or the Debt Trustee 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 Security for the
Subordinated Debt Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Subordinated Debt Securities
registered in the names of persons other than the Depositary or its nominee
only if (i) the Depositary notifies the Company that it is unwilling or unable
to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the Depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
Depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Subordinated Debt Securities registered in such names as the
Depositary shall direct. It is expected that such instructions will be based
upon directions received by the Depositary from its Participants with respect
to ownership of beneficial interests in such Global Security.
DEFEASANCE AND DISCHARGE
See "Description of the Subordinated Debt Securities and the Debt
Guarantees--Defeasance and Discharge" in the accompanying Prospectus.
GOVERNING LAW
The Indenture, the Subordinated Debt Securities and the Debt Guarantee will
be governed by, and construed in accordance with, the laws of the State of New
York, without regard to conflict of laws principles.
MISCELLANEOUS
The Indenture will provide that the Company will pay all fees and expenses
related to (i) the offering and sale of the Trust Securities, the Subordinated
Debt Securities and the Debt Guarantee, (ii) the organization, maintenance and
dissolution of the Trust, (iii) the retention of the Countrywide Trustees and
(iv) the enforcement by the Institutional Trustee of the rights of the holders
of the Capital Securities. The payment of such fees and expenses will be fully
and unconditionally guaranteed by CCI.
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The Company and CCI will have the right at all times to assign any of their
respective rights or obligations under the Indenture to a direct or indirect
wholly-owned subsidiary of the Company or CCI; provided that, in the event of
any such assignment, the Company or CCI, as the case may be, will remain
liable for all of their respective obligations. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. The Indenture provides that it
may not otherwise be assigned by the parties thereto.
EFFECT OF OBLIGATIONS UNDER THE
SUBORDINATED DEBT SECURITIES, THE DEBT
GUARANTEE AND THE CAPITAL SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
and sell the Trust Securities evidencing undivided beneficial interests in the
assets of the Trust and to invest the proceeds from such issuance and sale in
the Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the
following factors: (i) the aggregate principal amount of Subordinated Debt
Securities will be equal to the aggregate stated liquidation amount of the
Trust Securities; (ii) the interest rate and the interest and other payment
dates on the Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Capital Securities; (iii) the
Company shall pay all, and the Trust shall not be obligated to pay directly or
indirectly any, costs, expenses, debt and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration further
provides that the Countrywide Trustees shall not cause or permit the Trust to,
among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions (to the extent funds therefor are available to the
Trust) and other payments due on the Capital Securities (to the extent funds
therefor are available to the Trust) are guaranteed by CCI as set forth under
"Description of the Capital Securities Guarantees" in the accompanying
Prospectus. If the Company does not make interest payments on the Subordinated
Debt Securities purchased by the Trust and CCI does not make payments under
the Debt Guarantee, it is expected that the Trust will not have sufficient
funds to pay distributions on the Capital Securities. The Capital Securities
Guarantee does not apply to any payment of distributions except to the extent
that the Trust has funds available for the payment of such distributions. The
Capital Securities Guarantee covers the payment of distributions and other
payments on the Capital Securities only if and to the extent that the Company
or CCI has made payments of interest or principal on the Subordinated Debt
Securities or the Debt Guarantee held by the Trust as its sole assets. The
Capital Securities Guarantee, when taken together with the Company's
obligations under the Subordinated Debt Securities and the Indenture,
including its obligations to pay costs, expenses, debts and liabilities of the
Trust (other than with respect to the Trust Securities), and CCI's obligations
under the Debt Guarantee, the Indenture and the Declaration, provide a full
and unconditional guarantee on a subordinated basis by CCI of amounts due on
the Capital Securities.
If the Company fails to make interest or other payments on the Subordinated
Debt Securities when due (after giving effect to any Extension Period) and CCI
fails to make payments under the Debt Guarantee with respect to such payments
due on the Subordinated Debt Securities, the Declaration provides a mechanism
whereby the holders of the Capital Securities, using the procedures described
herein under "Description of the Capital Securities--Book-Entry Only
Issuance--The Depository Trust Company" and "--Voting Rights," may direct the
Institutional Trustee to enforce its rights under the Subordinated Debt
Securities and the Debt Guarantee, including proceeding directly against CCI
to enforce the Debt Guarantee without first proceeding against the Company
under the Subordinated Debt Securities. If the Institutional Trustee fails to
enforce its rights under the Subordinated Debt
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Securities or the Debt Guarantee after a majority in liquidation amount of the
Capital Securities have so directed the Institutional Trustee, a holder of
record of Capital Securities may institute a legal proceeding against the
Company or CCI to enforce the Institutional Trustee's rights under the
Subordinated Debt Securities or the Debt Guarantee, as the case may be,
without first instituting any legal proceeding against the Institutional
Trustee or any other person or entity including, in the case of the Debt
Guarantee, against the Company. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to (i) the failure of the Company to pay interest or principal on
the Subordinated Debt Securities on the respective dates such interest or
principal is payable (or in the case of redemption, on the redemption date) or
(ii) the failure of CCI to pay any obligation in respect thereof under the
Debt Guarantee, then a holder of record of Capital Securities may institute a
Direct Action for payment on or after the respective due dates specified in
the Subordinated Debt Securities. In connection with such Direct Action, the
Company or CCI, as the case may be, will be subrogated to the rights of such
holder of Capital Securities under the Declaration to the extent of any
payment made by the Company or CCI, as the case may be, to such holder of
Capital Securities in such Direct Action; provided, however, that no such
subrogation right may be exercised so long as a Declaration Event of Default
has occurred and is continuing. CCI, under the Capital Securities Guarantee,
acknowledges that the Capital Guarantee Trustee shall enforce the Capital
Securities Guarantee on behalf of the holders of the Capital Securities. If
CCI fails to make payments under the Capital Securities Guarantee, any holder
of Capital Securities may institute a legal proceeding directly against CCI to
enforce its right to receive payment under the Capital Securities Guarantee on
or after the date such payment is due and payable under the Capital Securities
Guarantee without first instituting a legal proceeding against the Trust, the
Capital Guarantee Trustee, or any other person or entity.
CCI and the Trust believe that the above mechanisms and obligations, taken
together, provide a full and unconditional guarantee on a subordinated basis
by CCI of payments due on the Capital Securities. See "Description of the
Capital Securities Guarantees--General" in the accompanying Prospectus.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In addition to the two specific opinions referred to below under "--US
Holders--Characterization of the Trust" and "--Characterization of the
Subordinated Debt Securities," Fried, Frank, Harris, Shriver & Jacobson (a
partnership including professional corporations), special counsel to the
Company, CCI and the Trust ("Counsel"), will, in connection with the issuance
of the Capital Securities, render its opinion generally to the effect that,
subject to the exceptions and qualifications set forth therein, the discussion
of United States federal income taxation which follows summarizes the material
United States federal income tax consequences of the purchase, ownership and
disposition of Capital Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject
to change, possibly on a retroactive basis.
Except as otherwise stated, this summary deals only with a Capital Security
held as a capital asset by a holder who or which (i) purchased Capital
Securities upon original issuance (an "Initial Holder") and (ii) is a US
Holder (as defined below). It does not deal with all aspects of United States
federal income taxation, nor with the particular United States federal income
tax (hereafter, "income tax") consequences which may be applicable to certain
classes of US Holders (such as banks, thrift
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<PAGE>
institutions, real estate investment trusts, regulated investment companies,
insurance companies, brokers and dealers in securities or currencies, other
financial institutions, tax-exempt organizations, persons holding Capital
Securities as a position in a "straddle," as part of a "synthetic security or
hedge," as part of a "conversion transaction" or as part of any other
integrated investment, persons having a functional currency other than the
U.S. Dollar and certain United States expatriates). Further, this summary does
not address (a) the income tax consequences to shareholders in, or partners or
beneficiaries of, a holder of Capital Securities, (b) the United States
federal alternative minimum tax consequences of the purchase, ownership or
disposition of Capital Securities, or (c) any state, local or foreign tax
consequences of the purchase, ownership and disposition of Capital Securities.
A "US Holder" is a holder of Capital Securities who or which is a citizen or
individual resident (or is treated as a citizen or individual resident) of the
United States for income tax purposes, a corporation or partnership created or
organized (or treated as created or organized for income tax purposes) in or
under the laws of the United States or any political subdivision thereof, or a
trust or estate the income of which is includible in its gross income for
income tax purposes without regard to its source. (For taxable years beginning
after December 31, 1996 (or for the immediately preceding taxable year, if the
trustee of a trust so elects), a trust is a US Holder for income tax purposes
if, and only if (i) a court within the United States is able to exercise
primary supervision over the administration of the trust, and (ii) one or more
United States trustees have the authority to control all substantial decisions
of the trust.)
US HOLDERS
CHARACTERIZATION OF THE TRUST
In connection with the issuance of the Capital Securities, Counsel will
render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration (and other
documents), and based on certain assumptions and qualifications referenced in
the opinion, the Trust will be characterized for United States federal income
tax purposes as a grantor trust, and will not be characterized as an
association taxable as a corporation for such purposes. Accordingly, for
income tax purposes, each holder of Capital Securities generally will be
considered the owner of an undivided interest in the Subordinated Debt
Securities owned by the Trust, and each US Holder will be required to include
all income or gain recognized for income tax purposes with respect to its
allocable share of the Subordinated Debt Securities on its own income tax
return.
CHARACTERIZATION OF THE SUBORDINATED DEBT SECURITIES
In connection with the issuance of the Capital Securities, Counsel will
render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Indenture (and other
documents), and based on certain assumptions and qualifications referenced in
the opinion, the Subordinated Debt Securities should be characterized for
United States federal income tax purposes as debt of the Company.
ORIGINAL ISSUE DISCOUNT
Under the terms of the Subordinated Debt Securities, the Company has the
option to defer payments of interest from time to time by extending the
interest payment period for a period not exceeding 10 consecutive semiannual
periods, but not beyond the maturity of the Subordinated Debt Securities.
Recently issued Treasury regulations under Section 1273 of the Code provide
that debt instruments like the Subordinated Debt Securities will not be
considered issued with OID by reason of the Company's option to defer payments
of interest if the likelihood of deferral is "remote."
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The Company has concluded, and this discussion assumes, that, as of the date
of this Prospectus Supplement, the likelihood of exercise of that option is
"remote" within the meaning of the applicable regulations, in part because
exercising that option would prevent the Company and CCI from declaring
dividends on their stock and would prevent the Company and CCI from making any
payments with respect to debt securities that rank pari passu or junior to the
Subordinated Debt Securities. Therefore, the Subordinated Debt Securities
should not be treated as issued with OID by reason of the Company's deferral
option. Rather, stated interest on the Subordinated Debt Securities will
generally be taxable to a US Holder, as ordinary income, when paid or accrued
in accordance with that holder's method of accounting for income tax purposes.
It should be noted, however, that these regulations have not yet been
addressed in any rulings or other interpretations by the Service. Accordingly,
it is possible that the Service could take a position contrary to the
interpretation described herein.
In the event the Company subsequently exercised its option to defer payments
of interest, the Subordinated Debt Securities would be treated as reissued for
OID purposes and the sum of the remaining interest payments on the
Subordinated Debt Securities (and any de minimis OID on the Subordinated Debt
Securities (discussed below)) would thereafter be treated as OID, which would
accrue, and be includible in a US Holder's taxable income, on an economic
accrual basis (regardless of the US Holder's method of accounting for income
tax purposes) over the remaining term of the Subordinated Debt Securities
(including any period of interest deferral), without regard to the timing of
payments under the Subordinated Debt Securities. (Subsequent distributions of
interest on the Subordinated Debt Securities generally would not be taxable.)
The amount of OID that accrued in any period would generally equal the amount
of interest that accrued on the Subordinated Debt Securities in that period at
the stated interest rate (adjusted for any de minimis OID on the Subordinated
Debt Securities). Consequently, during any period of interest deferral, US
Holders will include OID in gross income in advance of the receipt of cash,
and a US Holder which disposes of a Capital Security prior to the record date
for payment of distributions on the Subordinated Debt Securities following
that period will be subject to income tax on OID accrued through the date of
disposition (and not previously included in income), but will not receive cash
from the Trust with respect to that OID.
In the absence of the Company's election to defer an interest payment
period, de minimis OID would not be subject to income tax until a holder's
Subordinated Debt Securities were sold, redeemed or retired, in which event
the de minimis OID would increase any gain or decrease any loss recognized by
the holder. De minimis OID will be present with respect to the Subordinated
Debt Securities, in an amount equal to the excess of (a) the stated redemption
price at maturity (as defined for income tax purposes) of a Subordinated Debt
Security, over (b) the issue price of the Subordinated Debt Security, as such
amount is less than the product of (x) 0.25% of that redemption price, and (y)
the number of complete calendar years from the Subordinated Debt Security's
issue date to its maturity.
If the Company's option to defer payments of interest were not treated as
remote, the Subordinated Debt Securities would be treated as initially issued
with OID in an amount equal to the aggregate stated interest over the term of
the Subordinated Debt Securities, plus the amount of de minimis OID on the
Subordinated Debt Securities. That OID would generally be includible in a US
Holder's taxable income, over the term of the Subordinated Debt Securities, on
an economic accrual basis.
CHARACTERIZATION OF INCOME
Because the income underlying the Capital Securities will not be
characterized as dividends for income tax purposes, corporate holders of
Capital Securities will not be entitled to a dividend received deduction for
any income recognized with respect to the Capital Securities.
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MARKET DISCOUNT AND BOND PREMIUM
Holders of Capital Securities other than Initial Holders may be considered
to have acquired their undivided interests in the Subordinated Debt Securities
with market discount or acquisition premium (as each phrase is defined for
income tax purposes).
RECEIPT OF SUBORDINATED DEBT SECURITIES (AND THE DEBT GUARANTEE) OR CASH
UPON LIQUIDATION OF COUNTRYWIDE CAPITAL TRUST
Under the circumstances described under the caption "Description of the
Capital Securities--Tax Event Redemption or Distribution" above, Subordinated
Debt Securities, together with the Debt Guarantee, may be distributed to
holders in exchange for the Capital Securities and in liquidation of the
Trust. Except as discussed below, such a distribution would not be a taxable
event for income tax purposes, and each US Holder would have an aggregate
adjusted basis in its Subordinated Debt Securities (including the Debt
Guarantee) for income tax purposes equal to such holder's aggregate adjusted
basis in its Capital Securities. For income tax purposes, a US Holder's
holding period in the Subordinated Debt Securities (including the Debt
Guarantee) received in such a liquidation of the Trust would include the
period during which the Capital Securities were held by the holder. If,
however, the relevant event is a Tax Event which results in the Trust being
treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to US Holders of the Capital Securities for
income tax purposes.
Upon retirement of the Capital Securities, and under certain circumstances
described herein (see "Description of the Capital Securities"), the
Subordinated Debt Securities may be redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their Capital Securities.
Such a redemption would be taxable for income tax purposes, and a US Holder
would recognize gain or loss as if it had sold the Capital Securities for
cash. See "--Sales of Capital Securities" below.
SALES OF CAPITAL SECURITIES
A US Holder that sells Capital Securities will recognize gain or loss equal
to the difference between its adjusted basis in the Capital Securities and the
amount realized on the sale of such Capital Securities. A US Holder's adjusted
basis in the Capital Securities generally will be its initial purchase price,
increased by OID, if any, previously included (or currently includible) in
such holder's gross income to the date of disposition, and decreased by
payments received on the Capital Securities subsequent to the effective date
of the Company's first exercise of its option to defer payments of interest.
Any such gain or loss generally will be capital gain or loss, and generally
will be a long-term capital gain or loss if the Capital Securities have been
held for more than one year.
A holder who disposes of his Capital Securities between record dates for
payments of distributions thereon will be required to include accrued but
unpaid interest (or OID) on the Subordinated Debt Securities through the date
of disposition in its taxable income for United States federal income tax
purposes (notwithstanding that the holder may receive a separate payment from
the purchaser with respect to accrued interest), and to deduct that amount
from the sales proceeds received (including the separate payment, if any, with
respect to accrued interest) for the Capital Securities (or as to OID only, to
add such amount to such holder's adjusted tax basis in its Capital
Securities). To the extent the selling price is less than the holder's
adjusted tax basis (which will include accrued but unpaid OID, if any), a
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
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<PAGE>
NON-US HOLDERS
The following discussion applies to an Initial Holder who is not a US Holder
(a "Non-US Holder").
Payments to a holder of a Capital Security which is a Non-US Holder will
generally not be subject to withholding of income tax, provided that (a) the
beneficial owner of the Capital Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) the beneficial
owner of the Capital Security is not a controlled foreign corporation that is
related to the Company through stock ownership, and (c) either (I) the
beneficial owner of the Capital Securities certifies to the Trust or its
agent, under penalties of perjury, that it is a Non-US Holder and provides its
name and address, or (II) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business (a "Financial Institution"), and holds the Capital
Security in such capacity, certifies to the Trust or its agent, under
penalties of perjury, that such a statement has been received from the
beneficial owner by it or by another Financial Institution between it and the
beneficial owner in the chain of ownership, and furnishes the Trust or its
agent with a copy thereof.
As discussed above (see "Description of the Capital Securities--Tax Event
Redemption or Distribution"), changes in legislation affecting the income tax
consequences of the Subordinated Debt Securities are possible, and could
adversely affect the ability of the Company to deduct the interest payable on
the Subordinated Debt Securities. Moreover, any such legislation could, as the
Proposed Legislation would have, adversely affect Non-US Holders by
characterizing income derived from the Subordinated Debt Securities as
dividends, generally subject to a 30% income tax (on a withholding basis) when
paid to a Non-US Holder, rather than as interest which, as discussed above, is
generally exempt from income tax in the hands of a Non-US Holder.
A Non-US Holder of a Capital Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Capital Security.
A Non-US Holder which holds Capital Securities in connection with the active
conduct of a United States trade or business will be subject to income tax on
all income and gains recognized with respect to its proportionate share of the
Subordinated Debt Securities.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, Capital Securities held by a noncorporate
US Holder within the United States. In addition, payments made on, and
payments of the proceeds from the sale of, Capital Securities to or through
the United States office of a broker are subject to information reporting
unless the holder thereof certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding (see "--Backup Withholding" below). Taxable income on the Capital
Securities for a calendar year should be reported to US Holders on Forms 1099
by the following January 31st.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification or exemption requirements. Any amounts so withheld
will be allowed as a credit against the holder's income tax liability, or
refunded, provided the required information is provided to the United States
Internal Revenue Service.
* * *
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF CAPITAL SECURITIES. POTENTIAL HOLDERS OF CAPITAL SECURITIES ARE URGED TO
CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX CONSEQUENCES.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), Countrywide Capital Trust has agreed to sell
to Salomon Brothers Inc (the "Underwriter"), and the Underwriter has agreed to
purchase, the Capital Securities. In the Underwriting Agreement, the
Underwriter has agreed, subject to the terms and conditions set forth therein,
to purchase all the Capital Securities offered hereby if any of the Capital
Securities are purchased.
The Underwriter proposes to offer the Capital Securities, in part, directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus Supplement and, in part, to certain securities dealers at
such price less a concession of $ per Capital Security. The Underwriter may
allow, and such dealers may reallow, a concession not in excess of $ per
Capital Security to certain brokers and dealers. After the Capital Securities
are released for sale to the public, the offering price and other selling
terms may from time to time be varied by the Underwriter.
In view of the fact that the gross proceeds of the sale of the Capital
Securities will ultimately be used by Countrywide Capital Trust to purchase
the Subordinated Debt Securities of the Company, the Underwriting Agreement
provides that the Company will pay as compensation ("Underwriter's
Compensation") to the Underwriter arranging the investment therein of such
proceeds an amount in immediately available funds of $ per Capital Security
(or $ in the aggregate).
During a period of 30 days from the date of this Prospectus Supplement,
neither Countrywide Capital Trust, CCI nor the Company will, without the prior
written consent of the Underwriter, directly or indirectly, sell, offer to
sell, grant any option for sale of, or otherwise dispose of, any Capital
Securities, any security convertible into or exchangeable into or exercisable
for Capital Securities or Subordinated Debt Securities or any debt securities
substantially similar to the Subordinated Debt Securities or equity securities
substantially similar to the Capital Securities (except for the Subordinated
Debt Securities and the Capital Securities offered hereby).
Prior to this offering there has been no public market for the Capital
Securities. The Underwriter may make a market in the Capital Securities, but
the Underwriter is not obligated to do so and may discontinue market-making at
any time without notice. No assurance can be given as to the liquidity of the
trading market in the Capital Securities. See "Risk Factors--Absence of Prior
Public Market."
Countrywide Capital Trust, CCI and the Company have agreed to indemnify the
Underwriter against, or contribute to payments that the Underwriter may be
required to make in respect of, certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
The Underwriter engages in transactions with, and, from time to time, has
performed services for, CCI and its subsidiaries in the ordinary course of
business.
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<PAGE>
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Capital
Securities and the formation of the Trust will be passed upon on behalf of the
Trust by Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the
Trust. The validity under New York law of the Subordinated Debt Securities,
the Capital Securities Guarantee and the Debt Guarantee will be passed upon
for CCI and the Company by Fried, Frank, Harris, Shriver & Jacobson, a
partnership including professional corporations, New York, New York. Edwin
Heller (whose professional corporation retired as a partner of Fried, Frank,
Harris, Shriver & Jacobson in September 1996) is of counsel to Fried, Frank,
Harris, Shriver & Jacobson and is a director of CCI. Certain United States
federal income tax matters will be passed upon for the Company, CCI and the
Trust by Fried, Frank, Harris, Shriver & Jacobson. Certain legal matters will
be passed upon for the Underwriter by Brown & Wood LLP, New York, New York.
Brown & Wood LLP also serves as counsel for CWMBS, Inc. and CWABS, Inc., each
a wholly-owned subsidiary of CCI, in connection with offerings of mortgage-
backed and asset-backed securities, and as counsel to CWM Mortgage Holdings,
Inc.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
NOVEMBER 25, 1996
PROSPECTUS
$300,000,000
COUNTRYWIDE HOME LOANS, INC.
SUBORDINATED DEBT SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
COUNTRYWIDE CREDIT INDUSTRIES, INC.
COUNTRYWIDE CAPITAL I
COUNTRYWIDE CAPITAL II
CAPITAL SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED AS TO DISTRIBUTIONS AND OTHER PAYMENTS BY
[LOGO] COUNTRYWIDE(SM)
- ----------------------
CREDIT INDUSTRIES, INC.
Countrywide Home Loans, Inc., a New York corporation (the "Company"), and a
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a Delaware
corporation ("CCI"), may from time to time offer its subordinated debentures,
notes or other evidence of indebtedness (the "Subordinated Debt Securities") in
one or more series and in amounts, at prices and on terms to be determined at
the time of the offering. The Subordinated Debt Securities when issued will be
unsecured obligations of the Company and will be fully and unconditionally
guaranteed as to payment of principal, premium, if any, and interest by CCI
(the "Debt Guarantees"). The Company's obligations under the Subordinated Debt
Securities and CCI's obligations under the Debt Guarantees will be subordinate
and junior in right of payment to certain other indebtedness of the Company and
CCI, respectively, as may be described in an accompanying Prospectus Supplement
(the "Prospectus Supplement") and in an aggregate amount to be set forth as of
the most recent practicable date in such Prospectus Supplement.
Countrywide Capital I and Countrywide Capital II (each, a "Countrywide Capital
Trust" or a "Trust"), each a statutory business trust formed under the laws of
the State of Delaware, may offer, from time to time, capital securities
representing undivided beneficial interests in its assets ("Capital
Securities"). The payment of periodic cash distributions ("distributions") with
respect to Capital Securities of each of the Countrywide Capital Trusts out of
moneys held by such Countrywide Capital Trust, and payment on liquidation,
redemption or otherwise with respect to such Capital Securities,
(continued on following page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is , 1996.
<PAGE>
(continued from previous page)
will be guaranteed by CCI (each a "Capital Securities Guarantee"). See
"Description of the Capital Securities Guarantees" below. CCI's obligations
under the Capital Securities Guarantees are subordinate and junior in right of
payment to all other liabilities of CCI. Subordinated Debt Securities may be
issued and sold from time to time in one or more series to a Countrywide
Capital Trust, or a trustee of such Countrywide Capital Trust, in connection
with the investment of the proceeds from the offering of Capital Securities
and Common Securities (as defined herein, together the "Trust Securities") of
such Countrywide Capital Trust. The Subordinated Debt Securities purchased by
a Countrywide Capital Trust may be subsequently distributed pro rata to
holders of Capital Securities and Common Securities in connection with the
dissolution of such Countrywide Capital Trust upon the occurrence of certain
events as may be described in an accompanying Prospectus Supplement. The
Subordinated Debt Securities, the related Debt Guarantees and the Capital
Securities and the related Capital Securities Guarantees are sometimes
collectively referred to hereafter as the "Offered Securities."
Specific terms of the Subordinated Debt Securities of any series and the
Capital Securities of any Countrywide Capital Trust, the terms of which will
mirror the terms of the Subordinated Debt Securities held by such Countrywide
Capital Trust, in respect of which this prospectus (the "Prospectus") is being
delivered, will be set forth in a Prospectus Supplement with respect to such
securities, which will describe, without limitation, and if and where
applicable, the following: (i) in the case of Subordinated Debt Securities,
the specific designation, aggregate principal amount, denomination, maturity,
premium, if any, any exchange, conversion, redemption or sinking fund
provisions, if any, interest rate (which may be fixed or variable), if any,
the time and method of calculating interest payments, if any, dates on which
premium, if any, and interest, if any, will be payable, the right of the
Company, if any, to defer payment of interest on the Subordinated Debt
Securities and the maximum length of such deferral periods, the initial public
offering price, subordination terms, any listing on a securities exchange and
other specific terms of the offering and (ii) in the case of Capital
Securities, the designation, number of securities, liquidation preference per
security, initial public offering price, any listing on a securities exchange,
distribution rate (or method of calculation thereof), dates on which
distributions shall be payable and dates from which distributions shall
accrue, any voting rights, terms for any conversion or exchange into other
securities, any redemption, exchange or sinking fund provisions, any other
rights, preferences, privileges, limitations or restrictions relating to the
Capital Securities and the terms upon which the proceeds of the sale of the
Capital Securities shall be used to purchase a specific series of Subordinated
Debt Securities of the Company.
The Offered Securities may be offered in amounts, at prices and on terms to be
determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed
$300,000,000. The Prospectus Supplement relating to any series of Offered
Securities will contain information concerning certain United States federal
income tax considerations, if applicable, to the Offered Securities.
The Company and/or each of the Countrywide Capital Trusts intends to sell the
Offered Securities through underwriters. See "Plan of Distribution" below. The
names of any underwriters involved in the sale of the Offered Securities and
any applicable commissions and discounts will be set forth in any related
Prospectus Supplement.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
2
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OR ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, CCI, ANY COUNTRYWIDE CAPITAL TRUST OR ANY UNDERWRITER. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY, CCI
OR ANY COUNTRYWIDE CAPITAL TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS OR ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company, CCI and the Countrywide Capital Trusts with
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Offered
Securities. This Prospectus does not contain all of the information set forth
in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC, although it does include
a summary of the material terms of the Indenture (as defined herein) and the
Declarations (as defined herein). Reference is made to such Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company, CCI, the Countrywide Capital Trusts and the Offered
Securities. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or otherwise filed
with the SEC or incorporated by reference herein are not necessarily complete,
and, in each instance, reference is made to the copy of such document so filed
for a more complete description of the matter involved. Each such statement is
qualified in its entirety by such reference.
CCI is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith
files reports, proxy statements and other information with the SEC. Reports,
proxy statements and other information concerning CCI can be inspected and
copied at prescribed rates at the SEC's Public Reference Room, Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, as well as
the following Regional Offices of the SEC: 7 World Trade Center, Suite 1300,
New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. The SEC also maintains a Web site
(http://www.sec.gov) from which such reports, proxy statements and other
information concerning CCI may be obtained. Such reports, proxy statements and
other information may also be inspected at the offices of the following stock
exchanges on which certain of CCI's securities are listed: the New York Stock
Exchange, 20 Broad Street, New York, New York 10005 and the Pacific Stock
Exchange, 115 Sansome Street, San Francisco, California 94104.
No separate financial statements of any of the Countrywide Capital Trusts
have been included herein. CCI does not consider that such financial
statements would be material to holders of the Capital Securities because (i)
all of the voting securities of each of the Countrywide Capital Trusts will be
owned by CCI, a reporting company under the Exchange Act, (ii) each of the
Countrywide Capital
3
<PAGE>
Trusts has no independent operations but exists for the sole purpose of
issuing securities representing undivided beneficial interests in the assets
of such Countrywide Capital Trust and investing the proceeds of the sale
thereof in Subordinated Debt Securities guaranteed by CCI, and (iii) the
Company's obligations described herein and in any accompanying Prospectus
Supplement to provide certain indemnities in respect of and be responsible for
certain costs, expenses, debts and liabilities of each of Countrywide Capital
I and II under the Indenture and any supplemental indenture thereto and
pursuant to the Declaration of each Trust, the guarantee issued by CCI with
respect to the Capital Securities issued by that Trust, the Subordinated Debt
Securities purchased by that Trust, the guarantee issued by CCI with respect
to the Subordinated Debt Securities purchased by that Trust and the related
Indenture, taken together, constitute a full and unconditional guarantee on a
subordinated basis by CCI of payments due on the Capital Securities. See
"Description of the Subordinated Debt Securities and the Debt Guarantees" and
"Description of the Capital Securities Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated by reference in this Prospectus:
(a) CCI's Annual Report on Form 10-K for the fiscal year ended February
29, 1996;
(b) CCI's Quarterly Report on Form 10-Q for the quarter ended May 31,
1996; and
(c) CCI's Quarterly Report on Form 10-Q for the quarter ended August 31,
1996.
All documents filed by CCI pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, subsequent to the date of this Prospectus or any Prospectus
Supplement and prior to the termination of the offering of the Offered
Securities shall be deemed to be incorporated by reference in this Prospectus
and such Prospectus Supplement and to be a part hereof and thereof from the
date of filing of such documents. Any statement contained in this Prospectus
or any Prospectus Supplement or in a document incorporated or deemed to be
incorporated by reference herein or in any Prospectus Supplement shall be
deemed to be modified or superseded for purposes of this Prospectus and such
Prospectus Supplement to the extent that a statement contained herein or
therein (or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein or therein) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus or any
Prospectus Supplement.
CCI will provide without charge to each person to whom a copy of this
Prospectus or any Prospectus Supplement has been delivered, upon the written
or oral request of such person, a copy of any or all of the documents referred
to above which have been or may be incorporated by reference herein or therein
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should
be directed to Countrywide Credit Industries, Inc., 155 North Lake Avenue,
P.O. Box 7137, Pasadena, California 91109-7137 (telephone (818) 304-8400),
Attention: Investor Relations.
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<PAGE>
THE COMPANY
Countrywide Home Loans, Inc. (formerly Countrywide Funding Corporation), the
principal subsidiary of Countrywide Credit Industries, Inc., is engaged
primarily in the mortgage banking business and as such originates, purchases,
sells and services mortgage loans. The Company's mortgage loans are
principally prime credit quality first-lien mortgage loans secured by single-
(one to four) family residences. The Company also offers home equity loans
both in conjunction with newly produced first-lien mortgages and as a separate
product and sub-prime credit quality first-lien single-family mortgage loans.
The principal sources of revenue of the Company are: (i) loan origination
fees; (ii) gains from the sale of loans, if any; (iii) interest earned on
mortgage loans during the period that they are held by the Company pending
sale, net of interest paid on funds borrowed to finance such mortgage loans;
(iv) loan servicing fees; and (v) interest benefit derived from the custodial
balances associated with the Company's servicing portfolio.
The Company produces mortgage loans through three separate divisions. The
Consumer Markets Division originates loans using direct contact with consumers
through its nationwide network of retail branch offices and its telemarketing
systems. Through its Wholesale Division, the Company originates loans through
and purchases loans from mortgage loan brokers. Through the Correspondent
Division, the Company purchases loans primarily from other mortgage bankers,
commercial banks, savings and loan associations, credit unions and other
financial intermediaries. The Company customarily sells all loans that it
originates or purchases. Substantially all loans sold by the Company are sold
without recourse, subject, in the case of loan guaranties by the Veterans
Administration, to the limits of such guaranties.
The Company services on a non-recourse basis substantially all of the
mortgage loans that it originates or purchases. In addition, the Company
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,
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. The Company
receives fee income for servicing mortgage loans ranging generally from 1/4%
to 1/2% per annum on the declining principal balances of the loans. The
Company has sold, and may sell in the future, a portion of its portfolio of
loan servicing rights to other mortgage servicers.
The Company's principal financing needs are the financing of loan funding
activities and the investment in servicing rights. To meet these needs, the
Company currently utilizes commercial paper supported by its revolving credit
facility, medium-term notes, mortgage-backed securities, repurchase
agreements, subordinated notes, unsecured notes, pre-sale funding facilities
and cash flows from operations. In the past, the Company has utilized whole
loan repurchase agreements, servicing-secured bank facilities, direct
borrowings from its revolving credit facility, privately-placed financings and
contributions from CCI of the proceeds of public offerings of preferred and
common stock.
The Company is a New York corporation, originally incorporated in 1969. Its
principal executive offices are located at 155 North Lake Avenue, P. O. Box
7137, Pasadena, California 91109-7137, and its telephone number is (818) 304-
8400.
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<PAGE>
THE TRUSTS
Each of Countrywide Capital I and Countrywide Capital II is a statutory
business trust formed under Delaware law pursuant to (i) a separate
declaration of trust executed by CCI, as sponsor for such Trust (the
"Sponsor"), and the Countrywide Capital Trustees (as defined herein) for such
Trust and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on October 15, 1996. Each such declaration will be amended
and restated in its entirety (each as so amended and restated, a
"Declaration"). Each Countrywide Capital Trust exists for the exclusive
purposes of (i) issuing Capital Securities and common securities representing
undivided beneficial interests in the assets of such Trust (the "Common
Securities" and, together with the Capital Securities, the "Trust
Securities"), (ii) investing the gross proceeds of the Trust Securities issued
by such Trust in the Subordinated Debt Securities, and (iii) engaging in only
those other activities necessary or incidental thereto.
The Countrywide Capital Trusts may issue Capital Securities concurrently or
at different times. To the extent that a Countrywide Capital Trust issues
Capital Securities, it will issue Capital Securities mirroring the terms of
only one issue of Subordinated Debt Securities. Since any Countrywide Capital
Trust will purchase only a single issue of Subordinated Debt Securities,
Countrywide Capital I and Countrywide Capital II have been organized in order
to allow the issuance of up to two issues of Subordinated Debt Securities and
related Capital Securities under this Prospectus. All of the Common Securities
of each Trust will be directly or indirectly owned by CCI. The Common
Securities of each Trust will rank pari passu, and payments will be made
thereon pro rata, with the Capital Securities of such Trust except that upon
an event of default under the Declaration, the rights of the holders of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Capital Securities. CCI will acquire Common Securities in
an aggregate liquidation amount equal to 3% of the total capital of each
Countrywide Capital Trust. Each Countrywide Capital Trust has a term of
approximately 55 years, but may earlier terminate as provided in the relevant
Declaration. Each Countrywide Capital Trust's business and affairs will be
conducted by the trustees (the "Countrywide Capital Trustees") appointed by
CCI, as the holder of all the Common Securities. The holder of the Common
Securities of a Countrywide Capital Trust will be entitled to appoint, remove
or replace any of, or increase or reduce the number of, the Countrywide
Capital Trustees of such Countrywide Capital Trust. The duties and obligations
of the Countrywide Capital Trustees shall be governed by the Declaration of
such Countrywide Capital Trust. A majority of the Countrywide Capital Trustees
(the "Regular Trustees") of each Countrywide Capital Trust will be persons who
are employees or officers of or affiliated with the Company or CCI. One
Countrywide Capital Trustee of each Countrywide Capital Trust will be a
financial institution which will be unaffiliated with the Company and CCI and
which shall be eligible and act as property trustee and as indenture trustee
for purposes of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), pursuant to the terms set forth in a Prospectus Supplement
(the "Institutional Trustee"). In addition, unless the Institutional Trustee
maintains a principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law, one Countrywide Capital
Trustee of each Countrywide Capital Trust will have its principal place of
business or reside in the State of Delaware (the "Delaware Trustee"). The
Company will pay all fees and expenses related to the Countrywide Capital
Trusts and the offering and sale of Trust Securities, the payment of which
will be guaranteed by CCI. The office of the Delaware Trustee for each
Countrywide Capital Trust in the State of Delaware is The Bank of New York
(Delaware), White Clay Center, Route 273, Newark, Delaware 19711. The
principal place of business of each Countrywide Capital Trust shall be c/o
Countrywide Credit Industries, Inc., 155 North Lake Avenue, P.O. Box 7137,
Pasadena, California 91109-7137.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
Countrywide Credit Industries, Inc. is a holding company which through its
principal subsidiary, Countrywide Home Loans, Inc., is engaged primarily in
the mortgage banking business. CCI, through
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<PAGE>
its other wholly-owned subsidiaries, offers products and services
complementary to its mortgage banking business. A subsidiary of CCI trades
with other broker-dealers and institutional investors mortgage-backed
securities and other mortgage-related assets. CCI has a subsidiary which acts
as an agent in the sale of homeowners, fire, flood, earthquake, mortgage life
and disability insurance to the Company's mortgagors in connection with the
Company's mortgage banking operations. Another subsidiary of CCI earns fee
income by brokering servicing contracts owned by other mortgage lenders and
loan servicers. CCI also has a subsidiary that acts as a provider of various
title insurance and escrow services in the capacity of an agent rather than an
underwriter.
In addition, Countrywide Asset Management Corp. ("CAMC"), a subsidiary of
CCI, receives fee income for managing the operations of CWM Mortgage Holdings,
Inc. ("CWM"), a real estate investment trust whose shares are traded on The
New York Stock Exchange. CWM conducts real estate lending activities and has
an affiliate engaged in the operation of a jumbo and non-conforming mortgage
loan conduit. On November 4, 1996, CCI and CWM announced that they had reached
a preliminary understanding for the acquisition by CWM of the operations and
employees of CAMC. The proposed transaction is to be structured as a merger of
CAMC with and into CWM, with CCI to receive for its interest in CAMC
approximately 3.6 million newly issued common shares of CWM (approximately
$75.0 million based on certain recent closing prices of CWM's common stock),
subject to adjustment based on the market price of CWM common stock prior to
closing. As of the date of this Prospectus, a definitive agreement with
respect to the proposed transaction has not been executed, and there can be no
assurance that the proposed transaction will be consummated.
CCI is a Delaware corporation, and was originally incorporated in New York
under the name of OLM Credit Industries, Inc. in 1969. Its principal executive
offices are located at 155 North Lake Avenue, P. O. Box 7137, Pasadena,
California 91109-7137, and its telephone number is (818) 304-8400.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings of CCI to fixed charges
for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED FEBRUARY 28 (29)
SIX MONTHS ENDED -----------------------------
AUGUST 31, 1996 1996 1995 1994 1993 1992
---------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges................... 2.29 2.13 1.69 2.32 2.76 2.38
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income before federal income taxes, plus fixed charges. Fixed
charges include interest expense on debt and the portion of rental expenses
which is considered to be representative of the interest factor (one-third of
operating leases).
USE OF PROCEEDS
Each Countrywide Capital Trust will use gross proceeds received from the
sale of the Trust Securities to purchase Subordinated Debt Securities from the
Company. Except as may be otherwise stated in any Prospectus Supplement, the
Company intends to use the net proceeds (after payment of the expenses of the
offering and underwriters' compensation) from the sale of the Subordinated
Debt Securities for general corporate purposes, principally for investment in
servicing rights. Initially, the net proceeds will be used to repay short term
commercial paper with interest rates ranging from approximately 5 1/4% to 5
1/2% per annum.
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<PAGE>
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES AND THE DEBT GUARANTEES
Subordinated Debt Securities may be issued from time to time in one or more
series under an Indenture (the "Indenture") among the Company, CCI and The
Bank of New York, as Trustee (the "Debt Trustee"). The terms of the
Subordinated Debt Securities will include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act. The
following summary of the material terms of the Indenture does not purport to
be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the Indenture, a form of which is
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part, and the Trust Indenture Act. Whenever particular provisions or
defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section and Article
references used herein are references to provisions of the Indenture unless
otherwise noted.
GENERAL
The Subordinated Debt Securities will be unsecured, subordinated obligations
of the Company. The Indenture does not limit the aggregate principal amount of
Subordinated Debt Securities which may be issued thereunder and provides that
the Subordinated Debt Securities may be issued from time to time in one or
more series. The Subordinated Debt Securities are issuable in one or more
series pursuant to an indenture supplemental to the Indenture or a resolution
of the Company's Board of Directors or a special committee appointed thereby
(each, a "Supplemental Indenture"). (Section 2.03)
In the event Subordinated Debt Securities are issued to a Countrywide
Capital Trust or a trustee of such Trust in connection with the issuance of
Trust Securities by such Countrywide Capital Trust, such Subordinated Debt
Securities subsequently may be distributed pro rata to the holders of such
Trust Securities in connection with the dissolution of such Countrywide
Capital Trust upon the occurrence of certain events described in the
Prospectus Supplement relating to such Trust Securities. Only one series of
Subordinated Debt Securities will be issued to a Countrywide Capital Trust or
a trustee of such Trust in connection with the issuance of Trust Securities by
such Countrywide Capital Trust.
Reference is made to the Prospectus Supplement relating to the particular
Subordinated Debt Securities being offered thereby for the following terms:
(1) the designation of such Subordinated Debt Securities; (2) the aggregate
principal amount of such Subordinated Debt Securities; (3) the percentage of
their principal amount at which such Subordinated Debt Securities will be
issued; (4) the date or dates on which such Subordinated Debt Securities will
mature and the right, if any, to extend such date or dates; (5) the rate or
rates, if any, per annum, at which such Subordinated Debt Securities will bear
interest, or the method of determination of such rate or rates; (6) the date
or dates from which such interest shall accrue, the interest payment dates on
which such interest will be payable or the manner of determination of such
interest payment dates and the record dates for the determination of holders
to whom interest is payable on any such interest payment dates; (7) the right,
if any, to extend the interest payment periods and the duration of such
extension; (8) provisions for a sinking, purchase or other analogous fund, if
any; (9) the period or periods, if any, within which, the price or prices at
which, and the terms and conditions upon which such Subordinated Debt
Securities may be redeemed, in whole or in part, at the option of the Company
or the holder; (10) the form of such Subordinated Debt Securities; and (11)
any other specific terms of the Subordinated Debt Securities. Principal,
premium, if any, and interest, if any, will be payable, and the Subordinated
Debt Securities offered thereby will be transferable, at the corporate trust
office of the Debt Trustee in New York, New York, provided that payment of
interest, if any, may be made at the option of the Company by check mailed to
the address of the person entitled thereto as it appears in the Security
Register or by wire transfer to an account appropriately designated by the
holder entitled thereto. (Sections 3.01 and 3.02)
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<PAGE>
If a Prospectus Supplement specifies that a series of Subordinated Debt
Securities is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Subordinated Debt Securities will be issued and the coin or
currency in which the principal, premium, if any, and interest, if any, on
such Subordinated Debt Securities will be payable, which may be United States
dollars based upon the exchange rate for such other currency or currency unit
existing on or about the time a payment is due.
There are no terms in the Indenture or the Debt Guarantee that limit the
ability of CCI or its subsidiaries (including the Company) to incur additional
indebtedness, including indebtedness that may rank senior to, or pari passu
with, the Subordinated Debt Securities. The Indenture contains no covenants or
other provisions to afford protection to holders of the Subordinated Debt
Securities in the event of a highly leveraged transaction or a change in
control of the Company or CCI, except to the limited extent described under
"--Limitation on Mergers and Sales of Assets" below.
DEBT GUARANTEES
The Indenture provides that CCI will fully and unconditionally guarantee the
due and punctual payment of the principal, premium, if any, and interest on
the Subordinated Debt Securities when and as the same shall become due and
payable, whether at maturity, upon redemption or otherwise. (Section 2.13)
Since CCI is a holding company, the right of CCI and, hence, the right of
creditors of CCI (including the holders of the Subordinated Debt Securities)
to participate in any distribution of the assets of any subsidiary of CCI,
whether upon liquidation, reorganization, or otherwise, is subject to prior
claims of creditors of such subsidiary, except to the extent that claims of
CCI itself as a creditor of such subsidiary may be recognized.
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Subordinated Debt Securities will be issued in fully registered form without
coupons and in denominations of $1,000 and multiples of $1,000. No service
charge will be made for any transfer or exchange of the Subordinated Debt
Securities, but the Company or the Debt Trustee may require payment of a sum
sufficient to cover any tax or other government charge payable in connection
therewith. Where Subordinated Debt Securities of any series are issued in
bearer form, the special restrictions and considerations, including special
offering restrictions and special United States federal income tax
considerations, applicable to any such Subordinated Debt Securities and to
payment on and transfer and exchange of such Subordinated Debt Securities will
be described in the applicable Prospectus Supplement. Bearer Subordinated Debt
Securities will be transferable by delivery.
Unless otherwise provided in the applicable Prospectus Supplement, principal
and premium, if any, or interest, if any, will be payable and the Subordinated
Debt Securities may be surrendered for payment or transferred at the offices
of the Debt Trustee as paying and authenticating agent, provided that payment
of interest on registered securities may be made at the option of the Company
by check mailed to the address of the person entitled thereto as it appears in
the Security Register or by wire transfer to an account approximately
designated by the holder entitled thereto. Payment of Subordinated Debt
Securities in bearer form will be made at such paying agencies outside of the
United States as the Company may appoint.
BOOK-ENTRY SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities of a series may be issued in whole or in
part in the form of one or more global securities (each, a "Global Security")
that will be deposited with, or on behalf of, a depositary (the "Global
Depositary"), or its nominee, identified in the Prospectus Supplement relating
to such series. In such a case, one or more Global Securities will be issued
in a denomination or
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<PAGE>
aggregate denomination equal to the portion of the aggregate principal amount
of outstanding Subordinated Debt Securities of the series to be represented by
such Global Security or Securities. Unless and until it is exchanged in whole
or in part for Subordinated Debt Securities in definitive registered form, a
Global Security may not be registered for transfer or exchange except as a
whole by the Global Depositary to a nominee for such Global Depositary and
except in the circumstances described in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Subordinated Debt Securities to be represented by a Global
Security and a description of the Global Depositary will be provided in the
applicable Prospectus Supplement.
SUBORDINATION
The Subordinated Debt Securities will be subordinated and junior in right of
payment to certain other indebtedness of the Company and the Debt Guarantees
will be subordinated and junior in right of payment to certain other
indebtedness of CCI to the extent set forth in the applicable Prospectus
Supplement.
CERTAIN COVENANTS
If Subordinated Debt Securities are issued to a Countrywide Capital Trust or
a trustee of such Trust in connection with the issuance of Trust Securities by
such Countrywide Capital Trust and (i) there shall have occurred and be
continuing any event that would constitute an Event of Default (as defined
herein), (ii) CCI shall be in default with respect to its payment of any
obligations under the related Capital Securities Guarantee or Common
Securities Guarantee (as defined in the Indenture), or (iii) the Company shall
have given notice of its election to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Company and CCI shall not declare or pay any dividend
on, make a distribution with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock or rights to
acquire such capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in
connection with the satisfaction by CCI or the Company, respectively, of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of CCI's or the Company's capital stock or rights to acquire
such capital stock or the exchange or conversion of one class or series of
CCI's or the Company's capital stock or rights to acquire such capital stock
for another class or series of CCI's or the Company's capital stock or rights
to acquire such capital stock, (iii) the purchase of fractional interests in
shares of CCI's or the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, or (iv) dividends and distributions made on CCI's or the Company's
capital stock or rights to acquire such capital stock with CCI's or the
Company's capital stock or rights to acquire such capital stock) or make any
guarantee payments with respect to any of the foregoing and (b) the Company
and CCI shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by the Company or
CCI that rank pari passu with or junior to such Subordinated Debt Securities.
(Section 3.07)
In the event Subordinated Debt Securities are issued to a Countrywide
Capital Trust or a trustee of such Trust in connection with the issuance of
Trust Securities by such Countrywide Capital Trust, for so long as such Trust
Securities remain outstanding, CCI will covenant (i) to maintain 100%
ownership of the Common Securities of such Countrywide Capital Trust;
provided, however, that any permitted successor of CCI under the Indenture may
succeed to CCI's ownership of such Common Securities, (ii) to use its
reasonable efforts to cause such Countrywide Capital Trust (a) to remain a
statutory business trust, except in connection with the distribution of
Subordinated Debt Securities to the holders of Trust Securities in liquidation
of such Countrywide Capital Trust, the redemption of all of
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<PAGE>
the Trust Securities of such Countrywide Capital Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
Countrywide Capital Trust, and (b) to otherwise continue not to be classified
as a grantor trust for United States federal income tax purposes and (iii) to
use its reasonable efforts to cause each holder of Trust Securities to be
treated as owning an undivided beneficial interest in the Subordinated Debt
Securities. (Section 3.08)
LIMITATION ON MERGERS AND SALES OF ASSETS
Nothing contained in the Indenture or in the Subordinated Debt Securities of
any series shall prevent any consolidation or merger of the Company or CCI
with or into any other corporation (whether or not affiliated with the Company
or CCI, as the case may be) or successive consolidations or mergers in which
the Company or CCI, as the case may be, or its successor or successors shall
be a party, or shall prevent any sale, conveyance, transfer or other
disposition of the property of the Company or CCI, as the case may be, or its
successor or successors as an entirety, or substantially as an entirety, to
any other corporation (whether or not affiliated with the Company or CCI, as
the case may be, or its successor or successors) authorized to acquire and
operate the same; provided, however, the Company or CCI, as the case may be,
shall, upon any such consolidation, merger, sale, conveyance, transfer or
other disposition, cause the obligations of the Company under such series of
Subordinated Debt Securities or the obligations of CCI under the Debt
Guarantee, as the case may be, and under the Indenture, to be expressly
assumed, by supplemental indenture satisfactory in form to the Debt Trustee
and executed and delivered to the Debt Trustee, by the successor entity formed
by such consolidation or into which the Company or CCI, as the case may be,
shall have been merged, or which shall have acquired such property. Upon
execution and delivery of such supplemental indenture to the Debt Trustee,
such successor entity will be substituted under the Indenture, such series of
Subordinated Debt Securities and each Debt Guarantee, as the case may be, and
thereupon the Company and CCI, as the case may be, will be relieved of any
further liability or obligation thereunder. (Sections 10.01 and 10.02)
EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides than any one or more of the following described
events which has occurred and is continuing with respect to any series of
Subordinated Debt Securities constitutes an "Event of Default" with respect to
such series of Subordinated Debt Securities:
(a) default for 30 days in payment of any interest on the Subordinated
Debt Securities of that series, including any Additional Interest in
respect thereof, when due; provided, however, that a valid extension of the
interest payment period by the Company shall not constitute a default in
the payment of interest for this purpose; or
(b) default in payment of principal and premium, if any, on the
Subordinated Debt Securities of that series when due either at maturity,
upon redemption, by declaration or otherwise; provided, however, that a
valid extension of the maturity of such Subordinated Debt Securities shall
not constitute a default for this purpose; or
(c) default by the Company or CCI in the performance of any other of the
covenants or agreements in the Indenture which shall not have been remedied
for a period of 90 days after notice; or
(d) certain events of bankruptcy, insolvency or reorganization of the
Company or CCI; or
(e) in the event Subordinated Debt Securities of that series are issued
to a Countrywide Capital Trust or a trustee of such trust in connection
with the issuance of Trust Securities by such Countrywide Capital Trust,
the voluntary or involuntary dissolution, winding-up or termination of such
Countrywide Capital Trust, except in connection with the distribution of
Subordinated Debt Securities of that series to the holders of Trust
Securities in liquidation of such Countrywide Capital Trust, the redemption
of all of the Trust Securities of such Countrywide Capital Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of such Countrywide Capital Trust. (Section 5.01)
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<PAGE>
The Indenture provides that the Debt Trustee may, under certain
circumstances, withhold from the holders notice of default with respect to any
series of Subordinated Debt Securities (except for any default in payment of
principal of or interest or premium on the Subordinated Debt Securities of
such series) if the Trustee considers it in the interest of such holders to do
so. (Section 5.08)
The Indenture provides that if an Event of Default on any series of
Subordinated Debt Securities shall have occurred and be continuing, either the
Debt Trustee or the holders of not less than 25% in aggregate principal amount
of the Subordinated Debt Securities of such series then outstanding may
declare the principal of and accrued interest on all Subordinated Debt
Securities of such series to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be waived
(except defaults in payment of principal of or interest or premium on the
Subordinated Debt Securities, which must be cured or paid in full) by the
holders of a majority in aggregate principal amount of the Subordinated Debt
Securities of such series (or of all series, as the case may be) then
outstanding. (Section 5.01)
No holder of any Subordinated Debt Security of any series shall have any
right to institute any suit, action or proceeding for any remedy under the
Indenture, unless such holder previously shall have given to the Debt Trustee
written notice of a continuing Event of Default with respect to the
Subordinated Debt Securities of that series and unless the holders of not less
than 25% in aggregate principal amount of the Subordinated Debt Securities of
that series then outstanding shall have given the Debt Trustee a written
request to institute such action, suit or proceeding and shall have offered to
the Debt Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred thereby, and the Debt Trustee
for 60 days after its receipt of such notice, request and offer of indemnity
shall have failed to institute any such action, suit or proceeding; provided
that no holder of Subordinated Debt Securities of any series shall have any
right to prejudice the rights of any other holder of Subordinated Debt
Securities, obtain priority or preference over any other such holder or
enforce any right under this Indenture except as provided in the Indenture and
for the equal, ratable and common benefit of all holders of Subordinated Debt
Securities of the applicable series. Notwithstanding the foregoing, the right
of any holder of any Subordinated Debt Security to receive payment of the
principal of, premium, if any, and interest, if any, on such Subordinated Debt
Security when due, or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the consent of such holder.
(Section 5.04)
The holders of a majority in aggregate principal amount of the Subordinated
Debt Securities of any and all series affected (voting as one class) and then
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to, or exercising any trust
or power conferred on, the Debt Trustee under the Indenture; provided,
however, that, except under certain circumstances, the Debt Trustee may
decline to follow any such direction if the Debt Trustee determines that the
action so directed would be unjustly prejudicial to holders not taking part in
such direction or unlawful or would involve the Debt Trustee in personal
liability. (Section 5.07) The Indenture requires the annual filing by the
Company with the Debt Trustee of a certificate as to the absence of certain
defaults under the Indenture. (Section 3.05)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company, CCI and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debt Securities of all series affected
(voting as one class) by such modification at the time outstanding, to modify
the Indenture or any supplemental indenture or the rights of the holders of
the Subordinated Debt Securities; provided, however, that no such modification
shall (i) extend the fixed maturity of any Subordinated Debt Security, or
reduce the principal amount thereof (including in the case of a discounted
Subordinated Debt Security the amount payable thereon in the event of
acceleration or the amount provable in bankruptcy) or any redemption premium
thereon, or reduce the rate or extend the
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time of payment of interest thereon, or make the principal of, or interest or
premium on, the Subordinated Debt Securities payable in any coin or currency
other than that provided in the Subordinated Debt Securities, or impair or
affect the right of any holder of Subordinated Debt Securities to institute
suit for the payment thereof or the right of prepayment, if any, at the option
of the holder, without the consent of the holder of each Subordinated Debt
Security so affected, or (ii) reduce the aforesaid percentage of Subordinated
Debt Securities the consent of the holders of which is required for any such
modification, without, in each such case, the consent of the holders of each
Subordinated Debt Security affected. (Section 9.02)
The Company, CCI and the Debt Trustee may enter into supplemental
indentures, without the consent of any holder of the Subordinated Debt
Securities: (a) to evidence the succession of another corporation to the
Company or CCI and the assumption by the successor corporation of the
covenants, agreements and obligations of the Company or CCI, as the case may
be, pursuant to the Indenture; (b) to add to the covenants of the Company or
CCI such further covenants, restrictions or conditions for the protection of
the holders of all or any series of Subordinated Debt Securities and to make
the occurrence, or the occurrence and continuance (including any or no grace
periods), of a default in any of such additional covenants, restrictions or
conditions a default or an Event of Default permitting the enforcement of
remedies provided in the Indenture; (c) to provide for the issuance of
Subordinated Debt Securities in coupon form (including Subordinated Debt
Securities registrable as to principal only) and to provide for
exchangeability of such Subordinated Debt Securities and to make all
appropriate changes for such purpose; (d) to cure any ambiguity or to correct
or supplement any provision contained in the Indenture or in any supplemental
indenture which may be defective or inconsistent with any other provision
contained therein or in any supplemental indenture, or to make such other
provisions in regard to matters or questions arising under the Indenture;
provided that any such action shall not adversely affect the interests of the
holders of the Subordinated Debt Securities; (e) to add on, delete from, or
revise the terms of Subordinated Debt Securities of any series as permitted by
the Indenture, including, without limitation, any terms relating to the
issuance, exchange, registration or transfer of Subordinated Debt Securities
issued in whole or in part in the form of one or more Global Securities and
the payment of any principal thereof, or interest or premium, if any, thereon;
(f) to evidence and provide for the acceptance of appointment under the
Indenture by a successor Debt Trustee with respect to the Subordinated Debt
Securities of one or more series and to add to or change any of the provisions
of the Indenture as shall be necessary to provide for or facilitate the
administration of the trusts under the Indenture by more than one Debt
Trustee, pursuant to the Indenture; (g) to make any change that does not
adversely affect the rights of any holder of any Subordinated Debt Security in
any material respect; or (h) to provide for the issuance, and establish the
form and terms and conditions, of the Subordinated Debt Securities and the
Debt Guarantees of any series, to establish the form of any certifications
required to be furnished pursuant to the terms of the Indenture or any series
of Subordinated Debt Securities or to add to the rights of the holders of any
series of Subordinated Debt Securities. (Section 9.01)
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company, at the Company's option: (a) will
be discharged from any and all obligations in respect of the Subordinated Debt
Securities of a series (except for certain obligations to register the
transfer or exchange of Subordinated Debt Securities, replace stolen, lost or
mutilated Subordinated Debt Securities, maintain paying agencies and hold
moneys for payment in trust) or (b) need not comply with certain restrictive
covenants of the Indenture (including those described under "--Certain
Covenants" above), in each case if the Company deposits, in trust with the
Debt Trustee or the Defeasance Agent (as defined in the Indenture), money or
U.S. Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money in an
amount sufficient to pay all the principal (including any mandatory sinking
fund payments) of, and interest and premium, if any, on, the Subordinated Debt
Securities of
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such series on the dates such payments are due in accordance with the terms of
such Subordinated Debt Securities. To exercise any such option, the Company is
required to deliver to the Debt Trustee and the Defeasance Agent, if any, an
opinion of counsel to the effect that (i) the deposit and related defeasance
would not cause the holders of the Subordinated Debt Securities of such series
to recognize income, gain or loss for federal income tax purposes and, in the
case of a discharge pursuant to clause (a), such opinion shall be accompanied
by a private letter ruling to such effect received from the United States
Internal Revenue Service or a revenue ruling pertaining to a comparable form
of transaction to such effect published by the United States Internal Revenue
Service, and (ii) if listed on any national securities exchange, such
Subordinated Debt Securities would not be delisted from such exchange as a
result of the exercise of such option. (Sections 11.01 and 11.05)
GOVERNING LAW
The Indenture, the Subordinated Debt Securities and the Debt Guarantees will
be governed by, and construed in accordance with, the laws of the State of New
York, without regard to conflict of laws principles. (Section 13.05)
THE DEBT TRUSTEE
The Company and CCI may have normal banking relationships with the Debt
Trustee in the ordinary course of business.
DESCRIPTION OF THE CAPITAL SECURITIES
Each Countrywide Capital Trust may issue, from time to time, only one series
of Capital Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Countrywide Capital Trust will
authorize the Regular Trustees of such Countrywide Capital Trust to issue on
behalf of such Countrywide Capital Trust one series of Capital Securities. The
Declaration will be qualified as an indenture under the Trust Indenture Act.
The Capital Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration or made part of the Declaration by the Trust Indenture Act and
which will mirror the terms of the Subordinated Debt Securities held by such
Countrywide Capital Trust and described in the Prospectus Supplement relating
thereto. Reference is made to the Prospectus Supplement relating to the
Capital Securities of such Countrywide Capital Trust for specific terms,
including (i) the distinctive designation of such Capital Securities; (ii) the
number of Capital Securities issued by such Countrywide Capital Trust; (iii)
the annual distribution rate (or method of determining such rate) for Capital
Securities issued by such Countrywide Capital Trust and the date or dates upon
which such distributions shall be payable, subject, however, to the right, if
any, to extend the interest payment periods; (iv) whether distributions on
Capital Securities issued by such Countrywide Capital Trust shall be
cumulative, and, in the case of Capital Securities having such cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions on Capital Securities issued by such
Countrywide Capital Trust shall be cumulative; (v) the amount or amounts which
shall be paid out of the assets of such Countrywide Capital Trust to the
holders of Capital Securities of such Countrywide Capital Trust upon voluntary
or involuntary dissolution, winding-up or termination of such Countrywide
Capital Trust; (vi) the obligation, if any, of such Countrywide Capital Trust
to purchase or redeem Capital Securities issued by such Countrywide Capital
Trust and the price or prices at which, the period or periods within which,
and the terms and conditions upon which, Capital Securities issued by such
Countrywide Capital Trust shall be purchased or redeemed, in whole or in part,
pursuant to such obligation; (vii) the voting rights, if any, of Capital
Securities issued by such Countrywide Capital Trust in addition to those
required by law, including the number of votes per Capital Security and any
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requirement for the approval by the holders of Capital Securities, or of
Capital Securities issued by one or more Countrywide Capital Trusts, or of
both, as a condition to specified action or amendments to the Declaration of
such Countrywide Capital Trust; (viii) the terms and conditions, if any, upon
which the Subordinated Debt Securities may be distributed to holders of
Capital Securities; (ix) if applicable, any securities exchange upon which the
Capital Securities shall be listed; and (x) any other relevant rights,
preferences, privileges, limitations or restrictions of Capital Securities
issued by such Countrywide Capital Trust not inconsistent with the Declaration
of such Countrywide Capital Trust or with applicable law. All Capital
Securities offered hereby will be guaranteed by CCI as set forth below under
"Description of the Capital Securities Guarantees." Certain United States
federal income tax considerations applicable to any offering of Capital
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Capital Securities, each Countrywide
Capital Trust will issue one series of Common Securities. The Declaration of
each Countrywide Capital Trust will authorize the Regular Trustees of such
Trust to issue on behalf of such Countrywide Capital Trust one series of
Common Securities having such terms including distributions, redemption,
voting, liquidation rights or such restrictions as shall be set forth therein.
The terms of the Common Securities issued by a Countrywide Capital Trust will
be substantially identical to the terms of the Capital Securities issued by
such Trust and the Common Securities will rank pari passu, and payments will
be made thereon pro rata, with the Capital Securities except that, upon an
event of default under the Declaration, the rights of the holders of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Capital Securities. Except in certain limited
circumstances, the Common Securities will also carry the right to vote to
appoint, remove or replace any of the Countrywide Capital Trustees of a
Countrywide Capital Trust. All of the Common Securities of each Countrywide
Capital Trust will be owned by CCI.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If an Event of Default under the Declaration of a Countrywide Capital Trust
occurs and is continuing, then the holders of Capital Securities of such
Countrywide Capital Trust would, except as provided below, rely on the
enforcement by the Institutional Trustee of its rights as a holder of the
applicable series of Subordinated Debt Securities against the Company and CCI.
Subject to the requirement of the Institutional Trustee's obtaining a tax
opinion in certain circumstances, the holders of a majority in liquidation
amount of the Capital Securities of such Countrywide Capital Trust will have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Institutional Trustee, or exercising any trust
or power conferred upon the Institutional Trustee under the applicable
Declaration, including the right to direct the Institutional Trustee to
exercise the remedies available to it as a holder of the Subordinated Debt
Securities and the related Debt Guarantee. If the Institutional Trustee fails
to enforce its rights under the applicable series of Subordinated Debt
Securities or the related Debt Guarantee after the holders of a majority in
liquidation amount of the Capital Securities have so directed the
Institutional Trustee, a holder of record of such Capital Securities may
institute a legal proceeding directly against the Company or CCI to enforce
the Institutional Trustee's rights under the applicable series of Subordinated
Debt Securities or the related Debt Guarantee as the case may be, without
first instituting any legal proceeding against the Institutional Trustee or
any other person or entity, including, in the case of the Debt Guarantee,
against the Company. Notwithstanding the foregoing, if an Event of Default
under the applicable Declaration has occurred and is continuing and such event
is attributable to (i) the failure of the Company to pay interest or principal
on the applicable series of Subordinated Debt Securities on the respective
dates such interest or principal is payable (or in the case of redemption, on
the redemption date) or (ii) the failure of CCI to pay any obligation in
respect thereof under the related Debt Guarantee, then a holder of record of
Capital Securities of such Countrywide Capital Trust may directly institute a
proceeding for enforcement of payment, on or after the respective due dates
specified in such
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Subordinated Debt Securities, to such holder of the principal of or interest
on the applicable series of Subordinated Debt Securities having an aggregate
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder (a "Direct Action"). In connection with such Direct
Action, the Company and CCI will be subrogated to the rights of such holder of
Capital Securities under the applicable Declaration to the extent of any
payment made by the Company or CCI, as the case may be, to such holder of
Capital Securities in such Direct Action; provided, however, that no such
subrogation right may be exercised so long as an event of default under the
applicable Declaration has occurred and is continuing. The holders of Capital
Securities of a Countrywide Capital Trust will not be able to exercise
directly any other remedy available to the holders of the applicable series of
Subordinated Debt Securities or the related Debt Guarantee.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "Proposed Legislation") if such debt obligations have a maximum term
in excess of twenty years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. In addition, the Proposed Legislation
would deny issuers an interest deduction on any debt instruments with a
weighted average maturity greater than 40 years. On March 29, 1996, Senate
Finance Committee Chairman William V. Roth, Jr. and House Ways and Means
Committee Chairman Bill Archer issued a joint statement (the "Joint
Statement") indicating their intent that certain legislative proposals
initiated by the Clinton administration, including the Proposed Legislation,
that may be adopted by either of the tax-writing committees of Congress would
have an effective date that is no earlier than the date of "appropriate
Congressional action." Based upon the Joint Statement, it is expected that if
the Proposed Legislation were to be enacted, such Legislation would not apply
to a series of Subordinated Debt Securities if the series (i) was issued prior
to the date of "appropriate Congressional action" or (ii) had a maximum term
that did not exceed 20 years. The Company intends that any series of
Subordinated Debt Securities will either be issued prior to the date of
"appropriate Congressional action" or will have a maximum term that does not
exceed 20 years. Accordingly, the Company does not expect the Proposed
Legislation to apply to any series of Subordinated Debt Securities. There can
be no assurance, however, that the effective date guidance contained in the
Joint Statement will be incorporated into the Proposed Legislation, if
enacted, or that other legislation enacted after the date hereof will not
otherwise adversely affect the ability of the Company to deduct the interest
payable on any series of Subordinated Debt Securities. Accordingly, there can
be no assurance that a Tax Event will not occur.
DESCRIPTION OF THE CAPITAL SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Capital
Securities Guarantees which will be executed and delivered by CCI for the
benefit of the holders from time to time of Capital Securities. Each Capital
Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Bank of New York will act as indenture trustee under each
Capital Securities Guarantee for purposes of the Trust Indenture Act (the
"Capital Guarantee Trustee"). The terms of each Capital Securities Guarantee
will be those set forth in such Capital Securities Guarantee and those made
part of such Capital Securities Guarantee by the Trust Indenture Act. This
summary of the material terms of the Capital Securities Guarantees does not
purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the Capital Securities
Guarantee, a form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Trust Indenture Act.
Each Capital Securities Guarantee will be held by the Capital Guarantee
Trustee for the benefit of the holders of the Capital Securities of the
applicable Countrywide Capital Trust.
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GENERAL
Pursuant to each Capital Securities Guarantee, CCI will irrevocably and
unconditionally agree to pay in full, to the holders of the Capital Securities
issued by a Countrywide Capital Trust, the Guarantee Payments (as defined
herein) (except to the extent paid by such Countrywide Capital Trust), as and
when due, regardless of any defense, right of set-off or counterclaim which
such Countrywide Capital Trust may have or assert. The following payments with
respect to Capital Securities issued by a Countrywide Capital Trust, to the
extent not paid by such Countrywide Capital Trust (the "Guarantee Payments"),
will be subject to the Capital Securities Guarantee thereon (without
duplication): (i) any accrued and unpaid distributions which are required to
be paid on such Capital Securities, to the extent such Countrywide Capital
Trust shall have funds available therefor; (ii) the redemption price,
including all accrued and unpaid distributions to the date of redemption (the
"Redemption Price"), to the extent such Countrywide Capital Trust has funds
available therefor, with respect to any Capital Securities called for
redemption by such Countrywide Capital Trust and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of such Countrywide Capital
Trust (other than in connection with the distribution of Subordinated Debt
Securities to the holders of Capital Securities upon the redemption of all of
the Capital Securities), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on such Capital Securities to
the date of payment, to the extent such Countrywide Capital Trust has funds
available therefor, and (b) the amount of assets of such Countrywide Capital
Trust remaining available for distribution to holders of such Capital
Securities in liquidation of such Countrywide Capital Trust. The redemption
price and liquidation amount will be fixed at the time the Capital Securities
are issued. CCI's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by CCI to the holders of Capital
Securities or by causing the applicable Countrywide Capital Trust to pay such
amounts to such holders.
Each Capital Securities Guarantee will not apply to any payment of
distributions except to the extent the applicable Countrywide Capital Trust
shall have funds available therefor. If the Company does not make interest
payments on the Subordinated Debt Securities purchased by a Countrywide
Capital Trust and CCI does not fulfill its obligations under the Debt
Guarantee relating to such Subordinated Debt Securities, such Countrywide
Capital Trust will not pay distributions on the Capital Securities issued by
such Countrywide Capital Trust and will not have funds available therefor. See
"Description of the Subordinated Debt Securities and the Debt Guarantees--
Certain Covenants." The Capital Securities Guarantee, when taken together with
the Company's obligations under the Subordinated Debt Securities and the
Indenture, including its obligations to pay costs, expenses, debts and
liabilities of such Countrywide Capital Trust (other than with respect to the
Trust Securities), and CCI's obligations under the Debt Guarantee, the
Indenture and the Declaration, will provide a full and unconditional guarantee
on a subordinated basis by CCI of payments due on the Capital Securities.
CCI has also agreed separately to irrevocably and unconditionally guarantee
the obligations of each Countrywide Capital Trust with respect to its Common
Securities (the "Common Securities Guarantees") to the same extent as the
respective Capital Securities Guarantees, except that upon an event of default
under the Declaration of a Countrywide Capital Trust, holders of Capital
Securities of such Trust shall have priority over holders of Common Securities
of such Trust with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF CCI
In each Capital Securities Guarantee, CCI will covenant that, so long as any
Capital Securities issued by the applicable Countrywide Capital Trust remain
outstanding, if CCI shall be in default under such Capital Securities
Guarantee or there shall have occurred and be continuing any event that would
constitute an event of default under the Declaration of such Countrywide
Capital Trust, then (a) CCI shall not, and shall cause the Company not to,
declare or pay any dividend on, make a distribution
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with respect to, or redeem, purchase or make a liquidation payment with
respect to, any of CCI's or the Company's capital stock or rights to acquire
such capital stock (other than (i) purchases or acquisitions of shares of any
such capital stock or rights to acquire such capital stock in connection with
the satisfaction by CCI or the Company, respectively, of its obligations under
any employee benefit plans, (ii) as a result of a reclassification of CCI's or
the Company's capital stock or rights to acquire such capital stock or the
exchange or conversion of one class or series of CCI's or the Company's
capital stock or rights to acquire such capital stock for another class or
series of CCI's or the Company's capital stock or rights to acquire such
capital stock, (iii) the purchase of fractional interests in shares of CCI's
or the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
or (iv) dividends and distributions made on CCI's or the Company's capital
stock or rights to acquire such capital stock with CCI's or the Company's
capital stock or rights to acquire such capital stock) or make any guarantee
payments with respect to any of the foregoing and (b) CCI shall not, and shall
cause the Company not to, make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by CCI or
the Company that rank pari passu with or junior to such Subordinated Debt
Securities.
MODIFICATION OF THE CAPITAL SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Capital Securities (in which case no vote of such holders will
be required), each Capital Securities Guarantee may be amended only with the
prior approval of the holders of not less than a majority in liquidation
amount of the outstanding Capital Securities issued by the applicable
Countrywide Capital Trust. All guarantees and agreements contained in a
Capital Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of CCI and shall inure to the benefit of the
holders of the Capital Securities of the applicable Countrywide Capital Trust
then outstanding.
TERMINATION
Each Capital Securities Guarantee will terminate as to the Capital
Securities issued by the applicable Countrywide Capital Trust (a) upon full
payment of the Redemption Price of all Capital Securities of such Countrywide
Capital Trust, (b) upon distribution of the Subordinated Debt Securities held
by such Countrywide Capital Trust to the holders of the Capital Securities of
such Countrywide Capital Trust or (c) upon full payment of the amounts payable
in accordance with the Declaration of such Countrywide Capital Trust upon
liquidation of such Countrywide Capital Trust. Each Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Capital Securities issued by the applicable
Countrywide Capital Trust must restore payment of any sums paid under such
Capital Securities or such Capital Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Capital Securities Guarantee will occur upon the
failure of CCI to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Capital Securities
relating to such Capital Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Capital Guarantee Trustee in respect of the Capital Securities
Guarantee or to direct the exercise of any trust or power conferred upon the
Capital Guarantee Trustee under such Capital Securities Guarantee. A holder of
record of such Capital Securities may institute a legal proceeding directly
against CCI to enforce the Capital Guarantee Trustee's rights under such
Capital Securities Guarantee, without first instituting a legal proceeding
against the relevant Countrywide Capital Trust, the Capital Guarantee Trustee
or any other person or entity. In the Capital Securities Guarantees CCI will
waive any right or remedy to require that any action be brought first against
such Countrywide Capital Trust or any other person or entity before proceeding
directly against CCI.
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STATUS OF THE CAPITAL SECURITIES GUARANTEES
CCI's obligations under the Capital Securities Guarantees are subordinate
and junior in right of payment to all present and future liabilities of CCI,
including the Debt Guarantee. The terms of the Capital Securities provide that
each holder of Capital Securities issued by the applicable Countrywide Capital
Trust by acceptance thereof agrees to the subordination provisions and other
terms of the Capital Securities Guarantee relating thereto.
INFORMATION CONCERNING THE CAPITAL GUARANTEE TRUSTEE
The Capital Guarantee Trustee, prior to the occurrence of a default with
respect to a Capital Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Capital Securities Guarantee and,
after default, shall exercise such of the rights and powers vested in it by
such Capital Securities Guarantee, and use the same degree of care and skill
in their exercise, as a prudent individual would exercise or use in the
conduct of his or her own affairs. Subject to such provisions, the Capital
Guarantee Trustee is under no obligation to exercise any of the powers vested
in it by a Capital Securities Guarantee at the request of any holder of
Capital Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby.
CCI and certain of its affiliates maintain a banking relationship with the
Capital Guarantee Trustee.
GOVERNING LAW
The Capital Securities Guarantees will be governed by and construed in
accordance with the laws of the State of New York, without regard to conflict
of laws principles.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES, THE DEBT
GUARANTEES AND THE CAPITAL SECURITIES GUARANTEES
As set forth in the applicable Declaration, the sole purpose of each of the
Countrywide Capital Trusts is to issue and sell the Trust Securities
evidencing undivided beneficial interests in the assets of such Countrywide
Capital Trust, and to invest the gross proceeds from such issuance and sale in
the Subordinated Debt Securities of the Series issued by the Company in
accordance with such Trust Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities of that Series, such payments will be sufficient
to cover distributions and payments due on such Trust Securities because of
the following factors: (i) the aggregate principal amount of Subordinated Debt
Securities of that Series will be equal to the aggregate stated liquidation
amount of such Trust Securities; (ii) the interest rate and the interest and
other payment dates on the Subordinated Debt Securities of that Series will
match the distribution rate and distribution and other payment dates for the
Capital Securities of such Trust; (iii) the Company shall pay all, and such
Trust shall not be obligated to pay directly or indirectly any, costs,
expenses, debt, and obligations of such Trust (other than with respect to such
Trust Securities); and (iv) the Declaration of such Trust further provides
that the Countrywide Capital Trustees of such Trust shall not take or cause or
permit such Trust to, among other things, engage in any activity that is not
consistent with the purposes of such Trust.
Payments of distributions (to the extent funds therefor are available to
such Trust) and other payments due on such Capital Securities (to the extent
funds therefor are available to such Trust) are guaranteed by CCI as set forth
under "Description of the Capital Securities Guarantees." If the Company does
not make interest payments on the Subordinated Debt Securities of that Series
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purchased by such Trust and CCI does not make payments under the related Debt
Guarantee, it is expected that such Trust will not have sufficient funds to
pay distributions on such Capital Securities. The Capital Securities Guarantee
will not apply to any payment of distributions except to the extent that such
Trust has funds available for the payment of such distributions. The Capital
Securities Guarantee will cover the payment of distributions and other
payments on such Capital Securities only if and to the extent that the Company
or CCI has made payments of interest or principal on the Subordinated Debt
Securities of that Series or the related Debt Guarantees held by such Trust as
its sole assets. The Capital Securities Guarantee, when taken together with
the Company's obligations under the Subordinated Debt Securities of that
Series and the Indenture, including its obligations to pay costs, expenses,
debts and liabilities of such Trust (other than with respect to the Trust
Securities), and CCI's obligations under such Debt Guarantee, the Indenture
and such Declaration, provide a full and unconditional guarantee on a
subordinated basis by CCI of amounts when due on such Capital Securities.
If the Company fails to make interest or other payments on the Subordinated
Debt Securities of that Series when due (after giving effect to any Extension
Period) and CCI fails to make payments under such Debt Guarantee with respect
to such payments due on the Subordinated Debt Securities of that Series, such
Declaration provides a mechanism whereby the holders of the Capital
Securities, using the procedures described in "Description of the Capital
Securities--Book-Entry Only Issuance--The Depository Trust Company" and "--
Voting Rights" in the accompanying Prospectus Supplement with respect thereto,
may direct the Institutional Trustee to enforce its rights under the
Subordinated Debt Securities of that Series and such Debt Guarantee, including
proceeding directly against CCI under such Debt Guarantee without first
proceeding against the Company under the Subordinated Debt Security. If the
Institutional Trustee fails to enforce its rights under the Subordinated Debt
Securities of that Series or such Debt Guarantee after the holders of a
majority in liquidation amount of the Capital Securities have so directed the
Institutional Trustee, a holder of record of such Capital Securities may
institute a legal proceeding against the Company or CCI to enforce the
Institutional Trustee's rights under the Subordinated Debt Securities of that
Series or such Debt Guarantee, as the case may be, without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity, including, in the case of such Debt Guarantee, against the Company.
Notwithstanding the foregoing, if a Declaration Event of Default under such
Declaration has occurred and is continuing and such event is attributable to
(i) the failure of the Company to pay interest or principal on the
Subordinated Debt Securities of that Series on the respective dates such
interest or principal is under such Declaration payable (or in the case of
redemption, on the redemption date) or (ii) the failure of CCI to make payment
under such Debt Guarantee with respect to such payments due on the
Subordinated Debt Securities of that Series, then a holder of record of such
Capital Securities may institute a Direct Action for payment on or after the
respective due dates specified in the Subordinated Debt Securities of that
Series. In connection with such Direct Action, CCI or the Company, as the case
may be, will be subrogated to the rights of such holder of such Capital
Securities under such Declaration to the extent of any payment made by CCI or
the Company, as the case may be, to such holder of such Capital Securities in
such Direct Action; provided, however, that no such subrogation right may be
exercised so long as a Declaration Event of Default under such Declaration has
occurred and is continuing. CCI, under the Capital Securities Guarantee,
acknowledges that the Capital Securities Trustee shall enforce the Capital
Securities Guarantee on behalf of the holders of such Capital Securities. If
CCI fails to make payments under the Capital Securities Guarantee, any holder
of such Capital Securities may institute a legal proceeding directly against
CCI to enforce its right to receive payment under the Capital Securities
Guarantee on or after the date such payment is due and payable under the
Capital Securities Guarantee without first instituting a legal proceeding
against such Trust, the Capital Guarantee Trustee, or any other person or
entity.
20
<PAGE>
CCI and each of the Countrywide Capital Trusts believe that the above
mechanisms and obligations, taken together, provide a full and unconditional
guarantee on a subordinated basis by CCI of payments due on the Capital
Securities of each such Trust. See "Description of the Capital Securities
Guarantees--General."
PLAN OF DISTRIBUTION
The Company intends to sell the Subordinated Debt Securities and any
Countrywide Capital Trust may sell Capital Securities through underwriters.
In connection with any such sale, an underwriting agreement will be executed
with such underwriters at the time of sale to them and the names of the
underwriters and the terms of the transaction will be set forth in the
Prospectus Supplement.
Underwriters may be entitled under the relevant agreements to
indemnification by the Company, CCI and/or any Countrywide Capital Trust, as
the case may be, against certain liabilities, including liabilities under the
Securities Act.
The place and time of delivery for the Offered Securities in respect of
which this Prospectus is delivered are set forth in the accompanying
Prospectus Supplement.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Capital
Securities and formation of the Trust will be passed upon on behalf of the
Countrywide Capital Trusts by Morris, Nichols, Arsht & Tunnell, special
Delaware counsel to the Countrywide Capital Trusts. The validity under New
York law of the Subordinated Debt Securities, the Debt Guarantees and the
Capital Security Guarantees, will be passed upon by Fried, Frank, Harris,
Shriver & Jacobson, a partnership including professional corporations, New
York, New York. Edwin Heller (whose professional corporation retired as a
partner of Fried, Frank, Harris, Shriver & Jacobson in September 1996) is of
counsel to Fried, Frank, Harris, Shriver & Jacobson and a director of CCI.
Certain United States federal income tax matters also will be passed upon by
Fried, Frank, Harris, Shriver & Jacobson. Brown & Wood LLP, New York, New
York, will serve as counsel for any underwriters. Brown & Wood LLP also serves
as counsel for CWMBS, Inc. and CWABS, Inc., each a wholly-owned subsidiary of
CCI, in connection with offerings of mortgage-backed and asset-backed
securities, and as counsel to CWM.
EXPERTS
The annual consolidated financial statements of CCI incorporated by
reference in the Registration Statement, of which this Prospectus forms a
part, have been audited by Grant Thornton LLP, independent certified public
accountants, for the periods and to the extent indicated in their report
thereon, and have been so incorporated in reliance upon the authority of such
firm as experts in accounting and auditing.
21
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPO-
RATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNEC-
TION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY COUNTRYWIDE CREDIT INDUSTRIES, INC., COUNTRY-
WIDE HOME LOANS, INC., COUNTRYWIDE CAPITAL I OR THE UNDERWRITER. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF COUNTRYWIDE CREDIT INDUSTRIES,
INC., COUNTRYWIDE HOME LOANS, INC. OR COUNTRYWIDE CAPITAL I SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OF-
FER TO SELL OR SOLICITATION OF AN OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAK-
ING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Summary.................................................................. S-4
Risk Factors............................................................. S-9
ERISA Considerations .................................................... S-13
The Company.............................................................. S-15
Countrywide Credit Industries, Inc....................................... S-15
Countrywide Capital Trust................................................ S-15
Capitalization........................................................... S-17
Ratio of Earnings to Fixed Charges....................................... S-17
Accounting Treatment..................................................... S-17
Use of Proceeds.......................................................... S-18
Description of the Capital Securities.................................... S-18
Description of the Capital Securities Guarantee.......................... S-31
Description of the Subordinated Debt Securities and the Debt Guarantee... S-31
Effect of Obligations Under the Subordinated Debt Securities, the Debt
Guarantee and the Capital Securities Guarantee.......................... S-38
United States Federal Income Taxation.................................... S-39
Underwriting............................................................. S-44
Legal Matters............................................................ S-45
PROSPECTUS
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 4
The Company.............................................................. 5
The Trusts............................................................... 6
Countrywide Credit Industries, Inc....................................... 6
Ratio of Earnings to Fixed Charges....................................... 7
Use of Proceeds.......................................................... 7
Description of the Subordinated Debt Securities and the Debt Guarantees.. 8
Description of the Capital Securities.................................... 14
Description of the Capital Securities Guarantees......................... 16
Effect of Obligations Under the Subordinated Debt Securities, the Debt
Guarantees and the Capital Securities Guarantees........................ 19
Plan of Distribution..................................................... 21
Legal Matters............................................................ 21
Experts.................................................................. 21
</TABLE>
$
COUNTRYWIDE CAPITAL I
% CAPITAL TRUST PASS- THROUGH SECURITIES SM
(TRUPSSM)
(LIQUIDATION AMOUNT $1,000 PER SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED AS TO DISTRIBUTIONS AND OTHER PAYMENTS BY
[LOGO] COUNTRYWIDE(SM)
- ----------------------
CREDIT INDUSTRIES, INC.
THE PROCEEDS OF WHICH ARE TO BE INVESTED IN
% JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES DUE DECEMBER 1, 2026 OF
COUNTRYWIDE HOME
LOANS, INC.
-----------------------------
SALOMON BROTHERS INC
-----------------------------------
PROSPECTUS SUPPLEMENT
DATED , 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
SEC registration fee............................................. $90,909
Legal fees and expenses.......................................... *
Accounting fees and expenses..................................... *
Printing and engraving expenses.................................. *
Trustees' fees and expenses...................................... *
Rating agency fees............................................... *
Miscellaneous.................................................... *
-------
Total.......................................................... $ *
=======
</TABLE>
- --------
* Except for the SEC registration fee, all of the foregoing expenses have
been estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides, in substance,
that Delaware corporations shall have the power, under specified
circumstances, to indemnify their directors, officers, employees and agents in
connection with actions, suits or proceedings brought against them by a third
party or in the right of the corporation, by reason of the fact that they were
or are such directors, officers, employees or agents, against expenses
incurred in any such action, suit or proceeding. The Delaware General
Corporation Law also provides that Delaware corporations may purchase
insurance on behalf of any such director, officer, employee or agent. Sections
722, 723, 725 and 726 of the New York Business Corporation Law are
substantively equivalent to Section 145 of the Delaware General Corporation
Law.
Article SIXTH of the Certificate of Incorporation of CCI provides that CCI
may indemnify its directors and officers to the full extent permitted by the
laws of the State of Delaware. Article VIII of CCI's Bylaws provides that CCI
shall indemnify its directors and officers, and persons serving as directors
and officers of CHL at the request of CCI, against any threatened, pending or
completed action, suit or proceeding or investigation brought against such
directors and officers by reason of the fact that such persons were such
directors or officers, provided that such persons acted in good faith and in a
manner which they reasonably believed to be in or not opposed to the best
interests of CCI; except that in the case of actions brought by or in the
right of CCI to procure a judgment in its favor, no indemnification is
permitted in respect of any claim, issue or matter as to which any such
director or officer shall have been adjudged to be liable to CCI unless the
court in which the action was brought determines that such person is entitled
to indemnification. CCI's Bylaws further contemplate that the indemnification
provisions permitted thereunder are not exclusive of any other rights to which
such directors and officers are otherwise entitled by means of Bylaw
provisions, agreements, vote of stockholders or disinterested directors or
otherwise. CCI has entered into indemnity agreements with certain of its
directors and executive officers (including the directors and executive
officers of CHL), whereby such individuals are indemnified by CCI up to an
aggregate limit of $5,000,000 for any claims made against such individual
based on any act, omission or breach of duty committed while acting as a
director or officer, except, among other things, cases involving dishonesty or
improper personal benefit. CCI also maintains an insurance policy pursuant to
which its directors and officers (including the directors and executive
officers of CHL) are insured against certain liabilities which might arise out
of their relationship with CCI as directors and officers.
Article SEVENTH of the Certificate of Incorporation of CCI provides that a
director of CCI shall have no personal liability to CCI or its stockholders
for monetary damages for breach of his fiduciary duty of care as a director to
the full extent permitted by the Delaware General Corporation Law, as it may
be amended from time to time.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE NO.
------ ----------- --------
<C> <S> <C>
*1.1 Form of Underwriting Agreement for offering of Capital
Securities
+4.1 Certificate of Trust of Countrywide Capital I
+4.2 Certificate of Trust of Countrywide Capital II
+4.3 Declaration of Trust of Countrywide Capital I
+4.4 Declaration of Trust of Countrywide Capital II
*4.5 Form of Amended and Restated Declaration of Trust for
Countrywide Capital I
*4.6 Form of Indenture among Countrywide Home Loans, Inc., as
Issuer, Countrywide Credit Industries, Inc., as Guarantor,
and the Bank of New York, as Trustee
*4.7 Form of Supplemental Indenture to be used in connection with
the issuance of Subordinated Debt Securities
*4.8 Form of Capital Security (included in Exhibit 4.5 above)
*4.9 Form of Subordinated Debt Security (included in Exhibit 4.7
above)
*4.10 Form of Capital Securities Guarantee of Countrywide Credit
Industries, Inc. for the benefit of the holders of Capital
Securities
**5.1 Opinion of Morris, Nichols, Arsht & Tunnell as to the
validity of the Capital Securities
**5.2 Opinion of Fried, Frank, Harris, Shriver & Jacobson as to
the validity of the Subordinated Debt Securities, Debt
Guarantee and Capital Securities Guarantee
*8.1 Forms of Opinions of Fried, Frank, Harris, Shriver &
Jacobson as to certain United States federal income taxation
matters
+12.1 Statement regarding computation of ratio of earnings to
fixed charges of Countrywide Credit Industries, Inc.
*23.1 Consent of Grant Thornton LLP
*23.2 Consent of Morris, Nichols, Arsht & Tunnell (included in
Exhibit 5.1)
*23.3 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.2)
*23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 8.1)
+24.1 Powers of Attorney
*25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as Debt
Trustee under the Indenture
+25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as
Institutional Trustee under the Amended and Restated
Declaration of Trust of Countrywide Capital I
+25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as Capital
Guarantee Trustee under the Capital Securities Guarantee of
Countrywide Credit Industries, Inc. for the benefit of the
holders of Capital Securities
</TABLE>
- --------
+ Previously filed.
* Filed herewith.
** To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned, Countrywide Capital I, Countrywide Capital II, CHL and
CCI (collectively, the "Registrants"), hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement; notwithstanding
the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
II-2
<PAGE>
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of a
prospectus filed with the Securities and Exchange Commission (the
"Commission") pursuant to Rule 424(b) under the Securities Act of 1933,
as amended (the "Securities Act") if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by CCI pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each of the undersigned Registrants hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of CCI's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions permitted under Item 15 above or
otherwise, the Registrants have been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted against the Registrants by such director, officer or
controlling person in connection with the securities being registered hereby,
the Registrants will, unless in the opinion of their counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(d) The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act,
the information contained or omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and in a
form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time if was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) The undersigned Registrants undertake to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of section 310 of the Trust Indenture Act of 1939, as amended ("Act") in
accordance with the rules and regulations prescribed by the Commission under
section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, COUNTRYWIDE
CAPITAL I CERTIFIES THAT IT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE
REGISTRATION STATEMENT (FILE NOS. 333-14111, 333-14111-01, 333-14111-02 AND
333-14111-03) TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF PASADENA, STATE OF CALIFORNIA, ON THE 29TH DAY OF
NOVEMBER, 1996.
Countrywide Capital I
By: Countrywide Credit Industries,
Inc., as Sponsor
/s/ Angelo R. Mozilo
By:__________________________________
ANGELO R. MOZILO EXECUTIVE VICE
PRESIDENT AND VICE CHAIRMAN OF THE
BOARD OF DIRECTORS
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, COUNTRYWIDE
CAPITAL II CERTIFIES THAT IT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE
REGISTRATION STATEMENT (FILE NOS. 333-14111, 333-14111-01, 333-14111-02 AND
333-14111-03) TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF PASADENA, STATE OF CALIFORNIA, ON THE 29TH DAY OF
NOVEMBER, 1996.
Countrywide Capital II
By: Countrywide Credit Industries,
Inc., as Sponsor
/s/ Angelo R. Mozilo
By: _________________________________
ANGELO R. MOZILO EXECUTIVE VICE
PRESIDENT AND VICE CHAIRMAN OF THE
BOARD OF DIRECTORS
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, COUNTRYWIDE HOME
LOANS, INC. CERTIFIES THAT IT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE
REGISTRATION STATEMENT (FILE NOS. 333-14111, 333-14111-01, 333-14111-02 AND
333-14111-03) TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF PASADENA, STATE OF CALIFORNIA, ON THE 29TH DAY OF
NOVEMBER, 1996.
Countrywide Home Loans, Inc.
/s/ Angelo R. Mozilo
By: _________________________________
ANGELO R. MOZILO
CHAIRMAN OF THE BOARD OF DIRECTORS
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT (FILE NOS. 333-14111, 333-14111-01, 333-
14111-02 AND 333-14111-03) HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
* Director
- ------------------------------------- November 29,
DAVID S. LOEB 1996
/s/ Angelo R. Mozilo
- ------------------------------------- Chairman of the
ANGELO R. MOZILO Board of Directors November 29,
and Chief Executive 1996
Officer (Principal
Executive Officer);
Director
* President and Chief
- ------------------------------------- Operating Officer; November 29,
STANFORD L. KURLAND Director 1996
*
- ------------------------------------- Executive Vice
THOMAS K. MCLAUGHLIN President and Chief November 29,
Financial Officer 1996
(Principal
Financial and
Accounting Officer)
/s/ Angelo R. Mozilo
By: _________________________________
ANGELO R. MOZILO
ATTORNEY-IN-FACT
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, COUNTRYWIDE
CREDIT INDUSTRIES, INC. CERTIFIES THAT IT HAS DULY CAUSED THIS AMENDMENT NO. 2
TO THE REGISTRATION STATEMENT (FILE NOS. 333-14111, 333-14111-01, 333-14111-02
AND 333-14111-03) TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF PASADENA, STATE OF CALIFORNIA, ON THE 29TH DAY OF
NOVEMBER, 1996.
Countrywide Credit Industries, Inc.
/s/ David S. Loeb
By: _________________________________
DAVID S. LOEB
CHAIRMAN OF THE BOARD OF DIRECTORS
AND PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT (FILE NOS. 333-14111, 333-14111-01, 333-
14111-02 AND 333-14111-03) HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
* Chairman of the
- ------------------------------------- Board of Directors November 29,
DAVID S. LOEB and President 1996
(Principal
Executive Officer);
Director
/s/ Angelo R. Mozilo Executive Vice
- ------------------------------------- President and Vice November 29,
ANGELO R. MOZILO Chairman of the 1996
Board of Directors;
Director
* Managing Director--
- ------------------------------------- Finance, Chief November 29,
CARLOS M. GARCIA Financial Officer 1996
and Chief
Accounting Officer
(Principal
Financial and
Accounting Officer)
II-7
<PAGE>
SIGNATURE TITLE DATE
* Director
- ------------------------------------- November 29,
ROBERT J. DONATO 1996
*
- ------------------------------------- Director
BEN M. ENIS November 29,
1996
*
- ------------------------------------- Director
EDWIN HELLER November 29,
1996
*
- ------------------------------------- Director
HARLEY W. SNYDER November 29,
1996
*By: /s/ Angelo R. Mozilo
- -------------------------------------
ANGELO R. MOZILO
ATTORNEY-IN-FACT
II-8
<PAGE>
EXHIBIT INDEX
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE NO.
------ ----------- --------
<C> <S> <C>
*1.1 Form of Underwriting Agreement for offering of Capital
Securities
+4.1 Certificate of Trust of Countrywide Capital I
+4.2 Certificate of Trust of Countrywide Capital II
+4.3 Declaration of Trust of Countrywide Capital I
+4.4 Declaration of Trust of Countrywide Capital II
*4.5 Form of Amended and Restated Declaration of Trust for
Countrywide Capital I
*4.6 Form of Indenture among Countrywide Home Loans, Inc., as
Issuer, Countrywide Credit Industries, Inc., as Guarantor,
and the Bank of New York, as Trustee
*4.7 Form of Supplemental Indenture to be used in connection with
the issuance of Subordinated Debt Securities
*4.8 Form of Capital Security (included in Exhibit 4.5 above)
*4.9 Form of Subordinated Debt Security (included in Exhibit 4.7
above)
*4.10 Form of Capital Securities Guarantee of Countrywide Credit
Industries, Inc. for the benefit of the holders of the
Capital Securities
**5.1 Opinion of Morris, Nichols, Arsht & Tunnell as to the
validity of the Capital Securities
**5.2 Opinion of Fried, Frank, Harris, Shriver & Jacobson as to
the validity of the Subordinated Debt Securities, Debt
Guarantee and Capital Securities Guarantee
*8.1 Forms of Opinions of Fried, Frank, Harris, Shriver &
Jacobson as to certain United States federal income taxation
matters
+12.1 Statement regarding computation of ratio of earnings to
fixed charges of Countrywide Credit Industries, Inc.
*23.1 Consent of Grant Thornton LLP
*23.2 Consent of Morris, Nichols, Arsht & Tunnell (included in
Exhibit 5.1)
*23.3 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.2)
*23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 8.1)
+24.1 Powers of Attorney
*25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as Debt
Trustee under the Indenture
+25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as
Institutional Trustee under the Amended and Restated
Declaration of Trust of Countrywide Capital I
+25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as Capital
Guarantee Trustee under the Capital Securities Guarantee of
Countrywide Credit Industries, Inc. for the benefit of the
holders of the Capital Securities
</TABLE>
- --------
+Previously filed.
*Filed herewith.
**To be filed by amendment.
<PAGE>
EXHIBIT 1.1
300,000 Capital Trust Pass-through Securities
COUNTRYWIDE CAPITAL I
(a Delaware Trust)
Capital Trust Pass-through Securities/SM/ (TruPS/SM/)
(Liquidation Amount of $1,000 per Capital Security)
UNDERWRITING AGREEMENT
----------------------
November __, 1996
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
Each of Countrywide Capital I (the "Trust"), a statutory business trust
formed under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. (S)(S) 3801 et
--
seq.), Countrywide Home Loans, Inc., a New York corporation (the "Company"), and
- ---
Countrywide Credit Industries, Inc., a Delaware corporation (the "Guarantor"
and, together with the Trust and the Company, the "Offerors"), confirms its
agreement with you (the "Underwriter") with respect to the sale by the Trust and
the purchase by you of 300,000 shares of Capital Trust Pass-through Securities
(liquidation amount of $1,000 per security) of the Trust (the "Capital
Securities"). The Capital Securities will be guaranteed by the Guarantor with
respect to distributions and payments upon liquidation, redemption and otherwise
(the "Capital Securities Guarantee") pursuant to the Capital Securities
Guarantee Agreement (the "Capital Securities Guarantee Agreement") to be dated
as of the Closing Time (as defined in Section 2(b) hereof) between the Guarantor
and The Bank of New York, as trustee (the "Guarantee Trustee"), and entitled to
the benefits of certain backup undertakings to be described in the Prospectus
(as defined below) with respect to the Company's agreement pursuant to the
Supplemental Indenture (as defined herein) to pay all expenses
- ---------------
/SM/ Salomon Brothers Inc has filed applications with the United States Patent
and Trademark Office for the registration of the Capital Trust Pass-
through Securities and TRUPS service marks.
<PAGE>
relating to administration of the Trust and the Guarantor's guarantee pursuant
to the Supplemental Indenture of those undertakings. The Capital Securities and
the related Capital Securities Guarantee are referred to herein as the
"Securities".
Prior to the purchase and public offering of the Capital Securities by the
Underwriter, the Offerors and the Underwriter shall enter into an agreement
substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The
Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication between the Offerors and the Underwriter and shall
specify such applicable information as is indicated in Exhibit A hereto. The
offering of the Capital Securities will be governed by this Agreement, as
supplemented by the Pricing Agreement. From and after the date of the execution
and delivery of the Pricing Agreement, this Agreement shall be deemed to
incorporate the Pricing Agreement.
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Nos. 333-14111, 333-14111-
01, 333-14111-02 and 333-14111-03) and a related preliminary prospectus for the
registration under the Securities Act of 1933, as amended (the "1933 Act"), and
the offering from time to time in accordance with Rule 415 under the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations"),
of up to a combination of $300,000,000 of (i) preferred securities, including
the Capital Securities, (ii) guarantees by the Guarantor of distributions,
payments upon liquidation, redemption and otherwise in respect of the preferred
securities, including the Capital Securities Guarantee, (iii) unsecured
subordinated debt securities, including the Subordinated Debt Securities (as
defined below), to be issued and sold to the Trust by the Company and (iv)
guarantees by the Guarantor of the payment of principal, premium, if any, and
interest on the unsecured subordinated debt securities, including the Debt
Guarantee (as defined below) ((i), (ii), (iii) and (iv), collectively, the
"Registered Securities"), have filed such amendments thereto, if any, and such
amended preliminary prospectuses as may have been required to the date hereof,
and will file such additional amendments thereto and such amended prospectuses
as may hereafter be required. Such registration statement (as amended, if
applicable), including all documents incorporated or deemed to be incorporated
by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act (the
"Incorporated Documents") and the information, if any, deemed to be part thereof
pursuant to Rule 430A(b), as from time to time amended or supplemented pursuant
to the 1933 Act (the "Rule 430A Information"), the Securities Exchange Act of
1934, as amended (the "1934 Act"), or otherwise, is hereinafter referred to as
the "Registration Statement". The Offerors propose to file with the Commission
pursuant to Rule 424(b) of the 1933 Act Regulations as soon as practicable after
the execution of the Pricing Agreement
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the Prospectus Supplement (as defined in Section 3(b) hereof) relating to the
Securities, the Subordinated Debt Securities and the Debt Guarantee and the
Prospectus relating to the Registered Securities (the "Base Prospectus"). The
Base Prospectus together with the Prospectus Supplement, in the respective forms
on the date of the Pricing Agreement (being the forms in which they are to be
filed pursuant to Rule 424(b) of the 1933 Act Regulations after the execution of
the Pricing Agreement), including all documents incorporated or deemed to be
incorporated by reference therein through the date of the Pricing Agreement, are
hereinafter referred to as the "Prospectus", except that, if any revised
prospectus or prospectus supplement shall be provided to the Underwriter by the
Offerors for use in connection with the offering of the Securities which differs
from the Prospectus (whether or not such revised prospectus is required to be
filed by the Offerors pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first provided to
the Underwriter for such use. All references in this Agreement to financial
statements and schedules and other information that are "contained," "included"
or "stated" in the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information that are or are deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include the filing of any document under the 1934 Act that is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
The Offerors understand that the Underwriter proposes to make a public
offering of the Securities as soon as the Underwriter deems advisable after the
Pricing Agreement has been executed and delivered, the Registration Statement
has been declared effective and the Declaration (as defined herein), the
Indenture (as defined herein) and the Capital Securities Guarantee Agreement
have been qualified under the Trust Indenture Act of 1939, as amended (the "1939
Act"). The entire proceeds from the sale of the Securities will be combined
with the entire proceeds from the sale by the Trust to the Guarantor of its
common securities (the "Common Securities") (which Common Securities will be
guaranteed by the Guarantor, to the extent set forth in the Prospectus, with
respect to distributions and payments upon liquidation and redemption (the
"Common Securities Guarantee" and, together with the Capital Securities
Guarantee and the Debt Guarantee, the "Guarantees") pursuant to the Common
Securities Guarantee Agreement (the "Common Securities Guarantee Agreement" and,
together with the Capital Securities Guarantee Agreement, the "Guarantee
Agreements"), to be dated as of the
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Closing Time, by the Guarantor) and will be used by the Trust to purchase the
Junior Subordinated Deferrable Interest Debentures due December 1, 2026 (the
"Subordinated Debt Securities") issued by the Company and fully and
unconditionally guaranteed as to payment of principal, premium, if any, and
interest by the Guarantor (the "Debt Guarantee"). The Capital Securities and
the Common Securities will be issued pursuant to the declaration of trust of the
Trust, dated as of October 14, 1996 (the "Original Declaration" and, as such
Original Declaration may be amended and restated at or prior to the Closing Time
(the "Declaration"), among the Guarantor, as Sponsor, Eric P. Sieracki, Sandor
E. Samuels and Carlos Garcia, as regular trustees (the "Regular Trustees"), The
Bank of New York, a New York banking corporation, as institutional trustee (the
"Institutional Trustee"), and the institutional trustee to be named in the
Declaration, as Delaware trustee (the "Delaware Trustee" and, together with the
Regular Trustees and the Institutional Trustee, the "Trustees")), and the
holders from time to time of undivided beneficial interests in the assets of the
Trust. The Subordinated Debt Securities and the Debt Guarantee will be issued
pursuant to an indenture, to be dated as of the Closing Time (the "Base
Indenture"), among the Company, the Guarantor and The Bank of New York, as
trustee (the "Debt Trustee"), and a supplement to the Base Indenture, to be
dated as of the Closing Time (the "Supplemental Indenture," and, together with
the Base Indenture and any other amendments or supplements thereto, the
"Indenture"), among the Company, the Guarantor and the Debt Trustee.
Section 1. Representations and Warranties. (a) The Offerors jointly and
------------------------------
severally represent and warrant to the Underwriter as of the date hereof, as of
the time the Registration Statement becomes effective (the "Effective Time"), as
of the date of the Pricing Agreement (the "Representation Date") and as of the
Closing Time, as follows:
(i) The Registration Statement at the Effective Time and the
Registration Statement and the Base Prospectus, at the Representation Date
and at the Closing Time, will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations (including Rule
415(a) of the 1933 Act Regulations) and, to the extent applicable, the 1939
Act and the rules and regulations of the Commission under the 1939 Act (the
"1939 Act Regulations"), and the Registration Statement at the Effective
Time and the Registration Statement and the Base Prospectus at the
Representation Date and the Closing Time will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. The Prospectus, at the Representation Date (unless the term
"Prospectus" refers to a prospectus that has been provided to the
Underwriter by the Trust for use in connection with the
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offering of the Securities which differs from the Prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations, in which
case, at the time it is first provided to the Underwriter for such use),
and at the Closing Time will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
-------- -------
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Offerors in writing by the
Underwriter expressly for use in the Registration Statement or the
Prospectus or to those parts of the Registration Statement that constitute
the Statements of Eligibility and Qualification on Form T-1 under the 1939
Act with respect to the Institutional Trustee, the Debt Trustee and the
Guarantee Trustee, filed as exhibits to the Registration Statement (the
"Forms T-1").
(ii) The documents incorporated, to be incorporated or deemed to
be incorporated by reference in the Registration Statement or Prospectus,
at the time they were filed with the Commission complied, or at the time
they hereafter are filed with the Commission will comply, as the case may
be, in all material respects with the requirements of the 1933 Act, the
1933 Act Regulations, the 1934 Act and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations"), as applicable,
and, when read together with the other information in the Prospectus, at
the Representation Date, at the time any amendments to the Registration
Statement become effective and at the Closing Time, will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(iii) Grant Thornton LLP, whose reports have been incorporated by
reference or included in the Guarantor's most recent Annual Report on Form
10-K, which will be incorporated by reference in the Prospectus, are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iv) At the Effective Time, at the Representation Date and at the
Closing Time, the financial statements included in the Registration
Statement, and at the Representation Date and at the Closing Time the
financial statements included in the Prospectus, will present fairly the
financial position of the Guarantor and its consolidated
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subsidiaries as at the dates indicated and the results of their operations
for the periods specified; except as otherwise stated in the Registration
Statement and except as otherwise required pursuant to generally accepted
accounting principles, said financial statements will have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods specified therein; the Guarantor's
ratios of earnings to fixed charges included in the Prospectus under the
caption "Ratio of Earnings to Fixed Charges" and in Exhibit 12 to the
Registration Statement will have been calculated in compliance with Item
503(d) of Regulation S-K of the Commission and the supporting schedules
included in the Registration Statement will present fairly the information
required to be stated therein; and the selected financial data included in
the Prospectus will present fairly the information shown therein and will
have been compiled on a basis consistent with that of the audited
consolidated financial statements included in the Registration Statement.
The Prospectus will contain all pro forma financial statements and other
pro forma financial information required to be included therein and such
information will present fairly the information shown therein, will have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements, will have been properly compiled
on the pro forma bases described therein, and, in the opinion of the
Guarantor, the assumptions used in the preparation thereof will be
reasonable and the adjustments used therein will be appropriate to give
effect to the transactions or circumstances referred to therein.
(v) Each of the Offerors meets, and at the respective times of
commencement and consummation of the offering of the Securities will meet,
the registrant requirements for use of Form S-3 under the 1933 Act and the
1933 Act Regulations.
(vi) Since the respective dates as of which information will be
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there will have been no material adverse change in the
condition, financial or otherwise, or in the earnings or business affairs
of the Company and its subsidiaries, considered as one enterprise, the
Guarantor and its subsidiaries considered as one enterprise or of the
Trust, whether or not arising in the ordinary course of business, and (B)
there will have been no transactions entered into by the Trust, by the
Company or any of its subsidiaries or by the Guarantor or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries, considered
as
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one enterprise, the Guarantor and its subsidiaries, considered as one
enterprise, or the Trust.
(vii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of New York with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and Prospectus, to enter into and perform its
obligations under this Agreement, the Pricing Agreement and the Indenture;
and the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not have a material adverse effect on the condition, financial or
otherwise, or the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
(viii) The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and Prospectus, to enter into and perform its obligations under
this Agreement, the Pricing Agreement, the Declaration, the Indenture and
each of the Guarantees and to purchase, own, and hold the Common Securities
to be issued to it by the Trust; and the Guarantor is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse effect on
the condition, financial or otherwise, or the earnings or business affairs
of the Guarantor and its subsidiaries considered as one enterprise.
(ix) The authorized, issued and outstanding capital stock of the
Guarantor will be as set forth in the Prospectus under "Capitalization"
(except for subsequent issuances, if any, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus); and
all of the issued and outstanding shares of capital stock of the Guarantor
have been duly authorized and validly issued and are fully paid and non-
assessable.
(x) The Company is the only "significant subsidiary" (as such
term is defined in Rule 405 of Regulation C of the Rules and Regulations)
of the Guarantor, and the Company has no "significant subsidiaries". All
of
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the outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable and are
owned by the Guarantor directly, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
(xi) This Agreement has been, and at the Closing Time, the
Pricing Agreement will have been, duly authorized, executed and delivered
by each of the Offerors.
(xii) Each of the Guarantee Agreements has been duly authorized
by the Guarantor and, when validly executed and delivered by the Guarantor,
and, in the case of the Capital Securities Guarantee Agreement, assuming
due authorization, execution and delivery of the Capital Securities
Guarantee by the Guarantee Trustee, will constitute a valid and binding
obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, fraudulent conveyance, moratorium or other similar laws affecting
creditors rights generally or by general principles of equity (regardless
of whether enforcement is considered in a proceeding at law or in equity)
(the "Bankruptcy Exceptions"), and each of the Guarantees and the Guarantee
Agreements will conform in all material respects to the descriptions
thereof contained in the Prospectus; and the Capital Securities Guarantee
Agreement, at the Closing Time, will have been duly qualified under the
1939 Act.
(xiii) The Indenture has been duly authorized by the Company and
the Guarantor and, when validly executed and delivered by the Company and
the Guarantor and, assuming due authorization, execution and delivery of
the Indenture by the Debt Trustee, will constitute a valid and binding
agreement of the Company and the Guarantor, enforceable against the Company
and the Guarantor in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions; the
Indenture will conform in all material respects to the description thereof
contained in the Prospectus; and at the Closing Time, the Indenture will
have been duly qualified under the 1939 Act.
(xiv) The Subordinated Debt Securities have been duly authorized
by the Company and, at the Closing Time, will have been duly executed by
the Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment therefor as described in the
Prospectus, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except to
the extent that enforcement
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thereof may be limited by the Bankruptcy Exceptions; the Subordinated Debt
Securities are in the form contemplated by, and entitled to the benefits
of, the Indenture and will conform in all material respects to the
description thereof contained in the Prospectus.
(xv) The Debt Guarantee has been duly authorized by the Guarantor
and, when the Subordinated Debt Securities are authenticated in the manner
provided for in the Indenture and delivered against payment therefor as
described in the Prospectus, will constitute a valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its
terms, except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions; and the Debt Guarantee will conform in all material
respects to the description thereof contained in the Prospectus.
(xvi) None of the Offerors is an "investment company" or a
company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "1940
Act").
(xvii) Neither the Company, the Guarantor nor any of their
respective subsidiaries is in violation of its charter or by-laws; the
Trust is not in violation of the Original Declaration or its certificate of
trust filed with the State of Delaware on October 15, 1996 (the
"Certificate of Trust") and, as of the Closing Time, will not be in
violation of the Declaration; none of the Company, the Guarantor, any of
their respective subsidiaries or the Trust is in default under any
agreement, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the Guarantor, any of their respective
subsidiaries or the Trust is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company, the
Guarantor, any of their subsidiaries or the Trust is subject, except for
such defaults that would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the
Trust or of the Company and its subsidiaries, considered as one enterprise,
or of the Guarantor and its subsidiaries, considered as one enterprise; and
the execution, delivery and performance of this Agreement, the Pricing
Agreement, the Declaration, the Capital Securities, the Common Securities,
the Indenture, the Subordinated Debt Securities, the Guarantee Agreements
and the Guarantees and the consummation of the transactions contemplated
herein and therein and compliance by the Offerors with their respective
obligations hereunder and thereunder have been duly authorized by all
necessary action (corporate or otherwise) on the part of the Offerors and
do not and will not result
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in any violation of the charter or by-laws of the Company, the Guarantor or
any of their respective subsidiaries, or the Declaration (if applicable) or
the Certificate of Trust and do not and will not conflict with, or result
in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, the Guarantor or
any of their respective subsidiaries or the Trust under (A) any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which the Company, the Guarantor or any of their respective
subsidiaries or the Trust is a party or by which it may be bound or to
which any of its properties may be subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not have
a material adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its subsidiaries,
considered as one enterprise, the Guarantor and its subsidiaries,
considered as one enterprise, or the Trust) or (B) any existing applicable
law, rule, regulation, judgment, order or decree of any government,
governmental instrumentality or court, or any regulatory body or
administrative agency or other governmental body having jurisdiction over
the Company, the Guarantor or any of their respective subsidiaries or the
Trust or any of their respective properties (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not have
a material adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its subsidiaries,
considered as one enterprise, the Guarantor and its subsidiaries,
considered as one enterprise, or the Trust).
(xviii) Except as disclosed to the Underwriter and as will be
disclosed in the Prospectus, there is no action, suit or proceeding before
or by any government, governmental instrumentality or court, now pending
or, to the knowledge of the Trust, the Company or the Guarantor, threatened
against the Company, the Guarantor or any of their respective subsidiaries
or the Trust which is reasonably likely to result in any material adverse
change in the financial condition, results of operations or business of the
Trust, the Company and its subsidiaries considered as one enterprise, or
the Guarantor and its subsidiaries considered as one enterprise, or that
could materially and adversely affect the properties or assets of the
Trust, the Company and its subsidiaries considered as one enterprise, or
the Guarantor and its subsidiaries considered as one enterprise, or that
could adversely affect the consummation of the transactions contemplated in
this Agreement or the Pricing Agreement or which is required to be
disclosed in the Registration Statement; and there are no contracts or
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documents of the Company, the Guarantor, any of their respective
subsidiaries or the Trust that are required to be filed as exhibits to the
Registration Statement by the 1933 Act or by the 1933 Act Regulations or
that were required to be filed as exhibits to any document incorporated by
reference in the Prospectus by the 1934 Act or the 1934 Act Regulations
that have not been or will not be so filed.
(xix) No authorization, approval, consent or order of any court
or governmental authority or agency is necessary in connection with the
issuance and sale of the Common Securities, the Subordinated Debt
Securities, the Common Securities Guarantee or the Debt Guarantee, or the
offering of the Capital Securities or the Capital Securities Guarantee
hereunder, except such as may be required under the 1933 Act or the 1933
Act Regulations or state securities or blue sky laws and the qualification
of the Declaration, the Capital Securities Guarantee Agreement and the
Indenture under the 1939 Act.
(xx) The Trust has been duly created and is validly existing in
good standing as a statutory business trust under the Delaware Act with the
power and authority to own property and to conduct its business as
described in the Registration Statement and Prospectus and to enter into
and perform its obligations under this Agreement, the Pricing Agreement,
the Capital Securities, the Common Securities and the Declaration; the
Trust is duly qualified to transact business as a foreign entity and is in
good standing in any other jurisdiction in which such qualification is
necessary, except to the extent that the failure to so qualify or be in
good standing would not have a material adverse effect on the Trust; the
Trust is not a party to or otherwise bound by any agreement other than
those described in the Prospectus.
(xxi) At the Closing Time, the Common Securities will have been
duly authorized by the Declaration and, when issued and delivered by the
Trust to the Guarantor against payment therefor as described in the
Registration Statement and Prospectus, will be validly issued and (subject
to the terms of the Declaration) fully paid and non-assessable undivided
beneficial interests in the assets of the Trust and will conform in all
material respects to the description thereof contained in the Prospectus;
the issuance of the Common Securities will not be subject to preemptive or
other similar rights; and at the Closing Time all of the issued and
outstanding Common Securities of the Trust will be directly owned by the
Guarantor free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
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(xxii) The Declaration has been duly authorized by the Guarantor
and, at the Closing Time, will have been duly executed by the Guarantor and
the Regular Trustees, and assuming due authorization, execution and
delivery of the Declaration by the Institutional Trustee and the Delaware
Trustee, the Declaration will, at the Closing Time, be a valid and binding
obligation of the Guarantor and the Regular Trustees, enforceable against
the Guarantor and the Regular Trustees in accordance with its terms, except
to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions, and will conform in all material respects to the description
thereof contained in the Prospectus; and at the Closing Time, the
Declaration will have been duly qualified under the 1939 Act.
(xxiii) At the Closing Time, the Capital Securities will have
been duly authorized by the Declaration and, when issued and delivered
pursuant to this Agreement against payment of the consideration set forth
in the Pricing Agreement, will be validly issued and (subject to the terms
of the Declaration) fully paid and non-assessable undivided beneficial
interests in the assets of the Trust, will be entitled to the benefits of
the Declaration and will conform in all material respects to the
description thereof contained in the Prospectus; the issuance of the
Capital Securities will not be subject to preemptive or other similar
rights; and (subject to the terms of the Declaration) holders of Capital
Securities will be entitled to the same limitation of personal liability
under Delaware law as extended to stockholders of private corporations for
profit.
(xxiv) The Company, the Guarantor and the Trust have not taken
and will not take, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Capital Securities.
(xxv) Each of the Offerors has complied with, and is and will be
in compliance with, all provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder, or is exempt
therefrom.
Any certificate signed by any officer (or, in the case of the Trust,
any Regular Trustee) of any Offeror and delivered to the Underwriter or to
counsel for the Underwriter shall be deemed a representation and warranty by
such Offeror to the Underwriter as to the matters covered thereby.
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Section 2. Sale and Delivery to Underwriter; Closing.
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(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to the Underwriter, and the Underwriter agrees to purchase from
the Trust, at the price per Capital Security set forth in the Pricing Agreement,
300,000 Capital Securities (except as otherwise provided in the Pricing
Agreement).
The purchase price per Capital Security shall be consistent with the
prior understanding between the Underwriter and the Guarantor and shall be set
forth in the Pricing Agreement which shall be executed by the Underwriter and
the Offerors as soon as practicable, but in any event within two business days,
after the Effective Time. In the event that the Registration Statement is not
declared effective by 5:30 P.M., New York time, on December 20, 1996, this
Agreement shall terminate forthwith, without liability of any party to any other
party, unless otherwise agreed to by the Offerors and the Underwriter.
(b) Payment of the purchase price for, and delivery of certificates
for, the Capital Securities shall be made at the office of Fried, Frank, Harris,
Shriver & Jacobson, or at such other place as shall be agreed upon by the
Underwriter and the Trust, at 9:00 A.M. New York time on the third or fourth
business day (as permitted under Rule 15c6-1 of the 1934 Act Regulations)
(unless postponed in accordance with the provisions of Section 10) following the
Effective Time (or, if the Trust has elected to rely upon Rule 430A of the 1933
Act Regulations, the fourth business day after execution of the Pricing
Agreement), or such other time not later than ten business days after such date
as shall be agreed upon by the Underwriter, the Trust, the Guarantor and the
Company (such time and date of payment and delivery being herein called the
"Closing Time"). Payment shall be made to the Trust by same day funds payable
to the order of the Trust to an account designated by the Trust, against
delivery to the Underwriter of certificates for the Capital Securities to be
purchased by it. Certificates for the Capital Securities shall be in such
denominations and registered in such names as the Underwriter may request in
writing at least two business days before the Closing Time.
The certificate(s) for the Capital Securities will be made available
for examination and packaging by the Underwriter in The City of New York not
later than 10:00 A.M. on the last business day prior to the Closing Time.
At the Closing Time, the Company will pay, or cause to be paid, the
commission payable at such time to the Underwriter that is set forth in the
Pricing Agreement and consistent with the prior understanding between the
Underwriter and the Guarantor
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by certified or official bank check or checks payable to Salomon Brothers Inc in
New York Clearing House funds or other similar next day funds.
Section 3. Covenants of the Offerors. Each of the Offerors, jointly and
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severally, covenants with the Underwriter as follows:
(a) The Offerors will use their best efforts to cause the
Registration Statement, and any amendment thereof, to become effective not later
than 5:30 P.M., New York time, on December 20, 1996. If the Offerors elect to
rely on Rule 430A and subject to Section 3(b), the Offerors will comply with the
requirements of Rule 430A. The Offerors will notify the Underwriter immediately,
and confirm the notice in writing, (i) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective amendment) or
when any supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or preliminary prospectus
supplement, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction or of the initiation of any proceedings for
any of such purposes. The Offerors will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment. In conjunction with the
obligation of the Offerors to cause the Registration Statement to be declared
effective pursuant to this paragraph (a), the Underwriter shall file with the
Commission such requests for acceleration as required from the Underwriter
pursuant to Rule 461(a) of the 1933 Act.
(b) The Offerors will give the Underwriter notice of their intention
to file or prepare (i) any amendment to the Registration Statement (including
any post-effective amendment), (ii) any amendment or supplement to the
Prospectus (including any revised prospectus which the Offerors propose for use
by the Underwriter in connection with the offering of the Securities which
differs from the Prospectus, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), or (iii) any
document that would be incorporated by reference in the Prospectus whether
pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the
Underwriter or its counsel with copies of any such amendment, supplement or
other document a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not
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file any such amendment, supplement or other document or use any such prospectus
to which the Underwriter or counsel for the Underwriter shall reasonably object.
Subject to the foregoing, following the execution of the Pricing Agreement, the
Offerors will prepare a prospectus supplement dated the Representation Date (the
"Prospectus Supplement") containing such information as may be required by the
1933 Act or the 1933 Act Regulations and such other information as the
Underwriter and the Offerors deem appropriate. The Offerors will file the
Prospectus (including the Prospectus Supplement) pursuant to Rule 424(b) of the
1933 Act Regulations not later than the Commission's close of business on the
second business day following the date of the Pricing Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
1933 Act.
(c) The Offerors will deliver to the Underwriter as many signed copies
of the Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) as the
Underwriter may reasonably request.
(d) The Offerors will deliver to the Underwriter, without charge, from
time to time until the Effective Time (or, if the Offerors have elected to rely
upon Rule 430A of the 1933 Act Regulations, until such time the Pricing
Agreement is executed and delivered), as many copies of each preliminary
prospectus and preliminary prospectus supplement as the Underwriter may
reasonably request, and the Offerors hereby consent to the use of such copies
for purposes permitted by the 1933 Act. The Offerors will furnish to the
Underwriter, without charge, from time to time during the period when the
Prospectus is required to be delivered under the 1933 Act, such number of copies
of the Prospectus (as amended or supplemented) as the Underwriter may reasonably
request for the purposes contemplated by the 1933 Act or the 1934 Act or the
respective applicable rules and regulations of the Commission thereunder.
(e) If, at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Securities, any event shall occur
as a result of which it is necessary, in the opinion of counsel for the
Underwriter or counsel to the Guarantor, the Company and the Trust, to amend or
supplement the Prospectus in order to cause the Prospectus not to include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is to be delivered to a purchaser, or if
it shall be necessary in the opinion of any such counsel at any such time, to
amend the Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Offerors will promptly
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prepare and file with the Commission subject to paragraph (b) above such
amendment or supplement as may be necessary to correct such untrue statement or
omission or to make the Registration Statement or the Prospectus comply with
such requirements; and the Offerors will furnish to the Underwriter a reasonable
number of copies of such amendment or supplement.
(f) The Offerors will use their best efforts, in cooperation with the
Underwriter, to qualify the Capital Securities (and the Capital Securities
Guarantee) and the Subordinated Debt Securities (and the Debt Guarantee) for
offering and sale under the applicable securities laws of such states and the
other jurisdictions of the United States as the Underwriter may designate;
provided, however, that none of the Offerors shall be obligated to file any
general consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so qualified or
to subject itself to taxation in respect of doing business in any jurisdiction
in which it is not so subject.
(g) As soon as practicable, the Trust will make generally available to
its security holders and the Underwriter an earnings statement of the Guarantor
which will satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
of the 1933 Act Regulations.
(h) For a period of three years after the Closing Time, the Guarantor
will furnish to you and, upon request, to the Underwriter, copies of all annual
reports, quarterly reports and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as shall be
furnished by the Guarantor to its stockholders or security holders
generally.
(i) During a period of 30 days from the date of the Pricing Agreement,
none of the Offerors will, without the Underwriter's prior written consent,
directly or indirectly, sell, offer to sell, grant any option for the sale of,
or otherwise dispose of, any Capital Securities, any security convertible into
or exchangeable into or exercisable for Capital Securities or the Subordinated
Debt Securities or any debt securities substantially similar to the Subordinated
Debt Securities or equity securities substantially similar to the Capital
Securities (except for the Subordinated Debt Securities and the Capital
Securities issued pursuant to this Agreement).
Section 4. Payment of Expenses. The Company will pay all expenses
-------------------
incident to the performance of each Offeror's obligations under this Agreement,
including, but not limited to, (i) the printing and filing of the Registration
Statement as originally filed and of each amendment thereto, (ii) the
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preparation, printing and delivery to the Underwriter of this Agreement, the
Pricing Agreement and such other documents as may be required in connection with
the offering, purchase, sale and delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriter, including any capital duties, stamp duties and stock or other
transfer taxes payable upon the sale of the Capital Securities to the
Underwriter, (iv) the fees and disbursements of the Trust's, the Company's and
the Guarantor's counsel, accountants and other advisors, (v) the qualification
of the Capital Securities, the Capital Securities Guarantee, the Subordinated
Debt Securities and the Debt Guarantee under securities laws in accordance with
the provisions of Section 3(g) hereof, including filing fees and the fees and
disbursements of counsel for the Underwriter in connection therewith and in
connection with the preparation of any Blue Sky Survey and any supplement
thereto and any Legal Investment Survey, (vi) the printing and delivery to the
Underwriter of copies of the Registration Statement as originally filed and of
each amendment thereto, of each preliminary prospectus, and of the Prospectus
and Prospectus Supplement and any amendments or supplements thereto, (vii) the
printing and delivery to the Underwriter of copies of any Blue Sky Survey and
any Legal Investment Survey, (viii) the fee of the National Association of
Securities Dealers, Inc., if any, (ix) the fees and expenses of the Debt
Trustee, including the fees and disbursements of counsel for the Debt Trustee in
connection with the Indenture and the Subordinated Debt Securities, (x) the fees
and expenses of the Institutional Trustee and the Guarantee Trustee, including
the fees and disbursements of counsel for the Institutional Trustee in
connection with the Declaration and the Certificate of Trust; (xi) any fees
payable in connection with the rating of the Capital Securities and Subordinated
Debt Securities, (xiii) the cost and charges of any transfer agent or registrar
and (xiv) the cost of delivering the Capital Securities in book-entry form
through the facilities of The Depository Trust Company.
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 5 hereof, the Company shall reimburse the Underwriter
for all of its reasonable out-of-pocket expenses, including the reasonable fees
and disbursements of counsel for the Underwriter.
Section 5. Conditions of Underwriter's Obligations. The obligations of
---------------------------------------
the Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Offerors herein contained, to the performance by the Offerors
of their obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M., New York time, on December 20, 1996 or with the
consent of the Underwriter, at
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such later time and date as may be approved by the Underwriter; and at the
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission. The Prospectus shall have been
filed with the Commission pursuant to Rule 424(b) within the applicable
time period prescribed for such filing by the 1933 Act Regulations and in
accordance with Section 3(b), and prior to the Closing Time, the Offerors
shall have provided evidence satisfactory to the Underwriter of such timely
filing.
(b) At the Closing Time the Underwriter shall have
received:
(1) The favorable opinion, dated as of the Closing Time, of
Fried, Frank, Harris, Shriver & Jacobson (a partnership including
professional corporations), counsel for the Company and the Guarantor,
in form and substance satisfactory to counsel for the Underwriter, to
the effect that:
(i) Each of the Company and the Guarantor has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is
chartered or organized, with requisite corporate power and
authority to own its properties and conduct its business as
described in the Registration Statement.
(ii) The Guarantor's authorized equity capitalization is
as set forth in the Prospectus under the caption
"Capitalization".
(iii) The Declaration has been duly authorized and
executed by the Guarantor and the Regular Trustees.
(iv) The Registration Statement has become effective
under the 1933 Act; any required filing of the Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened
and the Registration Statement and the Prospectus and each
amendment or supplement thereto (exclusive of the documents
incorporated by reference therein), as of their respective
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effective or issue dates (other than the financial statements and
other financial and statistical information contained therein and
the Forms T-1 as to which such counsel need express no opinion)
appear on their face to be responsive as to form in all material
respects with the applicable requirements of the 1933 Act and the
1933 Act Regulations.
(v) No consent, approval, authorization or order of any
United States federal or New York, California or, with respect to
matters arising under the Delaware General Corporation Law,
Delaware court or governmental agency or body is required for the
consummation of the transactions contemplated by this Agreement
and the Pricing Agreement, except such as have been obtained
under the 1933 Act, the 1933 Act Regulations, the 1939 Act and
the 1939 Act Regulations and such as may be required under the
state securities or blue sky laws, rules or regulations of any
jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters and such other approvals as
have been obtained.
(vi) Each of the documents incorporated by reference in
the Registration Statement or the Prospectus at the time they
were filed or last amended (other than the financial statements
and other financial and statistical data contained therein, as to
which such counsel need express no opinion) appeared on its face
to be responsive as to form in all material respects with the
requirements of the 1933 Act, the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations, as applicable.
(vii) To such counsel's knowledge, each of the Company,
the Guarantor and the Trust meets the registrant requirements for
use of Form S-3 under the 1933 Act Regulations.
(viii) The Common Securities, the Capital Securities, the
Subordinated Debt Securities, each of the Guarantees, the
Declaration, the Indenture and each of the Guarantee Agreements
conform in all material respects to all statements relating
thereto contained in the Base Prospectus under the captions
"Description of the Capital Securities," "Description of the
Capital Securities Guarantees," "Description of the Subordinated
Debt Securities and the Debt Guarantees" and "Effect of
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Obligations under the Subordinated Debt Securities, the Debt
Guarantees and the Capital Securities Guarantees," and in the
Prospectus Supplement under the captions "Description of the
Capital Securities," "Description of the Capital Securities
Guarantee," "Description of the Debt Securities and the Debt
Guarantee" and "Effect of Obligations under the Subordinated Debt
Securities, the Debt Guarantee and the Capital Securities
Guarantee", insofar as such statements constitute matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions (in each case other than with respect to trust law as
to which such counsel need express no opinion).
(ix) This Agreement and the Pricing Agreement have been
duly authorized, executed and delivered by each of the Guarantor
and the Company.
(x) The Declaration has been qualified under the
1939 Act.
(xi) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Guarantor; the Capital
Securities Guarantee Agreement, assuming it is duly authorized,
executed, and delivered by the Guarantee Trustee, constitutes a
valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms, except to the
extent that enforcement thereof may be limited by the Bankruptcy
Exceptions; and the Capital Securities Guarantee Agreement has
been qualified under the 1939 Act.
(xii) The Indenture has been duly executed and delivered
by each of the Guarantor and the Company and, assuming due
authorization, execution, and delivery thereof by the Debt
Trustee, is a valid and binding obligation of the Guarantor and
the Company, enforceable against the Guarantor and the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions; and the
Indenture has been qualified under the 1939 Act.
(xiii) The Subordinated Debt Securities are in the form
contemplated by the Indenture, have been duly authorized,
executed and delivered
20
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by the Company and, when authenticated by the Debt Trustee in the
manner provided for in the Indenture and delivered against
payment therefor, will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance
with their terms, except to the extent that enforcement thereof
may be limited by the Bankruptcy Exceptions.
(xiv) The Debt Guarantee is in the form contemplated by
the Indenture, has been duly authorized, executed and delivered
by the Guarantor and, when the Subordinated Debt Securities have
been authenticated by the Debt Trustee in the manner provided for
in the Indenture and delivered against payment therefor, will
constitute a valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms,
except to the extent that enforcement thereof may be limited by
the Bankruptcy Exceptions.
(xv) Neither the Company, the Guarantor nor the Trust
is an "investment company" within the meaning of the 1940 Act.
(xvi) To the knowledge of such counsel, there are no
legal or governmental proceedings pending or threatened that are
required to be disclosed in the Registration Statement or
Prospectus other than those disclosed therein.
(xvii) The execution, delivery and performance by each of
the Company and the Guarantor of this Agreement, the Pricing
Agreement, the Declaration, the Capital Securities, the Common
Securities, the Indenture, the Subordinated Debt Securities, the
Guarantee Agreements, and the Guarantees to the extent that it is
a party thereto, the consummation by each of the Company and the
Guarantor, as the case may be, of the transactions contemplated
herein and therein, and the compliance by each of the Company and
the Guarantor, as the case may be, with their respective
obligations hereunder and thereunder do not and will not result
in any violation of the charter or bylaws of the Guarantor or the
Company, and do not and will not constitute or result in a breach
of any of the terms or provisions of, or constitute a default
under (A) any contract, indenture, mortgage, loan agreement,
note, lease or any other agreement or instrument filed as an
21
<PAGE>
exhibit to the Registration Statement or any of the Incorporated
Documents and to which the Guarantor or the Company is a party or
by which it may be bound or to which any of its properties may be
subject (except for such breaches or defaults that would not have
a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Guarantor and its
subsidiaries considered as one enterprise, or the Company and its
subsidiaries, considered as one enterprise), (B) any existing
applicable law of the United States, the State of New York, the
State of California or under the Delaware General Corporation Law
or rule or regulation of any United States, New York or
California governmental agency or body or Delaware governmental
agency or body under the Delaware General Corporation Law known
by such counsel to be applicable to the Company or the Guarantor
and their respective subsidiaries (other than the federal or
state securities or blue sky laws, rules or regulations, as to
which such counsel need express no opinion under this paragraph
(xviii)) (except for such breaches and defaults that would not
have a material adverse effect on (1) the condition (financial or
otherwise), earnings or business affairs of the Guarantor and its
subsidiaries considered as one enterprise, or the Company and its
subsidiaries considered as one enterprise or (2) the ability of
the Company or the Guarantor to consummate the transactions
contemplated by this Agreement or the Pricing Agreement) or (C)
any judgment, order or decree identified to such counsel in an
officer's certificate of any government, governmental
instrumentality or court or any regulatory body or administrative
agency or other governmental body having jurisdiction over the
Guarantor or the Company or any of their respective properties
(except for such breaches and defaults that would not have a
material adverse effect on (1) the condition (financial or
otherwise), earnings or business affairs of the Guarantor and its
subsidiaries considered as one enterprise, or the Company and its
subsidiaries considered as one enterprise or (2) the ability of
the Company or the Guarantor to consummate the transactions
contemplated by this Agreement or the Pricing Agreement).
(xviii) Under current law, the Trust will be classified
for United States federal income tax purposes as a grantor trust
and not as an
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<PAGE>
association taxable as a corporation; accordingly, for United
States federal income tax purposes, each holder of Capital
Securities generally will be considered the owner of an undivided
interest in the Subordinated Debt Securities, and each holder
will be required to include in its gross income any original
issue discount accrued with respect to its allocable share of the
Subordinated Debt Securities.
(xix) Under current law the Subordinated Debt Securities
should be classified for United States federal income tax
purposes as indebtedness of the Company.
(xx) The discussion set forth in the Prospectus under
the heading "United States Federal Income Taxation" is a fair and
accurate summary of the matters addressed therein, based upon
current law and the assumptions stated or referred to
therein.
Such counsel shall also state that in the course of the preparation by the
Guarantor, the Company, the Trust and their counsel of the Registration
Statement and Prospectus (other than the documents incorporated by reference
therein), such counsel attended conferences with certain of the officers of, and
the independent public accountants for, the Guarantor, the Company and the
Trust, at which the Registration Statement and the Prospectus were discussed.
Between the date of effectiveness of the Registration Statement and the time of
delivery of such counsel's opinion, such counsel shall state that such counsel
attended additional conferences with certain of the officers of, and the
independent public accountants for, the Guarantor, the Company and the Trust at
which the contents of the Prospectus were discussed to a limited extent. Given
the limitations inherent in the independent verification of factual matters and
the character of determinations involved in the registration process, such
counsel need not pass upon and need not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus (including the documents incorporated by
reference therein), except as specifically described in the opinions set forth
in paragraphs (ii), (viii) and (xx) above. Subject to the foregoing and on the
basis of the information such counsel gained in the performance of the services
referred to above, including information obtained from officers and other
representatives of the Guarantor, the Company and the Trust, such counsel shall
state that nothing has come to such counsel's attention that causes such counsel
to believe that at the time it became effective, the Registration Statement
contained any untrue statement of a material fact or omitted to state any
material
23
<PAGE>
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus, at the Representation Date (unless the
term "Prospectus" refers to a prospectus which has been provided to the
Underwriter by the Company for use in connection with the offering of the
Securities that differs from the Prospectus on file at the Commission at the
Representation Date, in which case at the time it is first provided to the
Underwriter for such use) or at the Closing Time includes any untrue statement
of material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that such counsel need not express a view or belief
with respect to financial statements, notes or schedules thereto or other
financial or statistical information included or incorporated by reference in
the Registration Statement and Prospectus or the Forms T-1.
In rendering the opinion set forth in paragraph (v) above, such counsel may
state that such opinion relates to those authorizations, approvals, consents or
orders that, in such counsel's experience, are normally applicable to companies
such as the Company and the Guarantor and to transactions of the type
contemplated by this Agreement and the Pricing Agreement.
In rendering the opinion set forth in paragraph (xviii) above, such counsel
may state that (a) insofar as such opinion relates to laws, rules and
regulations, such opinion relates to those laws, rules and regulations of the
United States, the State of New York, the State of California, or under the
Delaware General Corporation Law that, in such counsel's experience, are
normally applicable to companies such as the Company and the Guarantor and to
transactions of the type contemplated by this Agreement, the Pricing Agreement,
the Declaration, the Indenture and the Guarantee Agreements and (b) such counsel
expresses no opinion with respect to any breach or default (1) not readily
ascertainable from the face of (x) any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument filed by the Guarantor
or the Company as an exhibit to the Registration Statement or any of the
Incorporated Documents or (y) any judgment, order or decree identified to such
counsel in the officer's certificate mentioned above, (2) arising under or based
upon any cross-default provision insofar as it relates to a default under (x)
any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument not filed by the Guarantor or the Company as an exhibit
to the Registration Statement or any of the Incorporated Documents or (y) any
judgment, order or decree not identified to such counsel in the officer's
certificate mentioned above or (3) arising under or based upon any covenant of a
financial or numerical nature or requiring computation.
24
<PAGE>
In rendering such opinion, such counsel may rely (a) as to matters
involving the application of laws of any jurisdiction other than the State of
California, the State of New York, the State of Delaware (but only with respect
to the Delaware General Corporation Law) or the United States, to the extent
such counsel deems proper and specified in such opinion, upon the opinion of
other counsel of good standing whom such counsel believes to be reliable and who
are satisfactory to counsel for the Underwriter and (b) as to matters of fact,
to the extent such counsel deems proper, on certificates of responsible officers
of the Company, the Guarantor, the Trust and public officials. References to
the Prospectus in this paragraph (b)(1) include any supplements thereto at the
Closing Time.
(2) The favorable opinion, dated as of the Closing Time, of
Sandor E. Samuels, Esq., General Counsel of the Company and the
Guarantor, in form and substance satisfactory to counsel for the
Underwriter, to the effect that:
(i) Each of the Company and the Guarantor is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or
conducts material business other than jurisdictions in which the
failure to so qualify, when considered in the aggregate and not
individually, would not have a material adverse effect on the
Company and its subsidiaries, considered as one enterprise, or
the Guarantor and its subsidiaries, considered as one enterprise.
(ii) All of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are
fully paid and non-assessable; all of such shares are owned by
the Guarantor free and clear of any perfected security interest
and, to the knowledge of such counsel after due inquiry, any
other security interests, claims or encumbrances; no holder
thereof is subject to personal liability by reason of being such
a holder.
(iii) No holders of securities of the Company or the
Guarantor have rights to the registration of such securities
under the Registration Statement.
(iv) All of the issued and outstanding Common
Securities of the Trust are directly owned by the Guarantor free
and clear of any security
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interest, mortgage, pledge, lien, encumbrance, claim or equitable
right.
(v) Each of the Company and the Guarantor owns,
possesses or has obtained all material licenses, franchises,
permits, certificates, consents, orders, approvals and other
authorizations issued by the appropriate local, state, federal or
foreign regulatory agencies or bodies necessary to own or lease,
as the case may be, and to operate its properties and to carry on
its business as described in the Registration Statement (except
for such licenses, franchises, permits, certificates, consents,
orders, approvals or authorizations, the failure to own, possess
or obtain of which, would not have a material adverse effect on
the condition (financial or otherwise), earnings or business
affairs of the Guarantor and its subsidiaries considered as one
enterprise) or the Company and its subsidiaries considered as one
enterprise, and such licenses, franchises, permits, certificates,
consents, orders, approvals and other authorizations are in full
force and effect.
(vi) The execution, delivery and performance by the
Company or the Guarantor, of this Agreement, the Pricing
Agreement, the Declaration, the Capital Securities, the Common
Securities, the Indenture, the Subordinated Debt Securities, the
Guarantee Agreements, and the Guarantees to the extent that it is
a party thereto; the consummation by the Company or the
Guarantor, as the case may be, of the transactions contemplated
herein and therein; and the compliance by the Company or the
Guarantor, as the case may be, with their respective obligations
hereunder and thereunder do not and will not result in any
violation of the charter or bylaws of the Company or the
Guarantor, and do not and will not constitute, or result in, a
breach of any of the terms or provisions of, or constitute a
default under, (A) any contract, indenture, mortgage, loan
agreement, note, lease or any other agreement or instrument known
to such counsel to which the Company or the Guarantor is a party
or by which it may be bound or to which any of its properties may
be subject (except for such breaches or defaults that would not
have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
subsidiaries
26
<PAGE>
considered as one enterprise, or the Guarantor and its
subsidiaries considered as one enterprise), (B) any existing
applicable law, rule or regulation (other than the federal or
state securities or blue sky laws, rules or regulations, as to
which such counsel need express no opinion) (except for such
breaches and defaults that would not have a material adverse
effect on (1) the condition (financial or otherwise), earnings or
business affairs of the Guarantor and its subsidiaries considered
as one enterprise, or the Company and its subsidiaries considered
as one enterprise, or (2) the ability of the Company or the
Guarantor to consummate the transactions contemplated by this
Agreement or the Pricing Agreement) or (C) any judgment, order or
decree of any government, governmental instrumentality or court,
or any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or the
Guarantor or any of their respective properties (except for such
breaches and defaults that would not have a material adverse
effect on (1) the condition (financial or otherwise), earnings or
business affairs of the Guarantor and its subsidiaries considered
as one enterprise, or the Company and its subsidiaries considered
as one enterprise, or (2) the ability of the Company or the
Guarantor to consummate the transactions contemplated by this
Agreement or the Pricing Agreement).
(vii) All pending legal or governmental proceedings to
which the Company, the Guarantor or any of their respective
subsidiaries is a party, or to which any of their respective
property is subject, that are not described in the Registration
Statement or Prospectus, including ordinary routine litigation
incidental to the business of the Company or the Guarantor or any
of their respective subsidiaries are, considered in the
aggregate, not material to the condition (financial or
otherwise), earnings or business affairs of the Guarantor and its
subsidiaries considered as one enterprise, or the Company and its
subsidiaries considered as one enterprise.
(viii) To such counsel's knowledge, neither the
Company nor the Guarantor is in violation of its charter or
bylaws.
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In rendering the opinion set forth in paragraph (v) above, such counsel may
state that such opinion relates to those authorizations, approvals, consents or
orders that, in such counsel's experience, are normally applicable to companies
such as the Company and the Guarantor and to transactions of the type
contemplated by this Agreement and the Pricing Agreement.
In rendering the opinion set forth in paragraph (vii) above, such counsel
may state that (a) insofar as such opinion relates to laws, rules and
regulations, such opinion relates to those laws, rules and regulations that, in
such counsel's experience, are normally applicable to companies such as the
Company and the Guarantor and to transactions of the type contemplated by this
Agreement, the Pricing Agreement, the Declaration, the Indenture and the
Guarantee Agreements and (b) such counsel expresses no opinion with respect to
any breach or default (1) not readily ascertainable from the face of (x) any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument or (y) any judgment, order or decree or (2) arising under or based
upon any covenant of a financial or numerical nature or requiring computation.
In rendering such opinion, such counsel may rely (a) as to matters
involving the application of laws of any jurisdiction other than the State of
California or the United States, to the extent such counsel deems proper and
specified in such opinion, upon the opinion of other counsel of good standing
whom such counsel believes to be reliable and who are satisfactory to counsel
for the Underwriter and (b) as to matters, to the extent such counsel deems
proper, on certificates of responsible officers of the Company, the Guarantor
and public officials.
(3) The favorable opinion, dated as of the Closing Time, of
Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the
Trust, to the following effect and covering such additional matters as
the Underwriter may reasonably request:
(i) The Trust has been duly organized and is validly
existing in good standing as a business trust under the Delaware
Act; all filings required under the laws of the State of Delaware
with respect to the organization and valid existence of the Trust
as a business trust have been made; the Trust has all necessary
power and authority to own property and to conduct its business
as described in the Registration Statement and the Prospectus and
to enter into and perform its obligations under this Agreement,
the Pricing Agreement, the Capital Securities and the Common
Securities.
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(ii) The Declaration is the valid and binding
obligation of each of the Regular Trustees and the Delaware
Trustee, enforceable against the Regular Trustees and the
Delaware Trustee in accordance with its terms, except as
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws
of general application relating to or affecting the enforcement
of creditor's rights and remedies, as from time to time in
effect, (b) application of equitable principles (regardless of
whether such enforceability is considered in a proceeding in
equity or at law) and (c) considerations of public policy or the
effect of applicable law relating to fiduciary duties.
(iii) This Agreement and the Pricing Agreement have
been duly authorized and executed by the Trust.
(iv) The Common Securities have been duly authorized by
the Declaration for issuance and, when issued, delivered and paid
for in accordance with the Declaration and as described in the
Prospectus, will be validly issued and, subject to the terms of
the Declaration, fully paid and non-assessable undivided
beneficial interests in the assets of the Trust, and the issuance
of the Common Securities is not subject to preemptive rights
under the Delaware Act or the Declaration.
(v) The Capital Securities have been duly authorized by
the Declaration for issuance and, when issued, delivered and paid
for in accordance with the Declaration and this Agreement, will
be validly issued, and, subject to the terms of the Declaration,
fully paid and non-assessable undivided beneficial interests in
the assets of the Trust; under the Delaware Act and the terms of
the Declaration, the holders of the Capital Securities will,
subject to the terms of the Declaration, be entitled to the same
limitation of personal liability as is extended to stockholders
of private corporations for profit organized under the General
Corporation Law of the State of Delaware, provided, however, no
opinion shall be expressed with respect to the liability of any
Capital Security holder who is, was or may become a named Trustee
of the Trust; and the issuance of the Capital Securities is not
subject
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to preemptive rights under the Delaware Act or the Declaration.
Such counsel may state that the Capital Securities holders may be
obligated, pursuant to the Declaration, to (a) provide indemnity
and/or security in connection with and pay taxes or governmental
charges arising from transfers of Capital Securities and the
issuance of replacement Capital Securities, and (b) provide
security and indemnity in connection with requests of or
directions to the Institutional Trustee to exercise its rights
and powers under the Declaration.
(vi) The issuance, sale and delivery by the Trust of
the Capital Securities and of the Common Securities, the
execution and delivery by the Trust of this Agreement and the
Pricing Agreement, the purchase by the Trust of the Subordinated
Debt Securities and the performance by the Trust of its
obligations thereunder does not (a) result in any violation of
the Declaration or the Certificate of Trust or any applicable
Delaware law (statutory or decisional) or any rule or regulation
of any Delaware governmental agency or body having jurisdiction
over the Trust or any of its properties or assets or (b) to our
knowledge, without independent investigation, conflict with or
result in a breach or violation of any of the provisions of, or
constitute a default under, any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the
Trust is a party or to which any of its property or assets is
subject.
(vii) Assuming that the Trust derives no income from
or in connection with sources within the State of Delaware and
has no assets, activities (other than having a Delaware Trustee
as required by the Delaware Act and the filing of documents with
the Delaware Secretary of State) or employees in the State of
Delaware, no authorization, approval, consent or order of any
Delaware court or governmental authority or agency is required to
be obtained by the Trust solely in connection with the issuance
and sale of the Common Securities and the Capital Securities or
the purchase by the Trust of the Subordinated Debt Securities,
except such as may be required under Delaware securities or blue
sky laws.
(viii) The statements in the Base Prospectus under the
captions "The Trusts,"
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"Description of the Capital Securities," "Description of the
Capital Securities Guarantees," "Description of the Subordinated
Debt Securities and the Debt Guarantees" and "Effect of
Obligations under the Subordinated Debt Securities, the Debt
Guarantees and the Capital Securities Guarantee," and in the
Prospectus Supplement under the captions "Risk Factors,"
"Countrywide Capital Trust," "Description of the Capital
Securities," "Description of the Capital Securities Guarantee,"
"Description of the Debt Securities and the Debt Guarantee" and
"Effect of Obligations under the Subordinated Debt Securities,
the Debt Guarantee and the Capital Securities Guarantee," to the
extent such statements address matters of Delaware trust law, are
correct statements of such law in all material respect.
(4) The favorable opinion, dated as of the Closing Time, of
Emmet, Marvin & Martin, LLP, counsel for the Institutional Trustee
under the Declaration, and the Guarantee Trustee under the Capital
Securities Guarantee Agreement, in form and substance satisfactory to
counsel for the Underwriter, to the effect that:
(i) The Institutional Trustee and Guarantee Trustee is
a New York banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State
of New York with all necessary power and authority to execute and
deliver, and to carry out and perform its obligations under the
terms of the Declaration and the Capital Securities Guarantee
Agreement.
(ii) The execution, delivery and performance by the
Institutional Trustee of the Declaration and the execution,
delivery and performance by the Guarantee Trustee of the Capital
Securities Guarantee Agreement have been duly authorized by all
necessary corporate action on the part of the Institutional
Trustee, in the case of the Declaration, and the Guarantee
Trustee, in the case of the Capital Securities Guarantee
Agreement. The Declaration and the Capital Securities Guarantee
Agreement have been duly executed and delivered by the
Institutional Trustee, in the case of the Declaration, and the
Guarantee Trustee, in the case of the Capital Securities
Guarantee Agreement, and constitute the legal, valid and binding
obligations of the
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Institutional Trustee, in the case of the Declaration, and the
Guarantee Trustee, in the case of the Capital Securities
Guarantee Agreement, enforceable against the Institutional
Trustee, in the case of the Declaration, and the Guarantee
Trustee, in the case of the Capital Securities Guarantee
Agreement, in accordance with their terms, except as enforcement
thereof may be limited by the Bankruptcy Exceptions.
(iii) The execution, delivery and performance of the
Declaration and the Capital Securities Guarantee Agreement by the
Institutional Trustee, in the case of the Declaration, and the
Guarantee Trustee, in the case of the Capital Securities
Guarantee Agreement, does not conflict with or constitute a
breach of the Articles of Organization or Bylaws of the
Institutional Trustee, in the case of the Declaration, or the
Guarantee Trustee, in the case of the Capital Securities
Guarantee Agreement.
(iv) No consent, approval or authorization of, or
registration with or notice to, any New York or federal banking
authority is required for the execution, delivery or performance
by the Institutional Trustee of the Declaration or by the
Guarantee Trustee of the Capital Securities Guarantee Agreement.
(5) The favorable opinion, dated as of the Closing Time, of
Richards, Layton & Finger, counsel for The Bank of New York (Delaware), as
Delaware Trustee under the Declaration, in form and substance satisfactory
to counsel for the Underwriter, to the effect that:
(i) The Bank of New York (Delaware) is a Delaware
banking corporation with trust powers, duly organized, validly
existing and in good standing under the laws of the State of
Delaware with all necessary power and authority to execute and
deliver, and to carry out and perform its obligations under the
terms of the Declaration.
(ii) The execution, delivery and performance by the
Delaware Trustee of the Declaration have been duly authorized by
all necessary corporate action on the part of the Delaware
Trustee. The Declaration has been duly executed and delivered by
the Delaware Trustee.
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(iii) The execution, delivery and performance of the
Declaration by the Delaware Trustee does not conflict with or
constitute a breach of the Articles of Organization or Bylaws of
the Delaware Trustee.
(iv) No consent, approval or authorization of, or
registration with or notice to, any Delaware or federal banking
authority is required for the execution, delivery or performance
by the Delaware Trustee of the Declaration.
(6) The favorable opinion, dated as of the Closing Time, of
Brown & Wood llp, counsel for the Underwriter, in form and substance
satisfactory to the Underwriter with respect to the incorporation and
legal existence of the Guarantor and the Company; the legal existence
of the Trust, the Capital Securities, the Indenture, the Debt
Guarantee, the Capital Securities Guarantee Agreement, this Agreement,
the Pricing Agreement, the Registration Statement, the Prospectus and
other related matters as the Underwriter may require.
In giving its opinion, Brown & Wood llp may rely as to
certain matters of Delaware law upon the opinion of Morris, Nichols,
Arsht & Tunnell, special Delaware counsel to the Trust, the Company
and the Guarantor, which shall be delivered in accordance with Section
5(b)(3) hereof, and on the opinion of Richards, Layton & Finger,
counsel for the Delaware Trustee, which shall be delivered in
accordance with Section 5(b)(5) hereof.
(c) At the Closing Time the Company and the Guarantor shall each
furnish to the Underwriter a certificate of its President, a Managing
Director or a Vice President and its chief financial officer or chief
accounting officer, and the Trust shall furnish to the Underwriter a
certificate of two Regular Trustees of the Trust, each such certificate
dated as of the Closing Time, to the effect that (i) the representations
and warranties in Section 1 hereof are true and correct in all material
respects with the same force and effect as though expressly made at and as
of the Closing Time, (ii) each of the Trust, the Company and the Guarantor,
as the case may be, has complied with all agreements in all material
respects and satisfied all conditions in all material respects on its part
to be performed or satisfied at or prior to the Closing Time, and (iii) no
stop order suspending the effectiveness
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<PAGE>
of the Registration Statement has been issued and no proceedings for that
purpose have been initiated or, to the best knowledge and information of
such officer, threatened by the Commission. As used in this Section 5(c),
the term "Prospectus" means the Prospectus in the form first used to
confirm sales of the Securities.
(d) At the time of execution of the Pricing Agreement, the
Underwriter shall have received from Grant Thornton LLP a letter, dated
such date, in form and substance satisfactory to the Underwriter, and
substantially in the same form as the draft letter previously delivered to
and approved by the Underwriter.
(e) At the Closing Time the Underwriter shall have received from
Grant Thornton LLP a letter, dated as of the Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (d) of this Section, except that the specified date referred to
shall be a date not more than three days prior to the Closing Time and, if
the Offerors have elected to rely on Rule 430A of the 1933 Act Regulations,
to the further effect that they have carried out certain specified
procedures with respect to certain amounts, percentages and financial
information specified by the Underwriter and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and have found such
amounts, percentages and financial information to be in agreement with the
relevant accounting, financial and other records of the Guarantor and its
subsidiaries identified in such letter.
(f) At the Closing Time, the Capital Securities and the
Subordinated Debt Securities shall be rated in one of the four highest
rating categories for such securities ("Investment Grade") by any
nationally recognized statistical rating agency, and the Trust shall have
delivered to the Underwriter a letter, dated the Closing Time, from such
nationally recognized statistical rating agency, or other evidence
satisfactory to the Underwriter, confirming that the Capital Securities and
the Subordinated Debt Securities have Investment Grade ratings; and there
shall not have occurred any decrease in the ratings of any of the debt
securities of the Company or the Guarantor or of the Capital Securities by
any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the 1933 Act) and such organization shall not
have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the debt securities of
the Company or the Guarantor or of the Capital Securities.
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<PAGE>
(g) At the Closing Time and each Date of Delivery, if any,
counsel for the Underwriter shall have been furnished with such documents
and opinions as they may reasonably require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy
and completeness of any of the representations and warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Offerors in connection with the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriter and counsel for the Underwriter.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriter by notifying the Offerors at any time at or prior to the Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof and except that Sections 6 and 7
shall survive any such termination and remain in full force and effect.
Section 6. Indemnification. (a) Indemnification of Underwriter. Each of
---------------
the Offerors agrees, jointly and severally, to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the information deemed to
be part of the Registration Statement pursuant to Rule 430A(b) of the 1933
Act Regulations (the "Rule 430A Information"), if applicable, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus, any preliminary
prospectus supplement or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation,
35
<PAGE>
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission; provided that any such settlement is effected with the written
consent of the Trust, the Company or the Guarantor; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriter), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Offerors by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, if applicable, or any preliminary
prospectus, preliminary prospectus supplement or the Prospectus (or any
amendment or supplement thereto), and provided further, that the foregoing
-------- -------
indemnity with respect to any untrue statement or omission or alleged untrue
statement contained in or omission from any preliminary prospectus or
preliminary prospectus supplement, shall not inure to the benefit of the
Underwriter (or any person controlling the Underwriter within the meaning of
Section 15 of the 1933 Act) from whom the person asserting any such loss,
liability, claim, damage or expense purchased any of the Securities which are
the subject thereof if the Trust, the Company or the Guarantor, as applicable,
shall sustain the burden of proving that such person was not sent or given a
copy of the Prospectus (or the Prospectus as amended or supplemented), at or
prior to the written confirmation of the sale of such Securities to such person,
and the untrue statement contained in or omission from such preliminary
prospectus or preliminary prospectus supplement was corrected in the Prospectus
(or the Prospectus as amended or supplemented).
(b) Indemnification of Trust by Company and Guarantor. The Company and the
Guarantor agree jointly and severally to indemnify the Trust against any loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Section 6(a) hereunder.
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(c) Indemnification of Offerors, Directors and Officers. The Underwriter
agrees to indemnify and hold harmless each of the Trust, its trustees, and the
Company and the Guarantor, their directors and each of their officers who signed
the Registration Statement, and each person, if any, who controls the Trust, the
Company or the Guarantor within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, if applicable,
or any preliminary prospectus, preliminary prospectus supplement or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with information furnished to the Offerors by the Underwriter
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus, preliminary prospectus supplement or the Prospectus
(or any amendment or supplement thereto).
(d) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by the Underwriter and, in
the case of parties indemnified pursuant to Section 6(c) above, counsel to the
indemnified parties shall be selected by the Company and the Guarantor;
provided, however, that in case any such action is brought against any
- -------- -------
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein, and to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, further, that if the defendants in any such action include both
-------- -------
the indemnified party and the indemnifying party, and the indemnified party
shall have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to
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<PAGE>
such indemnified party of its election so to assume the defense of such action
and approval by the indemnified party of counsel, the indemnifying party will
not be liable to such indemnified party under this Section 6 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the second proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel, approved by the Underwriter in the
case of paragraph (a) of this Section 6, representing the indemnified parties
under such paragraph (a) who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii). No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
Section 7. Contribution. If the indemnification provided for in Section 6
------------
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Offerors on the one
hand and the Underwriter on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Offerors on the one hand and of the Underwriter on the
other hand in connection with the statements or omissions which
38
<PAGE>
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriter on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Capital
Securities pursuant to this Agreement (before deducting expenses) received by
the Offerors and the total underwriting discount received by the Underwriter, in
each case as set forth on the cover of the Prospectus, bear to the aggregate
initial public offering price of the Capital Securities as set forth on such
cover.
The relative fault of the Offerors on the one hand and the Underwriter on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Offerors or by the Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Offerors and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Capital Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
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For purposes of this Section 7, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter, and
each trustee of the Trust and each director of the Company or the Guarantor,
each officer of the Company or the Guarantor who signed the Registration
Statement, and each person, if any, who controls the Trust, the Company or the
Guarantor within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Trust, the Company or
the Guarantor, as the case may be.
Section 8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or
the Pricing Agreement, or contained in certificates of officers of the Company
or the Guarantor, or any Regular Trustee, submitted pursuant hereto or thereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or any controlling person,
or by or on behalf of the Offerors, and shall survive delivery of the Securities
to the Underwriter.
Section 9. Termination of Agreement. Termination; General. (a) The
------------------------
Underwriter may terminate this Agreement, by notice to the Offerors, at any time
at or prior to the Closing Time (i) if there has occurred any outbreak of
hostilities or escalation thereof the effect of which is such as to make it, in
the reasonable judgment of the Underwriter, impracticable to market the
Securities or enforce contracts for the sale of the Securities, or (ii) if
trading in any securities of the Company or the Guarantor has been suspended or
materially limited by the Commission or a national securities exchange, or if
trading generally on either the American Stock Exchange or the New York Stock
Exchange has been suspended, or (iii) if a banking moratorium has been declared
by either federal, New York or Delaware authorities, or (iv) if the rating
assigned by any nationally recognized securities rating agency to any debt
securities of the Company or the Guarantor or to the Capital Securities as of
the date hereof shall have been lowered since that date or if any such rating
agency shall have publicly announced since that date that it has under
surveillance or review, with possible negative implications, its rating of any
debt securities of the Company or the Guarantor or of the Capital Securities, or
(v) if there shall have come to your attention any facts that would cause you to
believe that the Prospectus, at such time, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time of such
delivery, not misleading or (vi) if the Registration Statement, and any
amendment thereof, shall not have become
40
<PAGE>
effective at or prior to 5:30 P.M., New York time, on December 20, 1996.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
Section 10. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of written telecommunication. Notices to the
Underwriter shall be directed to it at Seven World Trade Center, New York, New
York 10048, attention of Steven Crowley, notices to the Company or to the
Guarantor shall be directed to them at 155 N. Lake Avenue, Pasadena, California
91101, attention of the General Counsel and notices to the Trust shall be
directed to it c/o the Guarantor at 155 N. Lake Avenue, Pasadena, California
91101, attention of the General Counsel.
Section 11. Parties. This Agreement and the Pricing Agreement shall inure
-------
to the benefit of and be binding upon the Underwriter, the Trust, the Company,
the Guarantor and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation other than the Underwriter, the Trust, the Company, the Guarantor
and their respective successors and the controlling persons and the officers and
directors referred to in Sections 6 and 7 hereof and their heirs and legal
representatives any legal or equitable right, remedy or claim under or in
respect of this Agreement or the Pricing Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriter, the Trust, the
Company, the Guarantors and their respective successors, and said controlling
persons and said officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from the Underwriter shall be deemed to be a
successor or an assign merely by reason of such purchase.
Section 12. GOVERNING LAW AND TIME. THIS AGREEMENT AND THE PRICING
----------------------
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH
STATE. UNLESS STATED OTHERWISE, ALL SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME.
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Trust, the Company and the Guarantor a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement between the Underwriter, the Trust, the Company and the
Guarantor in accordance with its terms.
Very truly yours,
COUNTRYWIDE CAPITAL I
By: ______________________________
Name:
as Regular Trustee
By: ______________________________
Name:
as Regular Trustee
COUNTRYWIDE HOME LOANS, INC.
By: ______________________________
Name:
Title:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: ______________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
SALOMON BROTHERS INC
By: _____________________________________
Authorized Signatory
42
<PAGE>
EXHIBIT A
300,000 Capital Trust Pass-through Securities
COUNTRYWIDE CAPITAL I
(a Delaware Trust)
___% Capital Trust Pass-through Securities/SM/ (TruPS/SM/)
(Liquidation Amount of $1,000 per Capital Security)
PRICING AGREEMENT
-----------------
__________, 1996
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
Reference is made to the Underwriting Agreement dated November __, 1996
(the "Underwriting Agreement") relating to the purchase by the Underwriter of
the above-referenced ___% Capital Trust Pass-through (the "Capital Securities"),
of Countrywide Capital I, a Delaware business trust (the "Trust").
Pursuant to Section 2 of the Underwriting Agreement, each of Countrywide
Home Loans, Inc., a New York corporation (the "Company"), Countrywide Credit
Industries, Inc., a Delaware corporation (the "Guarantor" and, together with the
Company and the Trust, the "Offerors") and the Trust agrees with the Underwriter
as follows:
1. The initial public offering price per share for the Capital
Securities, determined as provided in said Section 2, shall be $_________.
2. The purchase price per share for the Capital Securities to be paid
by the Underwriter shall be $_______, being an amount equal to ____% of the
initial public offering price set forth above.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE.
- ---------------
/SM/ Salomon Inc has filed applications with the United States Patent and
Trademark Office for the registration of the Capital Trust Pass-through
Securities and TRUPS service marks.
A-1
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Trust, the Company and the Guarantor a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement between the Underwriter, the Trust, the Company and the
Guarantor in accordance with its terms.
Very truly yours,
COUNTRYWIDE CAPITAL I
By: ______________________________
Name:
as Regular Trustee
By: ______________________________
Name:
as Regular Trustee
COUNTRYWIDE HOME LOANS, INC.
By: ______________________________
Name:
Title:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: ______________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
SALOMON BROTHERS INC
By: _____________________________________
Authorized Signatory
<PAGE>
EXHIBIT 4.5
==============================================
AMENDED AND RESTATED DECLARATION
OF TRUST
COUNTRYWIDE CAPITAL I
Dated as of December ____, 1996
==============================================
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a) ........................................................ 5.3(a)
310(c) ........................................................ Inapplicable
311(c) ........................................................ Inapplicable
312(a) ........................................................ 2.2(a)
312(b) ........................................................ 2.2(b)
313 ........................................................ 2.3
314(a) ........................................................ 2.4
314(b) ........................................................ Inapplicable
314(c) ........................................................ 2.5
314(d) ........................................................ Inapplicable
314(f) ........................................................ Inapplicable
315(a) ........................................................ 3.9(b)
315(c) ........................................................ 3.9(a)
315(d) ........................................................ 3.9(a)
316(a) ........................................................ Annex I
316(c) ........................................................ 3.6(e)
__________
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
2
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
COUNTRYWIDE CAPITAL I
December __, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of December __, 1996, by the Original Trustees (as defined herein),
the Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Original Trustees and the Sponsor established Countrywide
Capital I, a trust under the Business Trust Act (as defined herein) (the
"Trust"), pursuant to a Declaration of Trust, dated as of October 17, 1996 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on October 15, 1996, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in the
Debentures (as defined herein) of the Debenture Issuer (as defined herein) and
the Debenture Guarantee (as defined herein) of the Sponsor endorsed thereon;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
-----------
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined
herein have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to
time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes
and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
---------
the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent.
-----
"Authorized Officer" of a Person means any Person that is authorized
------------------
to bind such Person.
"Book-Entry Interest" means a beneficial interest in a Global
-------------------
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means, with respect to any series of Securities, any
------------
day other than Saturday, Sunday or any other day on which federal or state
banking institutions in the Borough of Manhattan, the City of New York or Los
Angeles, California, are authorized or obligated by any applicable law,
executive order or regulation to close.
2
<PAGE>
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
------------------
Code, 12 Del. Code (S) 3801 et seq., as it may be amended from time to time, or
------------ -- ---
any successor legislation.
"Capital Securities Guarantee" means the guarantee agreement to be
----------------------------
dated as of December __, 1996, of the Sponsor in respect of the Capital
Securities.
"Capital Security" or "Capital Securities" has the meaning specified
----------------------------------------
in Section 7.1(a).
"Capital Security Beneficial Owner" means, with respect to a Book-
---------------------------------
Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules and regulations of such Clearing Agency).
"Capital Security Certificate" means a certificate representing a
----------------------------
Capital Security substantially in the form of Exhibit A-1.
"Certificate" means a Common Security Certificate or a Capital
-----------
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
---------------
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book-entry transfers of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time the Clearing
Agency effects book-entry transfers securities deposited with the Clearing
Agency.
"Closing Date" means the "Closing Time" under the Underwriting
------------
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission or a
----------
successor federal agency performing comparable functions.
"Common Securities Guarantee" means the guarantee agreement to be
---------------------------
dated as of December __, 1996 of the Sponsor in respect of the Common
Securities.
3
<PAGE>
"Common Security" or "Common Securities" has the meaning specified in
--------------------------------------
Section 7.1(a).
"Common Security Certificate" means a definitive certificate in fully
---------------------------
registered form representing one or more Common Securities substantially in the
form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
--------------------------
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional Trustee
----------------------
at which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay Street, Floor 21 West, New
York, New York 10286.
"Covered Person" means: (a) any officer, director, shareholder,
--------------
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Guarantee" means the guarantee by the Sponsor of the
-------------------
Debentures endorsed thereon.
"Debenture Issuer" means Countrywide Home Loans, Inc., a New York
----------------
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means The Bank of New York, a New York banking
-----------------
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by the
----------
Debenture Issuer under the Indenture to the Trust which Debentures will be
registered in the name of and held by the Institutional Trustee or, upon the
dissolution, winding-up or termination of the Trust, the Depositary or the
Holder, as the case may be, a specimen certificate for such series of Debentures
being substantially in the form of Exhibit B.
"Delaware Trustee" has the meaning set forth in Section 5.2.
----------------
"Definitive Capital Security Certificates" has the meaning set forth
----------------------------------------
in Section 9.4.
4
<PAGE>
"Depositary" means, with respect to the Capital Securities, DTC, or
----------
another Clearing Agency.
"Distribution" means a distribution payable to Holders of Securities
------------
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, New York, New York, the
---
initial Clearing Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974,
-----
as amended.
"ERISA Plan" means an employee benefit plan subject to ERISA or an
----------
individual retirement account or plan subject to Section 4975 of the Code.
"Event of Default" in respect of the Securities means an Indenture
----------------
Event of Default has occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
----------------------------
10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
------------------
"Guarantor" has the meaning set forth in the Indenture.
---------
"Holder" means a Person in whose name a Certificate representing a
------
Security is registered.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
------------------
Indemnified Person.
"Indenture" means the Indenture dated as of December __, 1996, among
---------
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures and the Debenture Guarantees are to be
issued.
"Indenture Event of Default" means an Event of Default as defined in
--------------------------
the Indenture.
"Institutional Trustee" means the Trustee meeting the eligibility
---------------------
requirements set forth in Section 5.3 and shall initially mean The Bank of New
York, a New York banking corporation.
"Institutional Trustee Account" has the meaning set forth in Section
-----------------------------
3.8(c).
"Investment Company" means an investment company as defined in the
------------------
Investment Company Act.
5
<PAGE>
"Investment Company Act" means the Investment Company Act of 1940, as
----------------------
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
------------
"Majority in liquidation amount of the Securities" means, except as
------------------------------------------------
provided in the terms of the Capital Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount of all outstanding
Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
------------------
Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered in connection with compliance with a condition or covenant
provided for it in this Declaration shall include:
(a) a statement that each officer signing the Certificate has
read the condition or covenant and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each such officer in rendering the
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Original Trustees" means, Eric P. Sieracki and Carlos Garcia, each in
-----------------
his capacity as a Regular Trustee of the Trust and The Bank of New York
(Delaware) in its capacity as Delaware Trustee of the Trust, in each case
appointed pursuant to the Original Declaration.
"Paying Agent" has the meaning specified in Section 7.2.
------------
6
<PAGE>
"Person" means a legal person, including any individual, corporation,
------
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Pricing Agreement" means the pricing agreement between the Trust, the
-----------------
Debenture Issuer, and the underwriter party to the Underwriting Agreement with
respect to the offer and sale of the Capital Securities.
"Quorum" means a majority of the Regular Trustees or, if there are
------
only two Regular Trustees, both of them.
"Regular Trustee" has the meaning set forth in Section 5.1.
---------------
"Related Party" means, with respect to the Sponsor, any direct or
-------------
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
-------------------
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, the
treasurer, any assistant treasurer or other officer of the Corporate Trust
Office of the Institutional Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
---------
"Securities" means the Common Securities and the Capital Securities.
----------
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
---------------------
Capital Securities Guarantee.
"Sponsor" means Countrywide Credit Industries, Inc., a Delaware
-------
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as sponsor of the Trust.
7
<PAGE>
"Successor Delaware Trustee" has the meaning set forth in Section
--------------------------
5.7(b).
"Successor Entity" has the meaning set forth in Section 3.15(b).
----------------
"Successor Institutional Trustee" has the meaning set forth in Section
-------------------------------
5.7(b).
"Successor Securities" has the meaning set forth in Section 3.15(b).
--------------------
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
--------------
"Tax Event" has the meaning set forth in Annex I hereto.
---------
"10% in liquidation amount of the Securities" means, except as
-------------------------------------------
provided in the terms of the Capital Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
--------------------
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
------- --------
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended from time to time, or any successor legislation.
"Underwriting Agreement" means the Underwriting Agreement for the
----------------------
offering and sale of Capital Securities substantially in the form of Exhibit C.
8
<PAGE>
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application.
--------------------------------
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only
Trustee which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S)310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
------------------------------
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Institutional Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of the
Holders ("List of Holders") as of such record date, provided that neither the
-------- ----
Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Institutional Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request therefor, a
List of Holders as of a date no more than 14 days before such List of Holders is
given to the Institutional Trustee. The Institutional Trustee shall preserve,
in as current a form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity) provided that the Institutional Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Institutional Trustee shall comply with its obligations under
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
------------------------------------
9
<PAGE>
Within 60 days after May 15 of each year, the Institutional Trustee
shall provide to the Holders of the Capital Securities such reports as are
required by (S) 313 of the Trust Indenture Act, if any, in the form and in the
manner provided by (S) 313 of the Trust Indenture Act. The Institutional
Trustee shall also comply with the requirements of (S) 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
-----------------------------------------
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such documents, reports information
(if any) and compliance certificates required by (S) 314 of the Trust Indenture
Act in the form, in the manner and at the times required by (S) 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such evidence of compliance
with all covenants and conditions precedent, if any, provided for in this
Declaration that relate to any of the matters set forth in (S) 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to (S) 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
-------------------------
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote or consent, on behalf of the Holders of all of the
Capital Securities, waive any past Event of Default in respect of the Capital
Securities and its consequences, provided that, if the underlying Indenture
-------- ----
Event of Default:
(i) is not waivable under the Indenture, the Event of Default
under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super Majority")
to be waived under the Indenture, such Event of Default under this
Declaration may only be waived by the vote or consent of the Holders
of at least the proportion in liquidation amount of the Capital
Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
10
<PAGE>
The foregoing provisions of this Section 2.6(a) shall be in lieu of (S)
316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a) (1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
Indenture Event of Default shall cease to exist, and any Event of Default with
respect to the Capital Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote or consent, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Indenture
-------- ----
Event of Default:
(i) is not waivable under the Indenture, the Event of Default
under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived under the Indenture, such Event of Default under this
Declaration may only be waived by the vote or consent of the Holders
of at least the proportion in liquidation amount of the Common
Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;
provided, further, that, notwithstanding (i) or (ii) above, each Holder of
- -------- -------
Common Securities will be deemed to have waived any such Indenture Event of
Default and all Events of Default with respect to the Common Securities and
their consequences until all Events of Default with respect to the Capital
Securities have been cured, waived or otherwise eliminated, and until such
Events of Default with respect to the Capital Securities have been so cured,
waived or otherwise eliminated, the Institutional Trustee will be deemed to be
acting solely on behalf of the Holders of the Capital Securities and only the
Holders of the Capital Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of (S)(S)
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and
11
<PAGE>
(S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted in the
Trust Indenture Act. Subject to the foregoing provisions in this Section
2.6(b), upon such waiver, any such Indenture Event of Default shall cease to
exist, and any Event of Default with respect to the Common Securities arising
therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Indenture Event of Default by the Institutional
Trustee at the direction of the Holders of the Capital Securities constitutes a
waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 2.6(c) shall be in lieu of
(S) 316(a)(1)(B) of the Trust Indenture Act and (S) 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Events of Default; Notice.
-------------------------
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all defaults with respect to the Securities
actually known to a Responsible Officer of the Institutional Trustee, unless
such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Indenture Event of Default, not including any periods of grace provided for
therein and irrespective of the giving of any notice provided therein);
provided, however, that, except for a default in the payment of principal of (or
- -------- ------- ----
premium, if any) or interest on any of the Debentures or in the payment of any
sinking fund installment established for the Debentures, the Institutional
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 5.01(a) and 5.01(b) of the
Indenture; or
(ii) any default as to which the Institutional Trustee shall have
received written notice or of which a Responsible Officer of the
Institutional Trustee
12
<PAGE>
charged with the administration of the Declaration shall have actual
knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust is named "Countrywide Capital I," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders. The Trust's activities may be conducted under the name of the
Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust is c/o Countrywide
Credit Industries, Inc., 155 North Lake Avenue, Pasadena, California 91101. On
ten Business Days' written notice to the Holders, the Regular Trustees may
designate another principal office.
The address of the Trust's registered office in the State of Delaware
is c/o The Bank of New York (Delaware), 400 White Clay Center, Route 273,
Newark, Delaware 19711, Attn: Corporate Trust Administrator.
SECTION 3.3 Purpose.
-------
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities and use the gross proceeds from such sale to acquire the
Debentures and the Debenture Guarantee, and (b) except as otherwise limited
herein, to engage in only those other activities necessary or incidental
thereto. The Trust shall not issue any securities other than the Securities,
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
---------
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the
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Trust. In dealing with the Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
------------------------------
Except as provided in Section 3.8 with respect to the Debentures, the
Debenture Guarantee and the Institutional Trustee Account or as otherwise
provided in this Declaration, legal title to all assets of the Trust shall be
vested in the Trust. The Holders shall not have legal title to any part of the
assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
-----------------------------------------
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Capital Securities and the Common Securities
in accordance with this Declaration; provided, however, that the Trust may
-------- -------
issue no more than one series of Capital Securities and no more than one
series of Common Securities, and, provided, further, that there shall be no
-------- -------
interests in the Trust other than the Securities, and the issuance of
Securities shall be limited to a simultaneous issuance of both Capital
Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Capital Securities,
at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor and the Debenture
Issuer, including any amendments thereto, pertaining to the Capital
Securities;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Capital Securities in any State
in which the Sponsor has determined to qualify or register such
Capital Securities for sale;
(iii) execute and file an application, prepared by the Sponsor,
to The New York Stock Exchange, Inc. or any other national securities
exchange or the Nasdaq Stockmarket's
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National Market for listing upon notice of issuance of any Capital
Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by
the Sponsor, relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act; and
(v) execute and enter into the Underwriting Agreement and Pricing
Agreement providing for the sale of the Capital Securities;
(c) to acquire the Debentures and the Debenture Guarantee with the
proceeds of the sale of the Capital Securities and the Common Securities;
provided, however, that the Regular Trustees shall cause legal title to the
- -------- -------
Debentures and the Debenture Guarantee to be held of record in the name of the
Institutional Trustee for the benefit of the Holders of the Capital Securities
and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written
notice of the occurrence of a Tax Event; provided that the Regular Trustees
-------- ----
shall consult with the Sponsor and the Institutional Trustee before taking or
refraining from taking any Ministerial Action in relation to a Tax Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of (S) 316(c) of the Trust Indenture Act, Distributions,
voting rights, redemptions, exchanges and other distributions upon dissolution,
winding-up or termination, and to issue relevant notices to the Holders of
Capital Securities and Holders of Common Securities as to such actions and
applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Institutional Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
15
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(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by (S) 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be executed by
any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of any notice
received from the Debenture Issuer of its election to defer payments of interest
on the Debentures by extending the interest payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the of Holders Securities or to
enable the Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their discretion to be
necessary or desirable in carrying out the activities of the Trust as set out in
this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes,
provided that such action does not adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly
16
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prepared and filed by the Regular Trustees, on behalf of the Trust.
(q) to call a meeting of the Holders of the Capital Securities if
directed to do so by Holders of at least 10% in aggregate liquidation amount
thereof; and
(r) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees are authorized and directed to operate the Trust
in such a way so that the Trust will not be required to register as an
Investment Company nor be characterized as other than a grantor trust for United
Stated federal income tax purposes. The Regular Trustees are authorized to take
any action, not inconsistent with applicable law, this Declaration or the
certificates of incorporation of the Debenture Issuer and the Guarantor, that
the Regular Trustees determine in their discretion to be necessary or desirable
to cause the Debentures to be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not cause or
permit the Trust to take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Institutional Trustee set forth in Section
3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and
---------------------------------------
the Trustees.
------------
(a) The Trust shall not, and the Trustees (including the Institutional
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Institutional Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant
to the terms of this Declaration and of the Securities;
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(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration (including
Annex I), (A) direct the time, method and place of exercising any
trust or power conferred upon the Debenture Trustee with respect to
the Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable or
(D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required
unless the Trust shall have received any required consent of Holders
and an opinion of counsel to the effect that such modification will
not cause more than an insubstantial risk that for United States
federal income tax purposes the Trust will not be classified as a
grantor trust.
SECTION 3.8 Powers and Duties of the Institutional
--------------------------------------
Trustee.
-------
(a) The legal title to the Debentures and the Debenture Guarantee
shall be owned by and held of record in the name of the Institutional Trustee in
trust for the benefit of the Holders of the Securities. The right, title and
interest of the Institutional Trustee to the Debentures and the Debenture
Guarantee shall vest automatically in each Person who may hereafter be appointed
as Institutional Trustee in accordance with Section 5.7. Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures and the Debenture Guarantee have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures and the Debenture
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Guarantee to the Regular Trustees or to the Delaware Trustee (if the
Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing bank
account (the "Institutional Trustee Account") in the name of and under the
exclusive control of the Institutional Trustee on behalf of the Holders
and, upon the receipt of payments of funds made in respect of the
Debentures and the Debenture Guarantee held by the Institutional Trustee,
deposit such funds into the Institutional Trustee Account and make payments
to the Holders of the Capital Securities and Holders of the Common
Securities from the Institutional Trustee Account in accordance with
Section 6.1 and on liquidation, redemption and otherwise. Funds in the
Institutional Trustee Account shall be held uninvested and without
liability for interest thereon until disbursed in accordance with this
Declaration. The Institutional Trustee Account shall be an account that is
maintained with a banking institution the rating on whose long-term
unsecured indebtedness is at least equal to the rating assigned to the
Capital Securities by a "nationally recognized statistical rating
organization", as that term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
(iii) upon written notice of Distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures and the Debenture Guarantees to Holders upon
the occurrence of certain special events (as may be defined in the terms of
the Securities) arising from a Tax Event or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform such
duties as may be specifically required of the Institutional Trustee pursuant to
the terms of the Securities.
(e) The Institutional Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default of which a Responsible Officer
of the Institutional Trustee has actual knowledge or the Institutional
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act; provided, however, that if an Event of Default has
-------- -------
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occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date) following any applicable grace period, then a Holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Capital Securities of
such Holder (a "Direct Action") on or after the respective due dates specified
in the Debentures. In connection with such Direct Action, the rights of the
Holders of the Common Securities will be subrogated to the rights of such Holder
of Capital Securities to the extent of any payment made by the Debenture Issuer
or the Guarantor to such Holder of Capital Securities in such Direct Action;
provided that no Holder of the Common Securities may exercise any such right of
subrogation so long as an Event of Default with respect to the Capital
Securities has occurred and is continuing. Except as provided in the preceding
sentences, the Holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Debentures.
(f) The Institutional Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation have been distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges as the holder of Debentures and the
Debenture Guarantee under the Indenture and, if an Event of Default actually
known to a Responsible Officer of the Institutional Trustee occurs and is
continuing, the Institutional Trustee shall, for the benefit of Holders, enforce
its rights as holder of the Debentures and the Debenture Guarantee subject to
the rights of the Holders pursuant to the terms of such Securities.
(h) The Institutional Trustee may authorize one or more Persons (each,
a "Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with (S) 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Institutional Trustee at any
20
<PAGE>
time and a successor Paying Agent or additional Paying Agents may be appointed
at any time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of
--------------------------------------
the Institutional Trustee.
-------------------------
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent individual would exercise or use under the circumstances
in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Institutional Trustee shall
be determined solely by the express provisions of this Declaration and
the Institutional Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Institutional Trustee;
and
(B) in the absence of bad faith on the part of the Institutional
Trustee, the Institutional Trustee may conclusively rely, as to the
truth of the statements
21
<PAGE>
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional Trustee and
conforming to the requirements of this Declaration; but in the case of
any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Institutional Trustee,
the Institutional Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Declaration;
(ii) the Institutional Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Institutional
Trustee, unless it shall be proved that the Institutional Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Institutional
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Institutional Trustee against such risk or
liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the
Institutional Trustee Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property for
its own account, subject to the protections and limitations on liability
afforded to the Institutional Trustee under this Declaration and the Trust
Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the Guarantee or the payment of any taxes or assessments
levied thereon or in connection therewith;
22
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(vii) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in writing
with the Sponsor. Money held by the Institutional Trustee need not be
segregated from other funds held by it except in relation to the
Institutional Trustee Account maintained by the Institutional Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise required
by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Institutional
Trustee be liable for any default or misconduct of the Regular Trustees or
the Sponsor.
SECTION 3.10 Certain Rights of Institutional Trustee.
---------------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such counsel and
experts with respect to legal
23
<PAGE>
matters or advice within the scope of such experts' area of expertise shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees. The
Institutional Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) subject to Section 3.9(a), the Institutional Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any Holder, unless such
Holder shall have offered to the Institutional Trustee security and
indemnity reasonably satisfactory to the Institutional Trustee, against the
costs, expenses (including attorneys' fees and expenses and the expenses of
the Institutional Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Institutional
Trustee; provided, however, that nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Institutional Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Institutional
Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the
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<PAGE>
Institutional Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Institutional Trustee's or its agents' taking
such action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Institutional Trustee (A) may request instructions from the
Holders which instructions from the Holders may only be given by the
Holders of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Institutional Trustee under the terms of
the Securities in respect of such remedy, right or action, (B) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received and (C) shall be protected in conclusively
relying on or acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration, the
Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration; and
(xii) except as otherwise expressly provided by this Declaration, the
Institutional Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith and reasonably believed by it to
be authorized or within the discretion or rights or powers conferred upon
it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law to perform
any such act or acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Institutional Trustee shall be
construed to be a duty.
SECTION 3.11 Delaware Trustee.
----------------
Notwithstanding any other provision of this Declaration other than
Sections 5.2 and 5.6, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Institutional Trustee described
in this Declaration. Except as set forth in Sections 5.2 and 5.6, the Delaware
Trustee shall be a Trustee for the sole and limited
25
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purpose of fulfilling the requirements of (S) 3807 of the Business Trust Act.
SECTION 3.12 [Intentionally Omitted]
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
-----------------
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for thirty-four (34) years from the Closing
Date.
SECTION 3.15 Mergers.
-------
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders, the Delaware Trustee or the Institutional Trustee,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State of the United States; provided that:
(i) if the Trust is not the survivor, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the
26
<PAGE>
Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Securities rank with respect to
Distributions and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee for the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the holder of the Debentures and the Guarantor
expressly acknowledges such trustee of the Successor Entity as the holder
of the Debenture Guarantee;
(iii) the Capital Securities remain listed, if they are listed
immediately prior to the effective date of the consolidation, amalgamation
or merger or any Successor Securities are listed if the Capital Securities
were listed immediately prior to the effective date of the consolidation,
amalgamation or merger, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with
another organization on which the Capital Securities were then so listed or
quoted;
(iv) such merger, consolidation, amalgamation or replacement does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders (or
the holders of any Successor Securities) in any material respect (other
than with respect to any dilution of such Holders' interests in the
Successor Entity as a result of such merger, consolidation, amalgamation or
replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Regular Trustees have received an opinion of a nationally
recognized independent counsel to the Trust experienced in such matters to
the effect that:
(A) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the
Holders (or the holders of any Successor Securities) in any material
respect (other than with respect to any dilution of the Holders'
interest in the Successor Entity);
27
<PAGE>
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Capital Securities Guarantee and the Common Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or to be replaced by any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger or replacement
would cause the Trust or Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
---------------------------------------
The Sponsor will purchase all of the Common Securities issued by the
Trust, in an amount at least equal to 3% of the total capital of the Trust, at
the same time as the Capital Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
--------------------------------
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Capital Securities,
including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and
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filing any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) if deemed desirable by the Sponsor to prepare for filing by the
Trust of an application to the New York Stock Exchange or any other national
securities exchange or the Nasdaq Stock Market's National Market for listing
upon notice of issuance of any Capital Securities;
(d) if deemed necessary or desirable by the Sponsor to prepare for
filing by the Trust with the Commission a registration statement on Form 8-A
relating to the registration of the Capital Securities under Section 12(b) of
the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement and Pricing
Agreement providing for the sale of the Capital Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
------------------
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities; provided, however, that, the number of Trustees shall in
-------- -------
no event be less than two (2); provided further that (1) there shall be a
-------- -------
Delaware Trustee if required by Section 5.2; (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
"Regular Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements, in which case Section 3.11 shall have no
application to such entity in its capacity as Institutional Trustee.
SECTION 5.2 Delaware Trustee.
----------------
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
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(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which maintains its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law.
SECTION 5.3 Institutional Trustee; Eligibility.
----------------------------------
(a) There shall at all times be one Trustee which shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.7(c).
(c) If the Institutional Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Institutional Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Indenture, the Debt Securities (as defined therein) issued or
to be issued thereunder, the Declaration, the Trust Securities issued or to be
issued thereunder and the Capital Securities Guarantees and Common Securities
Guarantees in connection therewith (including the Capital Securities Guarantee
in connection herewith) shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the
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proviso contained in Section 310(b)(1) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be:
The Bank of New York.
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware
-------------------------------------------------------
Trustee Generally.
- -----------------
Each Regular Trustee and the Delaware Trustee shall be either a
natural person who is at least 21 years of age or a legal entity that shall act
through one or more Authorized Officers.
SECTION 5.5 Regular Trustees.
----------------
The initial Regular Trustees shall be:
Eric P. Sieracki
Sandor E. Samuels
Carlos Garcia
(a) Except where a requirement for action by a specific number of
Regular Trustees is expressly set forth in this Declaration and except with
respect to any action the taking of which is the subject of a meeting of the
Regular Trustees any action required or permitted to be taken by the Regular
Trustees may be taken by, and any power of the Regular Trustees may be exercised
by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Initial Delaware Trustee.
------------------------
The initial Delaware Trustee shall be:
The Bank of New York (Delaware).
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
------------------------------------------------
(a) Subject to Section 5.7(b), Trustees may be appointed, removed or
replaced without cause at any time except during an Event of Default:
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(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a class
at a meeting of the Holders of the Common Securities.
(b) (i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.7(a) until a Successor Institutional
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Institutional Trustee and delivered to the
Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.7(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
-------- -------
that:
(i) no such resignation of the Trustee that acts as the Institutional
Trustee shall be effective:
(A) until a Successor Institutional Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Institutional Trustee and delivered to the Trust, the
Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
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(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Institutional
Trustee as the case may be if the Institutional Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.7 within 60 days after delivery of an instrument of resignation or
removal, the Institutional Trustee or Delaware Trustee resigning or being
removed, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Institutional Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.8 Vacancies Among Trustees.
------------------------
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.7, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 5.10 Meetings.
--------
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular
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Trustees may be held at a time and place fixed by resolution of the Regular
Trustees. Notice of any in-person meetings of the Regular Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic meetings of the Regular Trustees or any committee thereof shall
be hand delivered or otherwise delivered in writing (including by facsimile,
with a hard copy by overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Regular Trustee at a meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at a meeting by
vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.
SECTION 5.11 Delegation of Power.
-------------------
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.12 Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
- --------
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation
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succeeding to all or substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Institutional Trustee or the Delaware Trustee, as the case may
be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Capital Securities and the Common Securities in accordance
with the preferences set forth in their respective terms. If and to the extent
that the Debenture Issuer makes a payment of interest (including Compounded
Interest (as defined in the Indenture) and Additional Interest (as defined in
the Indenture)), premium and/or principal on the Debentures (or the Sponsor
makes a payment in respect of the Debenture Guarantee) held by the Institutional
Trustee (the amount of any such payment being a "Payment Amount"), the
Institutional Trustee shall and is directed, to the extent funds are available
for that purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Regular Trustees shall on behalf of the Trust issue one class
of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the "Capital
Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities"). The Trust shall issue no securities
or other interests in the assets of the Trust other than the Capital Securities
and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual signature of any present or
any future Regular Trustee. In case any Regular Trustee of the Trust who shall
have signed any of the Securities shall cease to be such Regular Trustee before
the
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Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Regular Trustee; and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such a
Regular Trustee. Certificates shall be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof, and may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as may be required
to comply with any law or with any rule or regulation of any stock exchange on
which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 7.2 Paying Agent.
------------
In the event that the Capital Securities are not in book-entry only
form, the Trust shall maintain in the Borough of Manhattan, City of New York,
State of New York, an office or agency where, in addition to payment methods
provided for in the terms of the Securities, the Capital Securities may be
presented for payment ("Paying Agent"). The Trust may appoint the Paying Agent
and may appoint one or more additional paying agents in such other locations as
it shall determine. The term "Paying Agent" includes any additional paying
agent. The Trust may change any Paying Agent without prior notice to any
Holder. The Trust shall notify the Institutional Trustee of the name and
address of any Paying Agent not a party to this Declaration. If the Trust fails
to appoint or maintain another entity as Paying Agent, the Institutional Trustee
shall act as such. The Bank of New York or any of its Affiliates may act as
Paying Agent. The Trust shall initially act as Paying Agent for the Capital
Securities and the Common Securities. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice
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to the Institutional Trustee. In the event that The Bank of New York shall no
longer be the Paying Agent, the Institutional Trustee shall appoint a successor
to act as Paying Agent (which shall be a bank or trust company).
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust.
------------------------------------
(a) The Trust shall dissolve:
(i) on December 31, 2050, the expiration of the term of the Trust;
(ii) upon the bankruptcy of the Sponsor or the Debenture Issuer;
(iii) (other than in connection with a merger, consolidation or
similar transaction not prohibited by the Indenture, the Declaration, the
Debt Guarantee or the Capital Securities Guarantee, as the case may be)
upon the filing of a certificate of dissolution or its equivalent with
respect to the Sponsor or the Debenture Issuer upon the consent of the
Holders of at least a Majority in liquidation amount of the Securities
voting together as a single class to file a certificate of cancellation
with respect to the Trust or upon the revocation of the charter of the
Sponsor or the Debenture Issuer and the expiration of 90 days after the
date of revocation without a reinstatement thereof;
(iv) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor, the Trust or the Debenture
Issuer;
(v) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been paid to
the Holders in accordance with the terms of the Securities;
(vi) upon the occurrence and continuation of a Tax Event pursuant to
which the Trust shall be dissolved in accordance with the terms of the
Securities and the Debentures and Debenture Guarantees endorsed thereon
shall, subject to the terms of the Securities, be distributed to the
Holders of Securities in exchange for the Securities; or
(vii) before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor.
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(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and upon completion of the winding up of the
Trust, the Trustees shall terminate the Trust by filing a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
(d) If the Trust is dissolved and at the time of dissolution the
Capital Securities are rated by at least one "nationally recognized statistical
rating organization", as that term is defined for purposes of Rule 436(g)(2)
under the Securities Act, the Debenture Issuer shall use its best efforts to
obtain from at least one such or another rating organization a rating for the
Debentures.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities; Capital
Securities Acquired by ERISA Plans.
----------------------------------
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities shall be freely
transferable. Notwithstanding the foregoing, Capital Securities may not be
acquired by any Person who is, or who in acquiring such Capital Securities is
using the assets of, an ERISA Plan unless one of the following class exemptions
is applicable: (i) Prohibited Transaction Class Exemption 90-1 ("PTE 90-1"),
regarding investments by insurance company pooled separate accounts, (ii)
Prohibited Transaction Class Exemption 91-38 ("PTE 91-38") regarding investments
by bank collective investment funds, (iii) Prohibited Transaction Class
Exemption 84-14 ("PTE 84-14"), regarding transactions effected by qualified
professional asset managers, (iv) Prohibited Transaction Class Exemption 96-23
("PTE 96-23"), regarding transactions effected by in-house asset managers, or
(v) Prohibited Transaction Class Exemption 95-60 ("PTE 95-60"), regarding
investments by insurance company general accounts. The acquisition of Capital
Securities by any Person who is, or who in acquiring such Capital Securities is
using the assets of, an ERISA Plan shall be deemed to constitute a
representation by such Person to the Trust that (i) such Person is eligible for
exemptive relief available pursuant to one of PTE 90-1, PTE 91-38, PTE 84-14,
PTE 96-23 or PTE 95-60 with respect to the acquisition and holding of such
Capital Securities, and (ii) neither Countrywide Home Loans, Inc. nor
Countrywide Credit Industries, Inc. is a "fiduciary", within the meaning of
Section 3(21) of ERISA and the regulations thereunder, with respect to such
Person's interest in the Capital Securities or the Debentures.
(c) The Sponsor may not transfer the Common Securities.
SECTION 9.2 Transfer of Certificates.
------------------------
The Regular Trustees shall provide for the registration of
Certificates and of transfers and exchanges of Certificates, which will be
effected without charge but only upon payment (with such indemnity as the
Regular Trustees, Institutional Trustee, or Debenture Issuer may require) in
respect of any tax or other government charges that may be imposed in relation
to it. Upon surrender for registration of transfer of any Certificate, the
Institutional Trustee shall cause one or more new Certificates to be issued in
the name of the designated transferee or transferees. Every Certificate
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Institutional Trustee duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Every Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to
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the obligations of a Holder hereunder upon the receipt by such transferee of a
Certificate. By acceptance of a Certificate, each transferee shall be deemed to
have agreed to be bound by this Declaration. The Trust will not be required to
register or cause to be registered the transfer or exchange of Capital
Securities after such Capital Securities have been called for redemption.
SECTION 9.3 Deemed Security Holders.
------------------------
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
--------------------
Unless otherwise specified in the terms of the Capital Securities, the
Capital Securities Certificates, on original issuance, will be issued in the
form of one or more, fully registered, global Capital Security Certificates
(each a "Global Certificate"), to be delivered to and deposited with DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificates shall initially be registered on the books and records of the Trust
in the name of Cede & Co., the nominee of DTC, and no Capital Security
Beneficial Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owner's interests in such Global
Certificates, except as provided in Section 9.7. Unless and until definitive,
fully registered Capital Security Certificates (the "Definitive Capital Security
Certificates") have been issued to the Capital Security Beneficial Owners
pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Capital Securities and the sole holder
of the Global Certificates and shall have no obligation to the Capital Security
Beneficial Owners;
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(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this Section
9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and DTC
will make book entry transfers among the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global Certificates to
such Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
--------------------------
Whenever a notice or other communication to the Capital Security
Holders is required under this Declaration, unless and until Definitive Capital
Security Certificates shall have been issued to the Capital Security Beneficial
Owners pursuant to Section 9.7, the Regular Trustees shall give all such notices
and communications specified herein to be given to the Capital Security
Holders to the Clearing Agency, and shall have no notice obligations to the
Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Capital Securities.
SECTION 9.7 Definitive Capital Security Certificates.
----------------------------------------
If:
(a) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Capital Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with respect to the
Capital Securities,
then:
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(c) Definitive Capital Security Certificates shall be prepared by the
Regular Trustees on behalf of the Trust with respect to such Capital Securities;
and
(d) upon surrender of the Global Certificates by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall cause
Definitive Capital Security Certificates to be delivered to Capital Security
Beneficial Owners in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of
such instructions and each of them may conclusively rely on and shall be
protected in relying on, said instructions of the Clearing Agency. The
Definitive Capital Security Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate, or as may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which Capital
Securities may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them harmless;
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
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ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
---------
(a) Except as expressly set forth in this Declaration, the Debenture
Guarantee, the Securities Guarantees and the terms of the Securities, the
Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of
the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the
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assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of Securities
might properly be paid.
SECTION 10.3 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Institutional Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of the Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Trust or
any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
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(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification.
---------------
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees and expenses) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust and
except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which
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such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4 (a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall be made (1) by
the Regular Trustees by a majority vote of a quorum consisting of such
Regular Trustees who were not parties to such action, suit or proceeding,
(2) if such a quorum is not obtainable, or, even if obtainable, if a quorum
of disinterested Regular Trustees so directs, by independent legal counsel
in a written opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by a
Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 10.4 (a) shall be paid by the Debenture Issuer in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Company Indemnified
Person to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Debenture Issuer as authorized in
this Section 10.4 (a). Notwithstanding the foregoing, no advance shall be
made by the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable,
or, even if obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion or (iii) the
Common Security Holder of the Trust, that, based upon the facts known to
the Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in bad
faith or in a manner that such Person did not believe to be in or not
opposed to the best interests of the Trust,
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or, with respect to any criminal proceeding, that such Company Indemnified
Person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the
Regular Trustees, independent legal counsel or the Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4 (a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Debenture
Issuer or Capital Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section
10.4(a) shall be deemed to be provided by a contract between the Debenture
Issuer and each Company Indemnified Person who serves in such capacity at
any time while this Section 10.4 (a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any Person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Debenture Issuer would have the power to indemnify him against such
liability under the provisions of this Section 10.4 (a).
(viii) For purposes of this Section 10.4 (a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any Person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same
position under the provisions of this Section 10.4 (a) with respect to the
resulting or surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided
when authorized or
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ratified, continue as to a Person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors
and administrators of such a Person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Institutional
Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each
of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense including taxes (other
than taxes based on the income of such Fiduciary Indemnified Person) incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration or the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 10.4(b)
shall survive the satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
------------------
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the
Delaware Trustee, or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.
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ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The books of account and the records of the Trust shall
be examined by and reported upon as of the end of each Fiscal Year of the Trust
by a firm of independent certified public accountants selected by the Regular
Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, within 90 days after the end of each Fiscal
Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities any annual United States federal income tax
information statement required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed an
annual United States federal income tax return on a Form 1041 or such other form
required by United States federal income tax law, and any other annual income
tax returns required to be filed by the Regular Trustees on behalf of the Trust
with any state or local taxing authority.
SECTION 11.3 Banking.
-------
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
-------- -------
respect of the Debentures and the Debenture Guarantee held by the Institutional
Trustee shall be made directly to the Institutional Trustee Account and
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no other funds of the Trust shall be deposited in the Institutional Trustee
Account. The sole signatories for such accounts shall be designated by the
Regular Trustees; provided, however, that the Institutional Trustee shall
-------- -------
designate the signatories for the Institutional Trustee Account.
SECTION 11.4 Withholding.
-----------
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
Distribution in the amount of the withholding to the Holder. In the event of
any claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations
or immunities of the Institutional Trustee, the Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
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(b) Notwithstanding any other provision of this Article XII, no
amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless, in the case of any proposed amendment, the Institutional
Trustee shall have first received an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Institutional
Trustee, the Institutional Trustee shall have first received;
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act.
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities.
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities.
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(e) Article IV shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities.
(f) the rights of the holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove, Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities.
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the rights, preferences or privileges of the
Holders; and
(v) modify, eliminate and add to any provision of this Declaration to
such extent as may be necessary; provided, however, that no such amendment
-------- -------
shall adversely affect the powers, preferences or special rights of Holders
of Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by
------------------------------------------------
Written Consent.
- ---------------
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for
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which the meeting is to be called. Any Holders of Securities calling a meeting
shall specify in writing the Certificates held by the Holders of Securities
exercising the right to call a meeting and only those Securities represented by
such Certificates shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more than
60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of Securities. Any
action that may be taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting forth the action so
taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and
the Holders of the Securities were stockholders of a Delaware corporation;
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(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed or trading
otherwise provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders of Securities, waiver
of any such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional
-----------------------------------------------
Trustee.
- -------
The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee, that:
(a) the Institutional Trustee is a New York banking corporation with
trust powers and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, this Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of this Declaration by the
Institutional Trustee does not conflict with
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or constitute a breach of the charter or by-laws of the Institutional Trustee;
and
(d) no consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee of this
Declaration.
SECTION 13.2 Representations and Warranties of Delaware
------------------------------------------
Trustee.
-------
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee, that:
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(c) No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution, delivery
or performance by the Delaware Trustee of this Declaration.
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
-------
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and
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shall be delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities:
Countrywide Capital I
Countrywide Credit Industries, Inc.
155 North Lake Avenue
Pasadena, CA 91101
Attention:
Telecopy
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders of the Securities):
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Institutional Trustee, at the Institutional
Trustee's mailing address set forth below (or such other address as the
Institutional Trustee may give notice of to the Holders of the Securities):
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Trust):
Countrywide Credit Industries, Inc.
155 North Lake Avenue
Pasadena, CA 91101
Attention:
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be
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delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 14.2 Governing Law.
-------------
This Declaration, the rights of the parties hereunder, and the
Securities shall be governed by and interpreted in accordance with the laws of
the State of Delaware and all rights and remedies shall be governed by such laws
without regard to the principles of conflict of laws of the State of Delaware or
any other jurisdiction that would call for the application of the law of any
jurisdiction other than the State of Delaware; provided, however, that there
shall not be applicable to the Trust, the Trustees or this Declaration any
provision of the laws (statutory or common) of the State of Delaware pertaining
to trusts that relate to or regulate, in a manner inconsistent with the terms
hereof (a) the filing with any court or governmental body or agency of trustee
accounts or schedules of trustee fees and charges, (b) affirmative requirements
to post bonds for trustees, officers, agents or employees of a trust, (c) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (d) fees or
other sums payable to trustees, officers, agents or employees of a trust, (e)
the allocation of receipts and expenditures to income or principal, (f)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding or investing trust assets or (g) the establishment of
fiduciary or other standards of responsibility or limitations on the acts or
powers of trustees that are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees as set forth or referenced in this
Declaration. Section 3540 of Title 12 of the Delaware Code shall not apply to
the Trust.
SECTION 14.3 Intention of the Parties.
------------------------
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 Headings.
--------
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5 Successors and Assigns.
----------------------
56
<PAGE>
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether or not so expressed.
SECTION 14.6 Partial Enforceability.
----------------------
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
------------
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to any of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
57
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
---------------------------------
Eric P. Sieracki,
as Regular Trustee
---------------------------------
Sandor E. Samuels,
as Regular Trustee
---------------------------------
Carlos Garcia, as Regular Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: _____________________________
Name:
Title
THE BANK OF NEW YORK,
as Institutional Trustee
By: _____________________________
Name:
Title:
COUNTRYWIDE CREDIT INDUSTRIES, INC.,
as Sponsor
By: ______________________________
Name:
Title:
58
<PAGE>
EXHIBIT A-1
<PAGE>
ANNEX I
TERMS OF
____% CAPITAL TRUST PASS-THROUGH SECURITIES
____% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of December __, 1996 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in the
Declaration or, if not defined in the Declaration, as defined in the Prospectus
referred to below):
1. Designation and Number.
----------------------
(a) Capital Securities. __________ Capital Securities of the Trust,
------------------
with an aggregate stated liquidation amount with respect to the assets of the
Trust of _____________________ dollars ($___________) and a stated liquidation
amount with respect to the assets of the Trust of $1,000 per Capital Security,
are hereby designated for the purposes of identification only as "____% Capital
Trust Pass-through Securities/sm/ (`TRUPS'/sm/)"* (the "Capital Securities").
The Capital Security Certificates evidencing the Capital Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice or to conform to the rules of any stock exchange on
which the Capital Securities are listed.
(b) Common Securities. _______ Common Securities of the Trust, with
-----------------
an aggregate stated liquidation amount with respect to the assets of the Trust
of _____________________________________ dollars ($_________) and a stated
liquidation amount with respect to the assets of the Trust of $1,000 per Common
Security, are hereby designated for the purposes of identification only as
"____% Common Securities" (the "Common Securities"). The Common Security
Certificates evidencing the Common Securities shall be substantially in the form
of Exhibit A-2 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
- ----------
* Salomon Brothers Inc has filed applications with the United States Patent
and Trademark Office for the registration of the Capital Trust Pass-through
Securities and TruPS service marks.
I-1
<PAGE>
2. Distributions.
-------------
(a) Distributions payable on each Security will be fixed at a rate per
annum of ____% (the "Coupon Rate") of the stated liquidation amount of $1,000
per Security, such rate being the rate of interest payable on the Debentures to
be held by the Institutional Trustee. Except as set forth below in respect of
an Extension Period, Distributions in arrears for more than one semiannual
period will bear interest thereon compounded semiannually at the Coupon Rate (to
the extent permitted by applicable law). The term "Distributions" as used
herein includes cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Debentures and the Debenture Guarantee held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full semiannual Distribution period on the basis of a 360-day
year of twelve 30-day months, and, for any period shorter than a full semiannual
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
(b) Distributions on the Securities will be cumulative, will accrue
from ________ __, 1996, and will be payable semiannually in arrears on June 1
and December 1 of each year, commencing on June 1, 1997, except as otherwise
described below. The Debenture Issuer has the right under the Indenture to
defer payments of interest by extending the interest payment period at any time
and from time to time on the Debentures for a period not exceeding 10
consecutive semiannual periods (each an "Extension Period"), during which
Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall be initiated while accrued interest with
- -------- ----
respect to prior, completed Extension Periods is unpaid or while the Company is
in default in the payment of interest that has become due and payable on the
Debentures; and, provided further, that no Extension Period shall extend beyond
-------- -------
the date of maturity of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, semiannual
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded semiannually during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further extend such Extension Period; provided
--------
that such Extension Period together with all such previous and further
- ----
extensions thereof may not exceed 10 consecutive semiannual periods or extend
beyond the maturity of the Debentures. Distributions accrued during any
Extension Period will be paid on the date that the related Extension Period
terminates to Holders as they appear on the books and records of the Trust on
the record date immediately preceding such date.
I-2
<PAGE>
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Capital Securities remain in book-entry only form, the
relevant record dates shall be one Business Day prior to the relevant payment
dates which payment dates correspond to the interest payment dates on the
Debentures. Subject to any applicable laws and regulations and the provisions
of the Declaration, each such payment in respect of the Capital Securities will
be made as described under the heading "Description of the Capital Securities --
Book-Entry Only Issuance -- The Depository Trust Company" in the Prospectus
Supplement dated ________ __, 1996, to the Prospectus dated _________ __, 1996
(together, the "Prospectus"), of the Trust included in the Registration
Statement on Form S-3 of the Sponsor, the Trust and certain other business
trusts. The relevant record dates for the Common Securities shall be the same
record dates as for the Capital Securities. If the Capital Securities shall not
continue to remain in book-entry only form, the relevant record dates for the
Capital Securities shall conform to the rules of any securities exchange on
which the Capital Securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least one Business Day but less than
60 Business Days before the relevant payment dates, which payment dates
correspond to the interest payment dates on the Debentures. If the Capital
Securities shall not continue to remain in book-entry only form, payments of
Distributions on the Capital Securities shall, subject to the Declaration, be
made by check mailed to the address of the Holder entitled thereto as such
address shall appear on the books and records of the Trust. Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer or the Guarantor having failed
to make a payment under the Debentures or the Debenture Guarantee, as the case
may be, when due (taking into account any Extension Period), will cease to be
payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If
any date on which Distributions are payable on the Securities is not a Business
Day, then payment of the Distributions payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on such payment date.
I-3
<PAGE>
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the liquidation, dissolution, winding-up or termination, as the case may
be, will be entitled to receive out of the assets of the Trust available for
distribution to Holders of Securities after paying or making reasonable
provision to pay all claims and obligations of the Trust in accordance with
Section 3808(e) of the Business Trust Act (to the extent not paid by the
Debenture Issuer or Guarantor) an amount equal to the aggregate of the stated
liquidation amount of $1,000 per Security plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless such liquidation, dissolution, winding-up or termination
occurs in connection with a Tax Event in which, in accordance with Section 4(c),
Debentures in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of such Securities, with an interest rate equal to the Coupon
Rate of, and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on, such Securities, shall be distributed on a
Pro Rata basis to the Holders of the Securities in exchange for such Securities.
If, upon any such liquidation, dissolution, winding up or termination
the Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities
shall be paid on a Pro Rata basis, except that if an Event of Default has
occurred and is continuing, the Capital Securities shall have a preference over
the Common Securities with regard to such amounts.
4. Redemption and Distribution.
---------------------------
(a) Upon the repayment of the Debentures in whole or in part, whether
at maturity or upon redemption (either at the option of the Debenture Issuer or
pursuant to a Tax Event as described below), the proceeds from such repayment or
payment shall be simultaneously applied to redeem Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed at a redemption price of per Security of $1,000 plus an
amount equal to accrued and unpaid Distributions thereon at the date of the
redemption, payable in cash (the "Redemption Price"). Holders will be given not
less than 30 nor more than 60 days' notice of such redemption.
I-4
<PAGE>
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be redeemed as described in
Section 4(f)(ii) below.
(c) If, at any time, a Tax Event (as defined below) shall occur and be
continuing the Regular Trustees shall, except in certain limited circumstances
described in this Section 4(c), dissolve the Trust and, after paying or making
reasonable provision to pay all claims and obligations of the Trust in
accordance with Section 3808(e) of the Business Trust Act, cause Debentures held
by the Institutional Trustee, having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment, as the
Securities, to be distributed to the Holders of the Securities together with the
Debenture Guarantee in liquidation of such Holders' interests in the Trust on a
Pro Rata basis, within 90 days following the occurrence of such Tax Event (the
"90 Day Period"); provided, however, that, if at the time there is available to
-------- -------
the Trust the opportunity to eliminate, within the 90 Day Period, the adverse
effects of the Tax Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable measure
that has no adverse effect on the Trust, the Debenture Issuer, the Sponsor or
the Holders of the Securities ("Ministerial Action"), the Trust will pursue such
Ministerial Action in lieu of dissolution.
If, after a Tax Event has occurred, the Debenture Issuer receives an
opinion (a "Redemption Tax Opinion") of a nationally recognized independent tax
counsel experienced in such matters that, as a result of a Tax Event, there is
more than an insubstantial risk that the Debenture Issuer would be precluded
from deducting the interest on the Debentures for United States federal income
tax purposes, even if the Debentures were distributed to the Holders of
Securities in liquidation of such Holders' interests in the Trust as described
in this Section 4(c), the Debenture Issuer shall have the right at any time
within 90 days following the occurrence of such Tax Event, upon not less than 30
nor more than 60 days' notice, to redeem the Debentures in whole or in part for
cash so long as such Tax Event is continuing, and, following such redemption,
Securities with an aggregate liquidation amount equal to the aggregate principal
amount of the Debentures so redeemed shall be redeemed by the Trust at the
Redemption Price on a Pro Rata basis; provided, however, that, if at the time
-------- -------
there is available to the Debenture Issuer or the Trust the opportunity to
eliminate, within the 90 Day Period and before any notice has been given, the
adverse effects of the Tax Event by taking some Ministerial Action, the
I-5
<PAGE>
Trust or the Debenture Issuer will pursue such Ministerial Action in lieu of
redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Dissolution Tax Opinion") to the effect that on or after the date of
the Prospectus Supplement, as a result of (a) any amendment to, clarification of
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any judicial decision or official
administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action"), or (c) any amendment to,
clarification of, or change in the official position or interpretation of such
Administrative Action or judicial decision that differs from the theretofore
generally accepted position, in each case, by any legislative body, court,
governmental agency or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment,
clarification, or change is effective or such Administrative Action or decision
is announced, in each case, on or after the first date of issuance of the
Securities, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to interest accrued or received on the Debentures, or
subject to more than a de minimis amount of other taxes, duties or other
governmental charges, (ii) any portion of interest payable by the Debenture
Issuer to the Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible by the Debenture Issuer for United States
federal income tax purposes, or (iii) the Debenture Issuer could become liable
to pay, on the next date on which any amount would be payable with respect to
the Debentures, any Additional Interest (as defined in the Indenture).
On and from the date fixed by the Regular Trustees for any
distribution of Debentures, together with the Debenture Guarantee, upon
dissolution of the Trust: (i) the Securities will be deemed to be no longer
outstanding, (ii) The Depository Trust Company or its nominee (or any successor
Clearing Agency or its nominee), as the Holder of the Capital Securities, will
receive a registered global certificate or certificates representing the
Debentures and the Debenture Guarantee to be delivered upon such distribution
and (iii) any Certificates representing Securities, except for Certificates
representing Capital Securities held by the Depositary or its nominee (or any
successor Clearing Agency or its nominee), will be deemed to represent
individual beneficial interests in such of the Debentures having an aggregate
principal amount equal to the aggregate stated
I-6
<PAGE>
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and bearing accrued and unpaid interest equal to accrued and unpaid
Distributions on, such Securities until such Certificates are presented to the
Debenture Issuer or its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all semiannual Distribution periods terminating on or before the date of
redemption.
(e) If the Trust is dissolved and at the time of dissolution the
Capital Securities are rated by at least one "nationally recognized statistical
rating organization", as that term is defined for purposes of Rule 436(g)(2)
under the Securities Act, the Debenture Issuer shall use its best efforts to
obtain from at least one such or other rating organization a rating for the
Debentures.
(f) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(f)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of
such Securities. Each Redemption/Distribution Notice shall be addressed to
the Holders of such Securities at the address of each such Holder appearing
on the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing thereof with respect to
any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities
are to be redeemed, the Securities to be redeemed shall be redeemed Pro
Rata from each Holder of Capital Securities; provided, however, that, in
respect of Capital Securities registered in the name of and held of record
by the Depositary or its nominee (or any successor Clearing Agency or its
nominee), the Capital Securities shall be redeemed in accordance with the
procedures of the Depositary (which may include redemption by lot), and the
I-7
<PAGE>
distribution of the proceeds of such redemption will be made to each
Clearing Agency Participant (or Person on whose behalf such nominee holds
such Securities) in accordance with the procedures applied by such Clearing
Agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) with respect to the Capital Securities, while the
Capital Securities are in book-entry only form, provided that the Debenture
Issuer or the Guarantor has paid the Institutional Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
Debentures, the Institutional Trustee will deposit irrevocably with the
Depositary or its nominee (or successor Clearing Agency or its nominee), by
12:00 noon, New York City time, on the redemption date, funds sufficient to
pay the applicable Redemption Price with respect to the Capital Securities
and will give the Depositary irrevocable instructions and authority to pay
the applicable Redemption Price to the Holders of the Capital Securities,
and (B) with respect to Capital Securities issued in definitive form and
Common Securities, provided that the Debenture Issuer has paid the
Institutional Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Institutional Trustee
will pay the relevant Redemption Price to the Holders of such Securities by
check mailed to the address of each such Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution
Notice shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on the date of
such deposit, or on the redemption date, as applicable, Distributions will
cease to accrue on the Securities so called for redemption and all rights
of Holders of such Securities so called for redemption will cease, except
the right of the Holders of such Securities to receive the Redemption
Price, but without interest on such Redemption Price. Neither the Regular
Trustees nor the Trust shall be required to register or cause to be
registered the transfer or exchange of any Securities that have been so
called for redemption. If any date fixed for redemption of Securities is
not a Business Day, then payment of the Redemption Price payable on such
date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date fixed for redemption. If
payment of the Redemption Price in respect
I-8
<PAGE>
of any Securities is improperly withheld or refused and not paid either by
the Institutional Trustee or by the Sponsor as guarantor pursuant to the
relevant Securities Guarantee, Distributions on such Securities will
continue to accrue at the then applicable rate from the original redemption
date to the actual date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Capital
Securities, the Depositary or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holders
thereof, and (B) in respect of the Common Securities, to the Holder
thereof.
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), provided the
acquiror is not the Holder of the Common Securities or the obligor under
the Indenture, the Sponsor or any of its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the
open market or by private agreement.
5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b) and 7 of this Annex to the
Declaration and as otherwise required by law and the Declaration, the Holders of
the Capital Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a majority in aggregate liquidation amount of the Capital Securities,
voting separately as a class, will have the right to direct the time, method,
and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Debentures and the Debenture Guarantee,
to (i) exercise the remedies available to it under the Indenture as a holder of
the Debentures and the Debenture Guarantee for conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive
any past default and its consequences that is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable or (iv) consent on behalf of all the
Holders of the Capital Securities to any amendment, modification or termination
of the Indenture, the
I-9
<PAGE>
Debentures or the Debenture Guarantee where such consent shall be required,
provided, however, that, where a consent or action under the Indenture would
- -------- -------
require the consent or act of the holders of greater than a majority in
principal amount of Debentures affected thereby (a "Super Majority"), the
Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in aggregate
liquidation amount of the Capital Securities outstanding which the relevant
Super-Majority represents of the aggregate principal amount of the Debentures
outstanding. The Institutional Trustee shall not revoke any action previously
authorized or approved by a vote or consent of the Holders of the Capital
Securities. Other than with respect to directing the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
as set forth above, the Institutional Trustee shall not take any action
described in (i), (ii), or (iii) above, unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Debentures after the Holders of a majority of
liquidation amount of the Capital Securities have so directed the Institutional
Trustee, a Holder of Capital Securities may institute a legal proceeding
directly against the Debenture Issuer to enforce the Institutional Trustee's
rights under the Debentures, without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the Debentures on the respective dates such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
Holder of Capital Securities may directly institute a proceeding against the
Debenture Issuer ("Direct Action") for enforcement of payment, on or after the
respective due dates specified in the Debentures, to such Holder directly of the
principal of or interest on the Debentures having an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Securities of such
Holder. In connection with such Direct Action, the Debenture Issuer shall
remain obligated to pay the principal of or interest on the Debentures held by
the Trust or the Institutional Trustee, and the Debenture Issuer will be
subrogated to the rights of such Holder of Capital Securities under the
Declaration to the extent of any payment made by the Debenture Issuer to such
Holder of Capital Securities in such Direct Action, provided that no Holder of
the Common Securities may exercise any such right of subrogation so long as an
Event of Default with respect to the Capital Securities has occurred and is
continuing. Except as provided in the preceding sentences, the Holders of
Capital Securities will not be able to exercise directly any other remedy
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<PAGE>
available to the holders of the Debentures and the Debenture Guarantee.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of Capital Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
The Regular Trustees will be required to call a meeting of the Holders
of the Capital Securities if directed to do so by Holders of at least 10% in
aggregate liquidation amount thereof.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned at such time by the Sponsor or any Affiliate
of the Sponsor shall not entitle the Holders thereof to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Capital
Securities were not outstanding.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), 6(c) and 7 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after each
Event of Default (if any) with respect to the Capital Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
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<PAGE>
of the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Debentures to (i) exercise the remedies
available under the Indenture, (ii) waive any past default and its consequences
that is waivable under the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and
payable, provided, however, that, where a consent or action under the Indenture
-------- ------- ----
would require a Super Majority, the Institutional Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Common Securities which the relevant
Super Majority represents of the aggregate principal amount of the Debentures
outstanding. Notwithstanding this Section 6(c), the Institutional Trustee shall
not revoke any action previously authorized or approved by a vote or consent of
the Holders of the Capital Securities. Other than with respect to directing the
time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth above, the
Institutional Trustee shall not take any action described in (i), (ii) or (iii)
above, unless the Institutional Trustee has obtained an opinion of tax counsel
to the effect that for the purposes of United States federal income tax the
Trust will not be classified as other than a grantor trust on account of such
action. If the Institutional Trustee fails to enforce its rights under the
Declaration, any Holder of Common Securities may institute a legal proceeding
directly against any Person to enforce the Institutional Trustee's rights under
the Declaration, without first instituting a legal proceeding against the
Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of Common Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel
I-12
<PAGE>
Common Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities,
voting together as a single class, will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of the Holders of at least a Majority in liquidation amount of the
Securities affected thereby; provided, however, that if any amendment or
-------- -------
proposal referred to in clause (i) above would adversely affect only the Capital
Securities or only the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Debentures and the Debenture Guarantee is required under the
Indenture with respect to any amendment, modification or termination of the
Indenture, the Debentures or the Debenture Guarantee, the Institutional Trustee
shall request the written direction of the Holders of the Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification, or termination as directed by a
Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
-------- -------
the consent of a Super Majority, the Institutional Trustee may only give such
consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities outstanding which the relevant Super-
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Institutional Trustee shall not take
-------- -------
any such action in accordance with the directions of the Holders of the
Securities under this Section 7(b) unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action.
I-13
<PAGE>
8. Pro Rata.
--------
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
has occurred and is continuing, in which case any funds available to make such
payment shall be paid first to each Holder of the Capital Securities pro rata
according to the aggregate liquidation amount of Capital Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Capital
Securities outstanding, and only after satisfaction of all amounts owed to the
Holders of the Capital Securities, to each Holder of Common Securities pro rata
according to the aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
9. Ranking.
-------
The Capital Securities rank pari passu and payment thereon shall be
---- -----
made Pro Rata with the Common Securities except that, where an Event of Default
has occurred and is continuing, the rights of Holders of the Common Securities
to payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Capital Securities.
10. Acceptance of Securities Guarantee and Indenture.
------------------------------------------------
Each Holder of Capital Securities and Common Securities, by the
acceptance of such Securities, agrees to the provisions of the Capital
Securities Guarantee and the Common Securities Guarantee, respectively,
including the subordination provisions therein and to the provisions of the
Indenture.
11. No Preemptive Rights.
--------------------
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-14
<PAGE>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
This Capital Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Capital Security is exchangeable for Capital Securities registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Capital
Security (other than a transfer of this Capital Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Capital Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Capital Security issued is registered in the name of Cede & Co.
or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
Certificate Number Number of Capital Securities
CUSIP NO ___________
Certificate Evidencing Capital Securities
of
COUNTRYWIDE CAPITAL I
____% Capital Trust Pass-through Securities/SM/ ("TRUPS"/SM/)
(liquidation amount $1,000 per Capital Security)
COUNTRYWIDE CAPITAL I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of preferred securities of
the Trust representing undivided beneficial interests in the assets of the
Trust, designated the ____% Capital Trust Pass-through Securities/SM/
(liquidation amount $1,000 per Capital Security) (the "Capital Securities").
The Capital Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this Certificate
duly endorsed and in proper form for transfer. The designation,
A1-1
<PAGE>
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities represented hereby are issued pursuant to, and shall in
all respects be subject to, the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of December 1, 1996, including the
designation of the terms of the Capital Securities as set forth in Annex I to
the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits
of the Capital Securities Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Capital Securities Guarantee and the
Indenture to the Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Capital Securities as evidence of beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _________, 1996.
COUNTRYWIDE CAPITAL I
By:___________________________
Name:
Title: Regular Trustee
A1-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of ____% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below
in respect of an Extension Period, Distributions in arrears for more than one
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such interest
payable unless otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures and the Debenture Guarantee
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full semiannual Distribution period on the basis
of a 360-day year of twelve 30-day months, and, for any period shorter than a
full semiannual Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 30-day month.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semiannually in arrears on June 1 and December 1 of each
year, commencing on December 1, 1997. The Debenture Issuer has the right under
the Indenture to defer payments of interest by extending the interest payment
period at any time and from time to time on the Debentures for a period not
exceeding 10 consecutive semiannual periods (each an "Extension Period"), during
which Extension Period no interest will be due and payable on the Debentures,
provided that no Extension Period shall be initiated while accrued interest with
- -------- ----
respect to prior, completed Extension Periods is unpaid or while the Company is
in default in the payment of interest that has become due and payable on the
Debentures, and provided further, that no Extension Period may extend beyond the
-------- -------
date of the maturity of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, semiannual
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded semiannually during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further extend such Extension Period; provided
--------
that such Extension Period together with all such previous and further
- ----
extensions thereof may not exceed 10 consecutive semiannual periods or extend
beyond the maturity of the Debentures. Distributions accrued during any
Extension Period will be paid on the date that the related Extension Period
terminates to Holders as they appear on the books and records of the Trust on
the record date immediately
A1-3
<PAGE>
preceding such date. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Capital Securities may not be acquired by any Person who is, or who in
acquiring such Capital Securities is using the asset of, an ERISA Plan unless
one of the following class exemptions is applicable: (i) Prohibited Transaction
Class Exemption 90-1 ("PTE 90-1"), regarding investments by insurance company
pooled separate accounts, (ii) Prohibited Transaction Class Exemption 91-38
("PTE 91-38"), regarding investments by bank collective investment funds, (iii)
Prohibited Transaction Class Exemption 84-14 ("PTE 84-14"), regarding
transactions effected by qualified professional asset managers, (iv) Prohibited
Transaction Class Exemption 96-23 ("PTE 96-23"), regarding transactions effected
by in-house asset managers, or (v) Prohibited Transaction Class Exemption 95-60
("PTE 95-60"), regarding investments by insurance company general accounts. The
acceptance of this Certificate by any Person who is, or who in acquiring this
Certificate is using the assets of, an ERISA Plan shall be deemed to constitute
a representation by such Person to the Trust that (i) such Person is eligible
for exemption relief available pursuant to one of PTE 90-1, PTE 91-38, PTE 84-
14, PTE 96-23 or PTE 95-60 with respect to the acquisition and holding of the
Capital Securities represented by this Certificate, and (ii) neither Countrywide
Home Loans, Inc. nor Countrywide Credit Industries, Inc. is a "fiduciary",
within the meaning of Section 3(21) of ERISA and the regulations thereunder,
with respect to such Person's interest in the Capital Securities or the
Debentures.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-4
<PAGE>
_________________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ___________________________
Signature: _____________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee*: _____________________________
- ----------------
* Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A1-5
<PAGE>
EXHIBIT A-2
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
COUNTRYWIDE CAPITAL I
_____% Common Securities
(liquidation amount $1,000 per Common Security)
COUNTRYWIDE CAPITAL I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Countrywide
Credit Industries, Inc. (the "Holder") is the registered owner of common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust, designated the _____% Common Securities (liquidation amount
$1,000 per Common Security) (the "Common Securities"). The Common Securities
are transferable on the books and records of the trust, in person or by a duly
authorized attorney, upon surrender of this Certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued pursuant to, and shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of ________ __, 1996, including the designation of the terms of the Common
Securities as set forth in Annex I to the Declaration, as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Common Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture to the Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of undivided beneficial ownership in the
Debentures.
A2-1
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of ______, 1996.
COUNTRYWIDE CAPITAL I
By:___________________________
Name:
Title: Regular Trustee
A2-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of _____% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below
in respect of an Extension Period, Distributions in arrears for more than one
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such interest
payable unless otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures and the Debenture Guarantee
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full semiannual Distribution period on the basis
of a 360-day year of twelve 30-day months, and, for any period shorter than a
full semiannual Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 30-day month.
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semiannually in arrears on June 1 and December 1 of each
year, commencing on June 1, 1997, to Holders of record fifteen (15) days prior
to such payment dates, which payment dates shall correspond to the interest
payment dates on the Debentures. The Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
at any time and from time to time on the Debentures for a period not exceeding
10 consecutive semiannual periods (each an "Extension Period"), provided that no
-------- ----
Extension Period shall be initiated while accrued interest with respect to prior
completed Extension Period is unpaid or while the Company is in default in the
payment of interest that has become due and payable on the Debentures, and
provided further that no Extension Period may extend beyond the date of the
- -------- -------
maturity of the Debentures. As a consequence of such deferral, Distributions
will also be deferred. Despite such deferral, semiannual Distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at the Coupon Rate compounded semiannually during any such Extension
Period. Prior to the termination of any such Extension Period, the Debenture
Issuer may further extend such Extension Period; provided that such Extension
-------- ----
Period together with all such previous and further extensions thereof may not
exceed 10 consecutive semiannual periods or extend beyond the maturity date of
the Debentures. Distributions accruing during any Extension Period will be paid
on the date that the related Extension period terminates to Holders as they
appear on the books and records of
A2-3
<PAGE>
the Trust on the record date immediately preceding such date. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-4
<PAGE>
______________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints________________________________________________________
________________________________________________________________________________
________________________________________________________ agent to transfer this
Common Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: __________________________
Signature: __________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee*: ______________________________________
- ---------
* Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A2-5
<PAGE>
EXHIBIT B
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE>
(FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This Debenture
is a Global Debenture within the meaning of the Indenture hereinafter referred
to and is registered in the name of a Depositary or a nominee of a Depositary.
This Debenture is exchangeable for Debentures registered in the name of a person
other than the Depositary or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Debenture (other than a
transfer of this Debenture as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
Unless this Debenture is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any
Debenture issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]
No. _________________ CUSIP No. _______________
COUNTRYWIDE HOME LOANS, INC.
______% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE ______
COUNTRYWIDE HOME LOANS, INC., a New York corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ____________ or
registered assigns, the principal sum of ________________ Dollars ($_________ )
on ________ __, 20___, and to pay interest on said principal sum from ________
__, ____, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
semiannually (subject to deferral as set forth herein) in arrears on June 1 and
December 1 of each year commencing June 1, 1997, at the rate of ______% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded
semiannually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which
B-2
<PAGE>
interest is payable on this Debenture is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Debenture (or one or more Predecessor Securities, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment, which shall be the close of business on the
Business Day next preceding such Interest Payment Date. [IF PURSUANT TO THE
PROVISIONS OF THE INDENTURE THE DEBENTURES ARE NO LONGER REPRESENTED BY A GLOBAL
Debenture --which shall be the close of business on the ____ Business Day next
preceding such Interest Payment Date.] Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered holders on such regular record date and may be paid to the Person in
whose name this Debenture (or one or more Predecessor Securities) is registered
at the close of business on a special record date to be fixed by the Trustee for
the payment of such defaulted interest, notice whereof shall be given to the
registered holders of this series of Debentures not less than 10 days prior to
such special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
-------- -------
option of the Company by check mailed to the registered holder at such address
as shall appear in the Security Register. Notwithstanding the foregoing, so
long as the holder of this Debenture is the Institutional Trustee, the payment
of the principal of (and premium, if any) and interest on this Debenture will be
made at such place and to such account as may be designated by the Institutional
Trustee.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so
B-3
<PAGE>
provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
COUNTRYWIDE HOME LOANS, INC.
By:
________________________
Name:
Title:
Attest:
By: _________________
Name:
Title:
B-4
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
Dated ________________
The Bank of New York,
as Trustee
By____________________
Authorized Signatory
[FORM OF GUARANTEE]
FOR VALUE RECEIVED, COUNTRYWIDE CREDIT INDUSTRIES, INC., a Delaware
corporation (the "Guarantor"), hereby unconditionally guarantees to the holder
of the Security upon which this Guarantee is endorsed the due and punctual
payment of the principal of, sinking fund payment, if any, premium, if any, or
interest on said Security, when and as the same shall become due and payable,
whether at maturity, upon redemption or otherwise, according to the terms
thereof and of the Indenture referred to therein.
The Guarantor agrees to determine, at least one Business Day prior to the
date upon which a payment of principal of, sinking fund payment, if any,
premium, if any, or interest on said Security is due and payable, whether the
Company has available the funds to make such payment as the same shall become
due and payable. In case of the failure of the Company punctually to pay any
such principal, sinking fund payment, if any, premium, if any, or interest, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether at maturity, upon redemption,
or otherwise, and as if such payment were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Security or said Indenture, the absence of
any action to enforce the same, any waiver or consent by the holder of said
Security with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company,
protest or notice with respect to said Security or
B-5
<PAGE>
indebtedness evidenced thereby, and all demands whatsoever and covenants that
this Guarantee will not be discharged except by complete performance of the
obligations contained in said Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of said
Security against the Company in respect of any amounts paid by the Guarantor
pursuant to the provisions of this Guarantee; provided, however, that the
Guarantor shall not, without the consent of the holders of all of the Securities
then outstanding, be entitled to enforce or to receive any payments arising out
of or based upon such right of subrogation until the principal of and premium,
if any, and interest on all Securities shall have been paid in full or payment
thereof shall have been provided for in accordance with said Indenture.
Notwithstanding anything to the contrary contained herein, if following any
payment of principal or interest by the Company on the Securities to the holders
of the Securities it is determined by a final decision of a court of competent
jurisdiction that such payment shall be avoided by a trustee in bankruptcy
(including any debtor-in-possession) as a preference under 11 U.S.C. Section 547
and such payment is paid by such holder to such trustee in bankruptcy, then and
to the extent of such repayment, the obligations of the Guarantor hereunder
shall remain in full force and effect.
The obligations of the Guarantor under this Guarantee are, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Guarantee is issued
subject to the provisions of the Indenture with respect thereto.
Each holder of the Security upon which this Guarantee is endorsed, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each holder of the Security upon which this Guarantee is
endorsed, by his or her acceptance thereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each holder upon said provisions.
This Guarantee shall not be valid or become obligatory for any purpose with
respect to a Security until the certificate of authentication on such Security
shall have been signed by the Trustee (or the Authentication Agent).
B-6
<PAGE>
This Guarantee shall be governed by the laws of the State of New York.
B-7
<PAGE>
IN WITNESS WHEREOF, COUNTRYWIDE CREDIT INDUSTRIES, INC. has caused this
Guarantee to be signed in its corporate name by the facsimile signature of two
of its officers thereunto duly authorized and has caused a facsimile of its
corporate seal to be affixed hereunto or imprinted or otherwise reproduced
hereon.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
______________________________{Seal} _______________________
{Title} {Title}
B-8
<PAGE>
(REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debt Securities
of the Company, specified in the Indenture, all issued or to be issued in one or
more series under and pursuant to an Indenture dated as of _________ __, 1996,
duly executed and delivered between the Company and The Bank of New York as
Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture
dated as of ________ __, 1996, between the Company and the Trustee (the
Indenture as so supplemented, the "Indenture"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the series of Debt Securities
(referred to herein as the "Debentures") of which this Debenture is a part. By
the terms of the Indenture, the Debt Securities are issuable in series that may
vary as to amount, date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Debentures is limited in aggregate
principal amount as specified in said First Supplemental Indenture.
Because of the occurrence and continuation of a Tax Event, in certain
circumstances, this Debenture may become due and payable at the principal amount
together with any interest accrued thereon (the "Redemption Price"). The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company determines. The
Company shall have the right to redeem this Debenture at the option of the
Company, without premium or penalty, in whole or in part at any time on or after
December 1, 2006 (an "Optional Redemption"), or at any time in certain
circumstances upon the occurrence of a Tax Event, at a redemption price equal to
100% of the principal amount plus any accrued but unpaid interest, to the date
of such redemption (the "Optional Redemption Price"). Any redemption pursuant
to this paragraph will be made upon not less than 30 days nor more than 60 days
notice, at the Optional Redemption Price. If the Debentures are only partially
redeemed by the Company pursuant to an Optional Redemption, the Debentures will
be redeemed pro rata or by lot or by any other method utilized by the Trustee;
--- ----
provided that if, at the time of redemption, the Debentures are registered as a
Global Debenture, the Depositary shall determine the principal amount of such
Debentures held by each Debentureholder to be redeemed in accordance with its
procedures.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for the unredeemed portion hereof will be
issued in the name of the holder hereof upon the cancellation hereof.
B-9
<PAGE>
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities of each series affected at the
time outstanding, as specified in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the Debt
Securities; provided, however, that no such supplemental indenture shall (i),
among other things, extend the fixed maturity of any Debt Securities of any
series, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, or reduce any premium payable upon the
redemption thereof, without the consent of the holder of each Debt Security so
affected, or (ii) reduce the aforesaid percentage of Debt Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Debt Securities then outstanding and
affected thereby. The Indenture also contains provisions permitting the holders
of a majority in aggregate principal amount of the Debt Securities of any series
at the time outstanding affected thereby, on behalf of all of the holders of the
Debt Securities of such series, to waive any past default in the performance of
any of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default in
the payment of the principal of or premium, if any, or interest on any of the
Debt Securities of such series. Any such consent or waiver by the registered
holder of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Debenture and of any Debenture issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debenture at the time and place and at the
rate and in the money herein prescribed.
The Company shall have the right at any time during the term of the
Debentures and from time to time to defer payments of
B-10
<PAGE>
interest on the Debentures by extending the interest payment period of the
Debentures for up to 10 consecutive semiannual periods (each, an "Extended
Interest Payment Period"), and on the date on which such Extended Interest
Payment Period ends the Company shall pay all interest then accrued and unpaid
(including any Additional Interest), (together with interest thereon at the rate
specified for the Debentures compounded semiannually to the extent that payment
of such interest is enforceable under applicable law); provided that no Extended
-------- ----
Interest Payment Period may be initiated while accrued interest with respect to
prior, completed Extended Interest Payment Periods is unpaid or while the
Company is in default in the payment of interest that has become due and payable
on the Debentures, and provided further that no Extended Interest Payment Period
-------- -------
may last beyond the Maturity Date. Before the termination of any such Extended
Interest Payment Period, the Company may further extend such Extended Interest
Payment Period, provided that each such Extended Interest Payment Period
together with all such previous and further extensions thereof shall not exceed
10 consecutive semiannual periods or extend beyond the Maturity Date. At the
termination of any such Extended Interest Payment Period and upon the payment of
all accrued and unpaid interest and any additional amounts then due, the Company
may commence a new Extended Interest Payment Period, subject to the above
requirements.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Security Register of the Company, upon surrender of this Debenture
for registration of transfer at the office or agency of the Trustee in the City
and State of New York accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and the Security registrar
may deem and treat the registered holder hereof as the absolute owner hereof
(whether or not this Debenture shall be overdue and notwithstanding any notice
of ownership or writing hereon made by anyone other than the Security registrar)
for the purpose of receiving payment of or on account of the principal hereof
and premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
registrar shall be affected by any notice to the contrary.
B-11
<PAGE>
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
[The Debentures of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.]
[This Global Debenture is exchangeable for Debentures in definitive form only
under certain limited circumstances set forth in the Indenture. Debentures of
this series so issued are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.] As provided in the
Indenture and subject to certain limitations [herein and] therein set forth,
Debentures of this series [so issued] are exchangeable for a like aggregate
principal amount of Debentures of this series of a different authorized
denomination, as requested by the holder surrendering the same. All terms used
in this Debenture that are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE
AND THE DEBENTURES WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
B-12
<PAGE>
EXHIBIT C
<PAGE>
EXHIBIT 4.6
================================================================================
COUNTRYWIDE HOME LOANS, INC.
as Issuer
and
COUNTRYWIDE CREDIT INDUSTRIES, INC.
as Guarantor
-------------------------------
-------------------------------
INDENTURE
Dated as of ______, 1996
-------------------------------
THE BANK OF NEW YORK
as Trustee
-------------------------------
SUBORDINATED DEBT SECURITIES
================================================================================
<PAGE>
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
________, 1996 among Countrywide Home Loans, Inc., as Issuer, Countrywide Credit
Industries, Inc., as Guarantor and The Bank of New York, Trustee:
ACT SECTION INDENTURE SECTION
301(a)(1)...........................................................6.09
(a)(2)...........................................................6.09
310(a)(3)...........................................................N.A.
(a)(4)...........................................................N.A.
310(b)..........................................6.08; 6.10(a)(b) and (d)
310(c)..............................................................N.A.
311(a) and (b)......................................................6.13
311(c)..............................................................N.A.
312(a).....................................................4.01; 4.02(a)
312(b) and (c)...........................................4.02(b) and (c)
313(a)...........................................................4.04(a)
313(b)(1)...........................................................N.A.
313(b)(2)........................................................4.04(b)
313(c)...........................................................4.04(c)
313(d)...........................................................4.04(d)
314(a)........................................................4.03, 3.05
314(b)..............................................................N.A.
314(c)(1) and (2)..................................................13.05
314(c)(3)...........................................................N.A.
314(d)..............................................................N.A.
314(e).............................................................13.05
314(f)..............................................................N.A.
315(a)(c) and (d)...................................................6.01
315(b)..............................................................5.08
315(e)..............................................................5.09
316(a)(1).....................................................5.01; 5.07
316(a)(2)........................................................Omitted
316(a) last sentence................................................7.04
316(b)..............................................................5.04
317(a)..............................................................5.02
317(b)...........................................................3.04(a)
318(a).............................................................13.07
- ----------------------------------
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
TABLE OF CONTENTS/*/
Page
----
Parties.................................................................... 1
Recitals................................................................... 1
Authorization of Indenture................................................. 1
Compliance with Legal Requirements......................................... 1
Purpose of and Consideration for Indenture................................. 1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions................................................. 1
Affiliate........................................................... 2
Authenticating Agent................................................ 2
Bankruptcy Law...................................................... 2
Board of Directors.................................................. 2
Board Resolution.................................................... 2
Business Day........................................................ 3
Capital Securities.................................................. 7
Capital Securities Guarantee........................................ 7
Certificate......................................................... 3
Common Securities................................................... 3
Common Securities Guarantee......................................... 3
Company............................................................. 3
Countrywide Trust................................................... 3
Custodian........................................................... 3
Debt Security....................................................... 4
Declaration......................................................... 4
Default............................................................. 4
Depositary.......................................................... 4
Event of Default.................................................... 4
Exchange Act........................................................ 4
Global Security..................................................... 4
Guarantee........................................................... 4
Guarantor........................................................... 4
Indenture........................................................... 4
Institutional Trustee............................................... 5
Interest............................................................ 5
Interest Payment Date............................................... 5
Mortgage............................................................ 5
Officers' Certificate............................................... 5
Opinion of Counsel.................................................. 5
Original Issue Date................................................. 5
Original Issue Discount Security.................................... 5
- ---------------
/*/ THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A PART
OF THE INDENTURE.
i
<PAGE>
Outstanding......................................................... 5
Person.............................................................. 6
Predecessor Security................................................ 6
Principal Office of the Trustee..................................... 7
Responsible Officer................................................. 7
Security............................................................ 7
Securityholder...................................................... 7
Security Register................................................... 7
Senior Indebtedness................................................. 8
Subsidiary.......................................................... 8
Trustee............................................................. 9
Trust Indenture Act................................................. 9
Trust Securities.................................................... 9
U.S. Government Obligations......................................... 9
Yield to Maturity................................................... 9
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally............................................ 10
SECTION 2.02. Form of Trustee's Certificate of
Authentication............................................. 10
SECTION 2.03. Amount Unlimited; Issuable in Series....................... 10
SECTION 2.04. Authentication and Dating.................................. 13
SECTION 2.05. Date and Denomination of Securities........................ 15
SECTION 2.06. Execution of Securities.................................... 17
SECTION 2.07. Exchange and Registration of Transfer of
Securities................................................. 18
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Securities................................................. 19
SECTION 2.09. Temporary Securities....................................... 20
SECTION 2.10. Cancellation of Securities Paid, etc....................... 21
SECTION 2.11. Global Securities.......................................... 21
SECTION 2.12. CUSIP Numbers.............................................. 22
SECTION 2.13. Unconditional Guarantees................................... 23
SECTION 2.14. Execution of Guarantee..................................... 25
SECTION 2.15. Assumption by Guarantor.................................... 25
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and
Interest................................................... 26
SECTION 3.02. Offices for Notices and Payments, etc...................... 26
SECTION 3.03. Appointments to Fill Vacancies in
Trustee's Office........................................... 27
SECTION 3.04. Provision as to Paying Agent............................... 27
SECTION 3.05. Certificate to Trustee..................................... 28
SECTION 3.06. Compliance with Consolidation
Provisions................................................. 28
ii
<PAGE>
SECTION 3.07. Limitation on Dividends.................................... 28
SECTION 3.08. Covenants as to Countrywide Trusts......................... 29
SECTION 3.09. Calculation of Original Issue Discount..................... 30
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists..................................... 30
SECTION 4.02. Preservation and Disclosure of Lists....................... 30
SECTION 4.03. Reports by Guarantor....................................... 32
SECTION 4.04. Reports by the Trustee..................................... 33
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
AN EVENT OF DEFAULT
SECTION 5.01. Events of Default.......................................... 34
SECTION 5.02. Payment of Securities on Default; Suit
Therefor................................................... 37
SECTION 5.03. Application of Moneys Collected by
Trustee.................................................... 40
SECTION 5.04. Proceedings by Securityholders............................. 40
SECTION 5.05. Proceedings by Trustee..................................... 41
SECTION 5.06. Remedies Cumulative and Continuing......................... 42
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of
Securityholders............................................ 42
SECTION 5.08. Notice of Defaults......................................... 43
SECTION 5.09. Undertaking to Pay Costs................................... 44
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee..................... 44
SECTION 6.02. Reliance on Documents, Opinions, etc....................... 46
SECTION 6.03. No Responsibility for Recitals, etc........................ 48
SECTION 6.04. Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May
Own Securities............................................. 48
SECTION 6.05. Moneys to be Held in Trust................................. 48
SECTION 6.06. Compensation and Expenses of Trustee....................... 48
SECTION 6.07. Officers' Certificate as Evidence.......................... 49
SECTION 6.08. Conflicting Interest of Trustee............................ 50
SECTION 6.09. Eligibility of Trustee..................................... 50
SECTION 6.10. Resignation or Removal of Trustee.......................... 50
SECTION 6.11. Acceptance by Successor Trustee............................ 52
SECTION 6.12. Succession by Merger, etc.................................. 54
iii
<PAGE>
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor.................................................. 54
SECTION 6.14. Authenticating Agents..................................... 54
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders................................. 56
SECTION 7.02. Proof of Execution by Securityholders..................... 57
SECTION 7.03. Who Are Deemed Absolute Owners............................ 57
SECTION 7.04. Securities Owned by Company or the
Guarantor Deemed Not Outstanding.......................... 58
SECTION 7.05. Revocation of Consents; Future Holders
Bound..................................................... 58
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings...................................... 59
SECTION 8.02. Call of Meetings by Trustee............................... 59
SECTION 8.03. Call of Meetings by Company, Guarantor
or Securityholders........................................ 60
SECTION 8.04. Qualifications for Voting................................. 60
SECTION 8.05. Regulations............................................... 60
SECTION 8.06. Voting.................................................... 61
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent
of Securityholders........................................ 62
SECTION 9.02. Supplemental Indentures with Consent of
Securityholders........................................... 64
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures......................... 66
SECTION 9.04. Notation on Securities.................................... 66
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee......................... 66
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company or Guarantor May Consolidate,
etc., on Certain Terms.................................... 67
SECTION 10.02. Successor Corporation to be Substituted................... 67
SECTION 10.03. Opinion of Counsel to be Given Trustee.................... 68
iv
<PAGE>
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.................................... 68
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by
Trustee................................................... 69
SECTION 11.03. Paying Agent to Repay Moneys Held......................... 70
SECTION 11.04. Return of Unclaimed Moneys................................ 70
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations............................... 70
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTOR
SECTION 12.01. Indenture and Securities Solely Corporate Obligations..... 73
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors............................................... 73
SECTION 13.02. Official Acts by Successor
Corporation.............................................. 73
SECTION 13.03. Surrender of Company Powers.............................. 74
SECTION 13.04. Addresses for Notices, etc............................... 74
SECTION 13.05. Governing Law............................................ 74
SECTION 13.06. Evidence of Compliance with Conditions
Precedent................................................ 74
SECTION 13.07. Legal Holidays........................................... 75
SECTION 13.08. Trust Indenture Act to Control........................... 75
SECTION 13.09. Table of Contents, Headings, etc......................... 75
SECTION 13.10. Execution in Counterparts................................ 75
SECTION 13.11. Separability............................................. 76
SECTION 13.12. Assignment............................................... 76
SECTION 13.13. Acknowledgement of Rights................................ 76
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Applicability of Article.................................. 77
SECTION 14.02. Notice of Redemption; Selection of Debt
Securities................................................ 77
SECTION 14.03. Payment of Securities Called for
Redemption................................................ 78
SECTION 14.04. Mandatory and Optional Sinking Fund....................... 79
v
<PAGE>
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.................................. 81
SECTION 15.02. Default on Senior Indebtedness............................ 82
SECTION 15.03. Liquidation; Dissolution; Bankruptcy...................... 82
SECTION 15.04. Subrogation............................................... 84
SECTION 15.05. Trustee to Effectuate Subordination....................... 85
SECTION 15.06. Notice by the Company and the
Guarantor................................................. 86
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.............................................. 87
SECTION 15.08. Subordination May Not Be Impaired......................... 87
Testimonium
Signatures
Acknowledgements
vi
<PAGE>
THIS INDENTURE, dated as of _____, 1996, among Countrywide Home Loans,
Inc., a New York corporation (hereinafter sometimes called the "Company"),
Countrywide Credit Industries, Inc., a Delaware corporation (hereinafter
sometimes called the "Guarantor"), and The Bank of New York, a New York banking
corporation, as trustee (hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue from time to time of its subordinated unsecured debentures,
notes or other evidence of indebtedness to be issued in one or more series (the
"Debt Securities") up to such principal amount or amounts as may from time to
time be authorized in accordance with the terms of this Indenture and, to
provide the terms and conditions upon which the Debt Securities are to be
authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; and
WHEREAS, for its lawful corporate purposes, the Guarantor has duly
authorized the execution and delivery of this Indenture and deems it appropriate
from time to time to issue its guarantee of the Debt Securities on the terms
herein provided (the "Guarantees" and, together with the Debt Securities, the
"Securities");
WHEREAS, all acts and things necessary to make this Indenture a valid
agreement according to its terms, have been done and performed;
NOW, THEREFORE, This Indenture Witnesseth:
In consideration of the premises, and the purchase of the Securities
by the holders thereof, the Company and the Guarantor covenant and agree with
the Trustee for the equal and proportionate benefit of the respective holders
from time to time of the Securities or of a series thereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture and of any indenture supplemental hereto shall have the
respective meanings
<PAGE>
specified in this Section 1.01. All other terms used in this Indenture which
are defined in the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), or which are by reference therein defined in the Securities Act of 1933,
as amended (the "Securities Act"), shall (except as herein otherwise expressly
provided or unless the context otherwise requires) have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities Act as in force at
the date of this Indenture as originally executed. All accounting terms used
herein and not expressly defined shall have the meanings assigned to such terms
in accordance with generally accepted accounting principles and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted at the time of any computation. The words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authenticating Agent" shall mean any agent or agents of the Trustee
which at the time shall be appointed and acting pursuant to Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" shall mean the board of directors or the
executive committee or any other duly authorized designated officers of the
Company or the Guarantor, as the case may be.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or the Guarantor, as the case
may be, to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification.
2
<PAGE>
"Business Day" shall mean, with respect to any series of Securities,
any day other than a day on which federal or state banking institutions in the
Borough of Manhattan, The City of New York, are authorized or obligated by law,
executive order or regulation to close.
"Capital Securities" shall mean undivided beneficial interests in the
assets of a Countrywide Trust which rank pari passu with Common Securities
issued by such Countrywide Trust; provided, however, that upon the occurrence of
-------- -------
an Event of Default, the rights of holders of Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and otherwise
are subordinated to the rights of holders of Capital Securities.
"Capital Securities Guarantee" shall mean, in respect of any
Countrywide Trust, any guarantee that the Guarantor may enter into with The Bank
of New York or other Persons that operates directly or indirectly for the
benefit of holders of Capital Securities of such Countrywide Trust.
"Certificate" shall mean a certificate signed by the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company or the Guarantor, as the case may be.
"Common Securities" shall mean undivided beneficial interests in the
assets of a Countrywide Trust which rank pari passu with Capital Securities
issued by such Countrywide Trust; provided, however, that upon the occurrence of
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an Event of Default, the rights of holders of Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and otherwise
are subordinated to the rights of holders of Capital Securities.
"Common Securities Guarantee" shall mean, in respect of any
Countrywide Trust, any guarantee that the Guarantor may enter into with any
Person or Persons and that operates directly or indirectly for the benefit of
holders of Common Securities of such Countrywide Trust.
"Company" shall mean Countrywide Home Loans, Inc., a New York
corporation, and, subject to the provisions of Article Ten, shall include its
successors and assigns.
"Countrywide Trust" shall mean Countrywide Capital I, a Delaware
business trust, or any other similar trust created for the purpose of issuing
Capital Securities in connection with the issuance of Securities under this
Indenture.
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"Custodian" shall mean any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Debt Security" or "Debt Securities" shall have the meaning stated in
the first recital of this Indenture and more particularly means any debt
security or debt securities, as the case may be, authenticated and delivered
under this Indenture.
"Declaration", with respect to a Countrywide Trust, shall mean the
Amended and Restated Declaration of Trust of such Countrywide Trust.
"Default" means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Depositary" shall mean, with respect to Securities of any series, for
which the Company shall determine that such Securities will be issued as a
Global Security, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Exchange Act, or other applicable statute or regulation, which, in each case,
shall be designated by the Company pursuant to either Section 2.03 or 2.11.
"Dissolution Tax Opinion" shall have the meaning set forth in Annex I
to the Declaration.
"Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Global Security" shall mean, with respect to any series of
Securities, a Security executed by the Company and delivered by the Trustee to
the Depositary or pursuant to the Depositary's instruction, all in accordance
with the Indenture, which shall be registered in the name of the Depositary or
its nominee.
"Guarantee" means the agreement of the Guarantor, in the form set
forth in Section 2.13 hereof, to be endorsed on the Debt Securities
authenticated and delivered under this Indenture.
"Guarantor" means Countrywide Credit Industries, Inc., a corporation
duly organized and existing under the laws of the State of Delaware.
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"Indenture" shall mean this instrument as originally executed or, if
amended or supplemented as herein provided, as so amended or supplemented, or
both, and shall include the form and terms of particular series of Securities
established as contemplated hereunder.
"Institutional Trustee" has the meaning set forth in the Declaration
of the applicable Countrywide Trust.
"Interest" shall mean, when used with respect to noninterest bearing
Securities, interest payable after maturity.
"Interest Payment Date", when used with respect to any installment of
interest on a Debt Security of a particular series, shall mean the date
specified in such Debt Security or in a Board Resolution or in an indenture
supplemental hereto with respect to such series as the fixed date on which an
installment of interest with respect to Debt Securities of that series is due
and payable.
"Mortgage" shall mean and include any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance.
"Officers' Certificate" shall mean a certificate signed by the
Chairman of the Board, the President, any Managing Director or any Vice
President, and by the Treasurer, an Assistant Treasurer, the Comptroller, an
Assistant Comptroller, the Secretary or an Assistant Secretary of the Company or
the Guarantor, as the case may be, and delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 13.06 if and to
the extent provided by the provisions of such Section.
"Opinion of Counsel" shall mean an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company, or may be other
counsel satisfactory to the Trustee. Each such opinion shall include the
statements provided for in Section 13.06 if and to the extent required by the
provisions of such Section.
"Original Issue Date" of any Security (or any portion thereof) shall
mean the earlier of (a) the date of such Security or (b) the date of any
Security (or portion thereof) for which such Security was issued (directly or
indirectly) on registration of transfer, exchange or substitution.
"Original Issue Discount Security" shall mean any Debt Security which
provides for an amount less than the principal
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amount thereof to be due and payable upon a declaration of acceleration of the
maturity thereof pursuant to Section 5.01.
The term "outstanding", when used with reference to Debt Securities,
shall, subject to the provisions of Section 7.04, mean, as of any particular
time, all Debt Securities authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except
(a) Debt Securities theretofore cancelled by the Trustee or the
Authenticating Agent or delivered to the Trustee for
cancellation;
(b) Debt Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have
been deposited in trust with the Trustee or with any paying agent
(other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as
its own paying agent); provided that, if such Debt Securities, or
portions thereof, are to be redeemed prior to maturity thereof,
notice of such redemption shall have been given as provided in
Article Fourteen or provision satisfactory to the Trustee shall
have been made for giving such notice; and
(c) Debt Securities paid pursuant to Section 2.08 or in lieu of or in
substitution for which other Debt Securities shall have been
authenticated and delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the Trustee is
presented that any such Debt Securities are held by bona fide
holders in due course.
In determining whether the holders of the requisite principal
amount of outstanding Debt Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the
principal amount of an Original Issue Discount Security that shall be
deemed to be outstanding for such purposes shall be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the maturity
thereof pursuant to Section 5.01.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company,
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trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt and guarantee and as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.08 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt and
guarantee as the lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar term, shall mean
the principal office of the Trustee, at which at any particular time its
corporate trust business shall be administered.
"Redemption Tax Event" shall have the meaning set forth in Annex I to
the Declaration.
"Responsible Officer", when used with respect to the Trustee, shall
mean the chairman and vice chairman of the board of directors, the chairman or
vice chairman of the executive committee of the board of directors, the
president, any vice president, any assistant vice president, the cashier, any
assistant cashier, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, any senior trust officer, any trust officer, the
controller, any assistant controller or any other officer or assistant officer
of the Trustee customarily performing functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Security" or "Securities" means any Debt Security or Debt Securities
with a Guarantee endorsed thereon.
"Securityholder", "holder of Securities", or other similar terms,
shall mean any Person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
"Security Register" shall have the meaning specified in Section 2.07.
"Senior Indebtedness" means, with respect to the Company or the
Guarantor, as the case may be, (i) the principal, premium, if any, and interest
in respect of (A) indebtedness of such obligor for money borrowed and (B)
indebtedness evidenced by securities, debentures, bonds or other similar
instruments issued
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by such obligor; (ii) all capital lease obligations of such obligor; (iii) all
obligations of such obligor issued or assumed as the deferred purchase price of
property, all conditional sale obligations of such obligor and all obligations
of such obligor under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business); (iv) all
obligations of such obligor for the reimbursement on any letter of credit, any
banker's acceptance, any security purchase facility or 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; (v) all
obligations of the type referred to in clauses (i) through (iv) of other Persons
for the payment of which such obligor is responsible or liable as obligor,
guarantor or otherwise; and (vi) all obligations of the type referred to in
clauses (i) through (v) of other Persons secured by any lien on any property or
asset of such obligor (whether or not such obligation is assumed by such
obligor), except (1) any such indebtedness that contains express terms, or is
issued under a deed, indenture or other instrument that contains express terms,
providing that it is subordinate to or ranks pari passu with the Debt Securities
or the Guarantee, (2) any indebtedness between or among the Company or the
Guarantor and any of their Affiliates, and (3) all other debt securities and
guarantees in respect of those debt securities, in any case issued by the
Company or the Guarantor to (x) any Countrywide Trust or a trustee of such Trust
or (y) any other trust, or a trustee of such trust, partnership or other entity
affiliated with the Company or the Guarantor, as the case may be, which is a
financing vehicle of the Company or the Guarantor, as the case may be (a
"Financing Entity"), in connection with the issuance by such Financing Entity of
preferred securities of a similar nature to the Capital Securities or of other
securities that rank pari passu with, or junior to, the Capital Securities.
Such Senior Indebtedness shall continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such senior Indebtedness.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of the
outstanding partnership or similar interests of which shall at the time be owned
by such Person, or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries and (iii) any limited partnership of which such
Person or any of its Subsidiaries is a general partner. For the purposes of
this
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definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power by reason of the occurrence of a
contingency.
"Trustee" shall mean the Person identified as "Trustee" in the first
paragraph hereof, and, subject to the provisions of Article Six hereof, shall
also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of Securities shall mean
the trustee with respect to that series.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939 as in
force at the date of execution of this Indenture, except as provided in Section
9.03.
"Trust Securities" shall mean Common Securities and Capital Securities
of a Countrywide Trust.
"U.S. Government Obligations" shall mean securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii), are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
"Yield to Maturity" shall mean the yield to maturity on a series of
Debt Securities, calculated at the time of issuance of such series of Debt
Securities, or if applicable, at the most recent redetermination of interest on
such series and calculated in accordance with accepted financial practice.
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ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities of each series shall be in substantially the form as
shall be established by or pursuant to a Board Resolution and as set forth in an
Officers' Certificate of the Company and the Guarantor or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with any law or with any rules made pursuant thereto or with
any rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.
In the event the Securities are issued in definitive form pursuant to
this Indenture, such Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 2.02. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication on all Debt Securities
shall be in substantially the following form:
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
The Bank of New York as Trustee
By______________________________
Authorized Signatory
SECTION 2.03. Amount Unlimited; Issuable in Series.
(a) The aggregate principal amount of Debt Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Debt Securities may be issued in one or more series up to the
aggregate principal amount of Debt Securities of that series from time to time
authorized by or pursuant to a Board
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Resolution of the Company or pursuant to one or more indentures supplemental
hereto. Prior to the initial issuance of Debt Securities of any series, there
shall be established in or pursuant to a Board Resolution of the Company and set
forth in an Officers' Certificate of the Company or established in one or more
indentures supplemental:
(1) the title of the Debt Securities of the series (which shall
distinguish Debt Securities of the series from all other Debt
Securities);
(2) any limit upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered
under this Indenture (except for Debt Securities authenticated
and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Debt Securities of the series pursuant
to Section 2.07, 2.08, 2.09, 9.04 or 14.03);
(3) the date or dates on which the principal of and premium, if any,
on the Debt Securities of the series is payable;
(4) the rate or rates at which the Debt Securities of the series
shall bear interest, if any, or the method by which such interest
may be determined, the date or dates from which such interest
shall accrue, the Interest Payment Dates on which such interest
shall be payable or the manner of determination of such Interest
Payment Dates and the record dates for the determination of
holders to whom interest is payable on any such Interest Payment
Dates;
(5) the place or places where the principal of, and premium, if any,
and any interest on Debt Securities of the series shall be
payable;
(6) the right, if any, to extend the interest payment periods and the
duration of such extension;
(7) the price or prices at which, the period or periods within which
and the terms and conditions upon which Debt Securities of the
series may be redeemed, in whole or in part, at the option of the
Company, pursuant to any sinking fund or otherwise:
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(8) the obligation, if any, of the Company to redeem, purchase or
repay Debt Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a Securityholder
thereof and the price or prices at which and the period or
periods within which the price or prices at which, and the terms
and conditions upon which Debt Securities of the series shall be
redeemed, purchased or repaid, in whole or in part, pursuant to
such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Debt Securities of the series
shall be issuable;
(10) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof
pursuant to Section 5.01 or provable in bankruptcy pursuant to
Section 5.02;
(11) any Events of Default with respect to the Debt Securities of a
particular series, if not set forth herein;
(12) the form of the Securities of the series including the form of
the certificate of authentication of such series;
(13) any trustee, authenticating or paying agents, warrant agents,
transfer agents or registrars with respect to the Debt Securities
of such series;
(14) whether the Debt Securities of the series shall be issued in
whole or in part in the form of one or more Global Securities
and, in such case, the Depositary for such Global Security or
Securities, and whether beneficial owners of interests in any
such Global Securities may exchange such interests for other Debt
Securities of such series in the manner provided in Section 2.07,
and the manner and the circumstances under which and the place or
places where any such exchanges may occur if other than in the
manner provided in Section 2.07, and any other terms of the
series relating to the global nature of the Global Securities of
such series and the exchange, registration or transfer
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thereof and the payment of any principal thereof, or interest or
premium, if any, thereon; and
(15) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Debt Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such resolution of the Board of Directors or in any such indenture
supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution of the Company, a copy of an appropriate record
of such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate of the Company setting forth the terms of the series.
(b) Prior to the issuance of any of the Guarantees, the exact form
and terms of such Guarantees, which shall comply with the terms of Section 2.13
hereof and contain such additional terms as are permitted by this Indenture,
shall be established by an Officers' Certificate of the Guarantor or in an
indenture supplemental hereto.
SECTION 2.04. Authentication and Dating.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debt Securities of any series executed
by the Company, together with the Guarantees endorsed thereon executed by the
Guarantor, to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Securities to or upon the
written order of the Company, signed by its Chairman of the Board of Directors,
President, one of its Managing Directors or one of its Vice Presidents and by
its Treasurer or any Assistant Treasurer, without any further action by the
Company hereunder. In authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be
fully protected in relying upon:
(1) a copy of any Board Resolution or Resolutions relating thereto
and, if applicable, an appropriate record of any action taken
pursuant to such resolution, in each case certified by the
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Secretary or an Assistant Secretary of the Company or the
Guarantor as the case may be;
(2) an executed supplemental indenture, if any;
(3) an Officers' Certificate setting forth the form and terms of the
Securities as required pursuant to Sections 2.01 and 2.03,
respectively; and
(4) an Opinion of Counsel prepared in accordance with Section 13.06
which shall also state:
(a) that the form of such Securities has been established by or
pursuant to a resolution of the Board of Directors or by a
supplemental indenture as permitted by Section 2.01 in
conformity with the provisions of this Indenture;
(b) that the terms of such Securities have been established by
or pursuant to a resolution of the Board of Directors or by
a supplemental indenture as permitted by Section 2.03 in
conformity with the provisions of this Indenture;
(c) that (i) such Debt Securities, when authenticated and
delivered by the Trustee and issued by the Company and (ii)
such Guarantees, when issued by the Guarantor, in each case
in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company and the Guarantor,
respectively;
(d) that all laws and requirements in respect of the execution
and delivery by the Company and the Guarantor of the Debt
Securities and the Guarantees, respectively, have been
complied with and that authentication and delivery of the
Securities by the Trustee will not violate the terms of the
Indenture; and
(e) such other matters as the Trustee may reasonably request.
The Trustee shall have the right to decline to authenticate any
Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not
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lawfully be taken or if the Trustee in good faith by its board of directors or
trustees, executive committee, or a trust committee of directors or trustees
and/or vice presidents shall determine that such action would expose the Trustee
to personal liability to existing holders.
SECTION 2.05. Date and Denomination of Securities.
The Securities shall be issuable as registered Securities without
coupons and in such denominations as shall be specified as contemplated by
Section 2.03. In the absence of any such specification with respect to the
Securities of any series, the Securities of such Series shall be issuable in the
denominations of $1,000 and any multiple thereof. The Securities shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the officers executing the same may determine with the
approval of the Trustee as evidenced by the execution and authentication
thereof.
Every Security shall be dated the date of its authentication, shall
bear interest, if any, from such date and shall be payable on such dates, in
each case, as contemplated by Section 2.03. The interest installment on any
Security that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date for Securities of that series shall be paid to the Person
in whose name said Security (or one or more Predecessor Securities) is
registered at the close of business on the regular record date for such interest
installment. In the event that any Security of a particular series or portion
thereof is called for redemption and the redemption date is subsequent to a
regular record date with respect to any Interest Payment Date and prior to such
Interest Payment Date, interest on such Security will be paid upon presentation
and surrender of such Security as provided in Section 14.03.
Any interest on any Security that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date for a Security of the
same series (herein called "Defaulted Interest") shall forthwith cease to be
payable to the registered holder on the relevant regular record date by virtue
of having been such holder; and such Defaulted Interest shall be paid by the
Company, at its election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of business
on a special record date for the payment of such Defaulted Interest, which
shall be fixed in the following manner: the Company shall notify the
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Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each such Security and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a special record date for the payment of such Defaulted Interest
which shall not be more than 15 nor less than ten days prior to the date of
the proposed payment and not less than ten days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such special record date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed, first
class postage prepaid, to each Securityholder at his or her address as it
appears in the Security Register (as hereinafter defined), not less than
ten days prior to such special record date. Notice of the proposed payment
of such Defaulted Interest and the special record date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the Persons
in whose names such Securities (or their respective Predecessor Securities)
are registered on such special record date and shall be no longer payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on any
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
Unless otherwise set forth in a Board Resolution of the Company or one
or more indentures supplemental hereto establishing the terms of any series of
Securities pursuant to Section 2.01 hereof, the term "regular record date" as
used in this Section with respect to a series of Securities with respect to any
Interest Payment Date for such series shall mean either the fifteenth day of the
month immediately preceding the month in which an Interest Payment Date
established for such series pursuant to Section 2.01 hereof shall occur, if such
Interest Payment Date is the first day of a month, or the last day of the month
immediately preceding the month in which an Interest
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Payment Date established for such series pursuant to Section 2.01 hereof shall
occur, if such Interest Payment Date is the fifteenth day of a month, whether or
not such date is a Business Day.
Subject to the foregoing provisions of this Section, each Security of
a series delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Security of such series shall carry the rights to interest
accrued and unpaid, and to accrue, that were carried by such other Security.
SECTION 2.06. Execution of Securities.
The Securities shall be signed in the name and on behalf of the
Company by, and the Guarantees endorsed thereon shall be signed on behalf of the
Guarantor by, the facsimile signature of its Chairman of the Board of Directors,
President, one of its Managing Directors or one of its Vice-Presidents and by
the facsimile signature of its Treasurer or one of its Assistant Treasurers,
under its corporate seal which may be affixed thereto or printed, engraved or
otherwise reproduced thereon, by facsimile or otherwise, and which need not be
attested. Only such Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, executed by the
Trustee or the Authenticating Agent, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Trustee or the Authenticating Agent upon any Security executed by the Company
and the Guarantor shall be conclusive evidence that the Security so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.
In case any officer of the Company or the Guarantor who shall have
signed any of the Securities shall cease to be such officer before the
Securities so signed shall have been authenticated by the Trustee or the
Authenticating Agent, or disposed of by the Company, such Securities
nevertheless may be authenticated or disposed of as though the Person who signed
such Securities had not ceased to be such officer of the Company or the
Guarantor, as the case may be; and any Security may be signed on behalf of the
Company or the Guarantor by such Persons as, at the actual date of the execution
of such Security, shall be the proper officers of the Company or the Guarantor,
as the case may be, although at the date of the execution of this Indenture any
such person was not such an officer.
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SECTION 2.07. Exchange and Registration of Transfer of Securities.
Subject to Section 2.03(14), Securities of any series may be exchanged for
a like aggregate principal amount of Securities of the same series of other
authorized denominations. Securities to be exchanged may be surrendered at the
principal corporate trust office of the Trustee or at any office or agency to be
maintained by the Company for such purpose as provided in Section 3.02, and the
Company and the Guarantor shall execute, the Company or the Trustee shall
register and the Trustee or the Authenticating Agent shall authenticate and make
available for delivery in exchange therefor the Security or Securities which the
Securityholder making the exchange shall be entitled to receive. Upon due
presentment for registration of transfer of any Security of any series at the
principal corporate trust office of the Trustee or at any office or agency of
the Company maintained for such purpose as provided in Section 3.02, the Company
and the Guarantor shall execute, the Company or the Trustee shall register and
the Trustee or the Authenticating Agent shall authenticate and make available
for delivery in the name of the transferee or transferees a new Security or
Securities of the same series for a like aggregate principal amount.
Registration or registration of transfer of any Security by the Trustee or by
any agent of the Company appointed pursuant to Section 3.02, and delivery of
such Security, shall be deemed to complete the registration or registration of
transfer of such Security.
The Company or the Trustee shall keep, at the principal corporate
trust office of the Trustee, a register (the "Security Register") for each
series of Securities issued hereunder in which, subject to such reasonable
regulations as it may prescribe, the Company or the Trustee shall register all
Securities and shall register the transfer of all Securities as in this Article
Two provided. Such register shall be in written form or in any other form
capable of being converted into written form within a reasonable time.
All Securities presented for registration of transfer or for exchange
or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by, the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of Securities, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax,
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fee or other governmental charge that may be imposed in connection therewith.
The Company or the Trustee shall not be required to exchange or
register a transfer of (a) any Security for a period of 15 days next preceding
the date of selection of Securities of such series for redemption, or (b) any
Securities of any series selected, called or being called for redemption in
whole or in part, except in the case of any Securities of any series to be
redeemed in part, the portion thereof not so to be redeemed.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities.
In case any temporary or definitive Security shall become mutilated or
be destroyed, lost or stolen, the Company and the Guarantor shall execute, and
upon its request the Trustee shall authenticate and deliver, a new Security of
the same series bearing a number not contemporaneously outstanding, in exchange
and substitution for the mutilated Security, or in lieu of and in substitution
for the Security so destroyed, lost or stolen. In every case the applicant for
a substituted Security shall furnish to the Company, the Guarantor and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company, the Guarantor and the Trustee evidence to
their satisfaction of the destruction, loss or theft of such Security and of the
ownership thereof.
The Trustee may authenticate any such substituted Security and make
available for delivery the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted Security, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Security which has matured or is
about to mature or has been called for redemption in full shall become mutilated
or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Security, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated Security) if the applicant for such
payment shall furnish to the Company, the Guarantor and the Trustee such
security or indemnity as may be required by them to save each of them harmless
and, in case of destruction, loss or theft, evidence satisfactory to the Company
and to the Trustee of the destruction, loss or theft of such Security and of the
ownership thereof.
Every substituted Security of any series issued pursuant to the
provisions of this Section 2.08 by virtue of the
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fact that any such Security is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company or the Guarantor, as the case
may be, whether or not the destroyed, lost or stolen Security shall be found at
any time, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of the same series duly
issued hereunder. All Securities shall be held and owned upon the express
condition that, to the extent permitted by applicable law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.09. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company and the Guarantor may execute and the Trustee shall authenticate and
make available for delivery temporary Securities (printed or lithographed).
Temporary Securities shall be issuable in any authorized denomination, and
substantially in the form of the definitive Securities but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as
may be determined by the Company. Every such temporary Security shall be
executed by the Company and the Guarantor and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with the same
effect, as the definitive Securities. Without unreasonable delay the Company
and the Guarantor will execute and deliver to the Trustee or the Authenticating
Agent definitive Securities and thereupon any or all temporary Securities of
such series may be surrendered in exchange therefor, at the principal corporate
trust office of the Trustee or at any office or agency maintained by the Company
for such purpose as provided in Section 3.02, and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in
exchange for such temporary Securities a like aggregate principal amount of such
definitive Securities. Such exchange shall be made by the Company at its own
expense and without any charge therefor except that in case of any such exchange
involving a registration of transfer the Company may require payment of a sum
sufficient to cover any tax, fee or other governmental charge that may be
imposed in relation thereto. Until so exchanged, the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of the same series authenticated and
delivered hereunder.
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SECTION 2.10. Cancellation of Securities Paid, etc.
All Securities surrendered for the purpose of payment, redemption,
exchange or registration of transfer, shall, if surrendered to the Company, the
Guarantor or any paying agent, be surrendered to the Trustee and promptly
cancelled by it, or, if surrendered to the Trustee or any Authenticating Agent,
shall be promptly cancelled by it, and no Securities shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Indenture. All Securities cancelled by any Authenticating Agent shall be
delivered to the Trustee. The Trustee shall deliver all cancelled Securities to
the Company. If the Company shall acquire any of the Securities, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation.
SECTION 2.11. Global Securities.
(a) If the Company shall establish pursuant to Section 2.03 that the
Securities of a particular series are to be issued as a Global Security, then
the Company and the Guarantor shall execute and the Trustee shall, in accordance
with Section 2.04, authenticate and deliver, a Global Security that (i) shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the outstanding Securities of such series, (ii)
shall be registered in the name of the Depositary or its nominee, (iii) shall be
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
"Except as otherwise provided in Section 2.11 of the Indenture, this Security
may be transferred, in whole but not in part, only by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary,
another nominee of the Depositary or to a successor Depositary or its nominee."
(b) Notwithstanding the provisions of Section 2.07, the Global
Security of a series may be transferred, in whole but not in part and in the
manner provided in Section 2.07, only by the Depositary to a nominee of the
Depositary for such series, or by a nominee of the Depositary to the Depositary
for such series, another nominee of the Depositary for such series, or a
successor Depositary for such series selected or approved by the Company, or a
nominee of such successor Depositary for such series.
(c) If at any time the Depositary for a series of the Securities
notifies the Company that it is unwilling or unable to continue as Depositary
for such series or if at any time the Depositary for such series shall no longer
be registered or in
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good standing under the Exchange Act, or other applicable statute or regulation,
and a successor Depositary for such series is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
condition, as the case may be, this Section 2.11 shall no longer be applicable
to the Securities of such series and the Company and the Guarantor will execute,
and subject to Section 2.07, the Trustee will authenticate and make available
for delivery the Securities of such series in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount equal
to the principal amount of the Global Security of such series in exchange for
such Global Security. In addition, the Company may at any time determine that
the Securities of any series shall no longer be represented by a Global Security
and that the provisions of this Section 2.11 shall no longer apply to the
Securities of such series. In such event the Company and the Guarantor will
execute and subject to Section 2.07, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will authenticate and
make available for delivery the Securities of such series in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security
of such series in exchange for such Global Security. Upon the exchange of the
Global Security for such Securities in definitive registered form without
coupons, in authorized denominations, the Global Security shall be cancelled by
the Trustee. Such Securities in definitive registered form issued in exchange
for the Global Security pursuant to this Section 2.11(c) shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Securities to the
Depositary for delivery to the Persons in whose names such Securities are so
registered.
SECTION 2.12. CUSIP Numbers
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Securityholders; provided that any such notice
--------
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
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SECTION 2.13. Unconditional Guarantees.
(FORM OF GUARANTEE)
FOR VALUE RECEIVED, the Guarantor hereby fully and unconditionally
guarantees to the holder of the Security upon which this Guarantee is endorsed
the due and punctual payment of the principal of, sinking fund payment, if any,
premium, if any, or interest on said Security, when and as the same shall become
due and payable, whether at maturity, upon redemption or otherwise, according to
the terms thereof and of the Indenture referred to therein.
The Guarantor agrees to determine, at least one Business Day prior to
the date upon which a payment of principal of, sinking fund payment, if any,
premium, if any, or interest on said Security is due and payable, whether the
Company has available the funds to make such payment as the same shall become
due and payable. In case of the failure of the Company punctually to pay any
such principal, sinking fund payment, if any, premium, if any, or interest, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether at maturity, upon redemption,
or otherwise, and as if such payment were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Security or said Indenture, the absence of
any action to enforce the same, any waiver or consent by the holder of said
Security with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company,
protest or notice with respect to said Security or indebtedness evidenced
thereby, and all demands whatsoever and covenants that this Guarantee will not
be discharged except by complete performance of the obligations contained in
said Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of said
Security against the Company in respect of any amounts paid by the Guarantor
pursuant to the provisions of this Guarantee; provided, however, that the
Guarantor shall not, without the consent of the holders of all of the Securities
then outstanding, be entitled to enforce or to receive any payments
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arising out of or based upon such right of subrogation until the principal of
and premium, if any, and interest on all Securities shall have been paid in full
or payment thereof shall have been provided for in accordance with said
Indenture.
Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Company on the Securities
to the holders of the Securities it is determined by a final decision of a court
of competent jurisdiction that such payment shall be avoided by a trustee in
bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C.
Section 547 and such payment is paid by such holder to such trustee in
bankruptcy, then and to the extent of such repayment, the obligations of the
Guarantor hereunder shall remain in full force and effect.
The obligations of the Guarantor under this Guarantee are, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Guarantee is issued
subject to the provisions of the Indenture with respect thereto.
Each holder of the Security upon which this Guarantee is endorsed, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each holder of the Security upon which this Guarantee is
endorsed, by his or her acceptance thereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each holder upon said provisions.
This Guarantee shall not be valid or become obligatory for any purpose
with respect to a Security until the certificate of authentication on such
Security shall have been signed by the Trustee (or the Authentication Agent).
This Guarantee shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, Countrywide Credit Industries, Inc. has caused
this Guarantee to be signed in its corporate name by the facsimile signature of
two of its officers thereunto duly authorized and has caused a facsimile of its
corporate seal to be affixed hereunto or imprinted or otherwise reproduced
hereon.
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SECTION 2.14. Execution of Guarantee
To evidence the Guarantee to the Securityholders specified in Section
2.13, the Guarantor hereby agrees to execute the Guarantees, in substantially
the form above recited, to be endorsed on each Security authenticated and
delivered by the Trustee (or the Authenticating Agent). Each such Guarantee
shall be signed on behalf of the Guarantor as set forth in Section 2.06 to the
authentication of the Security on which it is endorsed and the delivery of such
Security by the Trustee (or the Authenticating Agent), after the authentication
thereof hereunder, shall constitute due delivery of such Guarantee on behalf of
the Guarantor.
SECTION 2.15. Assumption by Guarantor
(a) The Guarantor may, without the consent of the Securityholders,
assume all of the rights and obligations of the Company hereunder with respect
to a series of Securities and under the Securities of such series if, after
giving effect to such assumption, no Default or Event of Default shall have
occurred and be continuing. Upon such an assumption, the Guarantor shall
execute a supplemental indenture evidencing its assumption of all such rights
and obligations of the Company and the Company shall be released from its
liabilities hereunder and under such Securities as obligor on the Securities of
such series.
(b) The Guarantor shall assume all of the rights and obligations of
the Company hereunder with respect to a series of Securities and under the
Securities of such series if, upon a default by the Company in the due and
punctual payment of the principal, sinking fund payment, if any, premium, if
any, or interest on such Securities, the Guarantor is prevented by any court
order or judicial proceeding from fulfilling its obligations under Section 2.13
with respect to such series of Securities. Such assumption shall result in the
Securities of such series becoming the direct obligations of the Guarantor and
shall be effected without the consent of the holders of the Securities of any
series. Upon such an assumption, the Guarantor shall execute a supplemental
indenture evidencing its assumption of all such rights and obligations of the
Company, and the Company shall be released from its liabilities hereunder and
under such Securities as obligor on the Securities of such series.
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ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay or cause to be paid the
principal of and premium, if any, and interest on each of the Debt Securities of
that series at the place, at the respective times and in the manner provided in
such Debt Securities. At the option of the Company, each installment of
interest on the Debt Securities of any series may be paid (i) by mailing checks
for such interest payable to the order of the holders of Debt Securities
entitled thereto as they appear on the registry books of the Company or (ii) by
wire transfer to any account designated by such Person.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the Securities of each series may be presented for payment, an office or
agency where the Securities of that series may be presented for registration or
transfer and for exchange as in this Indenture provided and an office or agency
where notices and demands to or upon the Company in respect of the Securities of
that series or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. Until otherwise designated from time to time by the
Company in a notice to the Trustee, or specified as contemplated by Section
2.03, such office or agency for all of the above purposes shall be the office or
agency of the Trustee. In case the Company shall fail to maintain any such
office or agency in the Borough of Manhattan, The City of New York, or shall
fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
principal corporate trust office of the Trustee.
In addition to any such office or agency, the Company may from time to
time designate one or more offices or agencies outside the Borough of Manhattan,
The City of New York, where the Securities may be presented for registration of
transfer and for exchange in the manner provided in this Indenture, and the
Company may from time to time rescind such designation, as the Company may deem
desirable or expedient; provided, however, that no such designation or
-------- -------
rescission shall in any manner relieve the
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Company of its obligation to maintain any such office or agency in the Borough
of Manhattan, The City of New York, for the purposes above mentioned. The
Company will give to the Trustee prompt written notice of any such designation
or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Securities of any series, it will
cause such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee,
subject to the provision of this Section 3.04,
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or
interest, if any, on the Securities of such series (whether
such sums have been paid to it by the Company or by any
other obligor on the Securities of such series) in trust for
the benefit of the holders of the Securities of such series;
and
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Securities of such
series) to make any payment of the principal of and premium,
if any, or interest, if any, on the Securities of such
series when the same shall be due and payable.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of and premium, if any, or
interest, if any, on the Securities of any series, set aside,
segregate and hold in trust for the benefit of the holders of the
Securities of such series a sum sufficient to pay such principal,
premium or interest so becoming due and will notify the Trustee
of any failure to take such action and of any failure by the
Company (or by any other
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obligor under the Securities of such series) to make any payment
of the principal of and premium, if any, or interest, if any, on
the Securities of such series when the same shall become due and
payable.
(c) Anything in this Section 3.04 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or more or all
series of Securities hereunder, or for any other reason, pay, or
direct any paying agent to pay to the Trustee all sums held in
trust for any such series by the Company or any such paying
agent, such sums to be held by the Trustee upon the trusts herein
contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section
3.04 is subject to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days after
the end of each fiscal year in each year commencing on __________, 19__, so long
as Securities of any series are outstanding hereunder, a Certificate signed by
its principal executive officer, principal financial officer or principal
accounting officer, stating that in the course of the performance by the signers
of their duties as officers of the Company they would normally have knowledge of
any default by the Company in the performance of any covenants contained herein,
stating whether or not they have knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge and the nature
thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
Neither the Company nor the Guarantor will, while any of the
Securities remain outstanding, consolidate with, or merge into, or merge into
itself, or sell or convey all or substantially all of its property to any other
company unless the provisions of Article Ten hereof are complied with.
SECTION 3.07. Limitation on Dividends.
If Securities are issued to a Countrywide Trust or a trustee of such
trust in connection with the issuance of Trust
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Securities by such Countrywide Trust and (i) there shall have occurred and be
continuing any event that would constitute an Event of Default, (ii) the
Guarantor shall be in default with respect to its payment of any obligations
under the Capital Securities Guarantee or Common Securities Guarantee relating
to such Countrywide Trust, or (iii) the Company shall have given notice of its
election to defer payments of interest on such Securities by extending the
interest payment period as provided in the Indenture and such period, or any
extension thereof, shall be continuing, then (a) the Guarantor and the Company
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its capital stock (other than (i) purchases or acquisitions of shares of the
Company's or the Guarantor's capital stock in connection with the satisfaction
by the Company or the Guarantor, respectively, of their obligations under any
employee benefit plans, (ii) as a result of a reclassification of the Company's
or the Guarantor's capital stock or the exchange or conversion of one class or
series of the Company's or the Guarantor's capital stock for another class or
series of the Company's or the Guarantor's capital stock, or in any such case,
any rights to acquire any such stock, (iii) the purchase of fractional interests
in shares of the Company's or the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) dividends or distributions made on the Company's or
the Guarantor's capital stock or rights to acquire such stock with the Company's
or the Guarantor's capital stock or rights to acquire such stock), or make any
guarantee payments with respect to the foregoing and (b) the Guarantor and the
Company shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities (including guarantees) issued
by the Guarantor or the Company which rank pari passu with or junior to such
Securities.
SECTION 3.08. Covenants as to Countrywide Trusts.
In the event Securities are issued to a Countrywide Trust or a trustee
of such trust in connection with the issuance of Trust Securities by such
Countrywide Trust, for so long as such Trust Securities remain outstanding, the
Guarantor will (i) maintain 100% direct ownership of the Common Securities of
such Countrywide Trust, (ii) use its reasonable efforts to cause such
Countrywide Trust (a) to remain a business trust, except in connection with a
distribution of Securities, the redemption of all of the Trust Securities of
such Countrywide Trust or certain mergers, consolidations or amalgamations, each
as permitted by the Declaration of such Countrywide Trust, and (b) to otherwise
continue not to be treated as an association taxable as a corporation or
partnership for United States federal income tax
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purposes and (iii) use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Securities.
SECTION 3.09. Calculation of Original Issue Discount
The Company shall file with the Trustee promptly at the end of each
calendar year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on outstanding Debt
Securities as of the end of such year.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or caused to be
furnished to the Trustee:
(a) on each regular record date for each series of Securities, a
list, in such form as the Trustee may reasonably require, of the
names and addresses of the Securityholders of such series of
Securities as of such record date (and on dates to be determined
pursuant to Section 2.03 for non-interest bearing securities in
each year); and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15
days prior to the time such list is furnished; except that no
such lists need be furnished under this Section 4.01 so long as
the Trustee is in possession thereof by reason of its acting as
Security registrar for such series.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the
holders of each series of Securities (1) contained in the most
recent list furnished to it as provided in Section 4.01 or (2)
received by it in the capacity of Securities registrar (if so
acting) hereunder.
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The Trustee may destroy any list furnished to it as provided in
Section 4.01 upon receipt of a new list so furnished.
(b) In case three or more holders of Securities of any series
(hereinafter referred to as "applicants") apply in writing to the
Trustee and furnish to the Trustee reasonable proof that each
such applicant has owned a Security of such series for a period
of at least six months preceding the date of such application,
and such application states that the applicants desire to
communicate with other holders of Securities of such series or
with holders of all Securities with respect to their rights under
this Indenture or under such Securities and is accompanied by a
copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall within
five Business Days after the receipt of such application, at its
election, either:
(1) afford such applicants access to the information preserved
at the time by the Trustee in accordance with the provisions
of subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number of
holders of such series or all Securities, as the case may
be, whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02, and as to
the approximate cost of mailing to such Securityholders the
form of proxy or other communication, if any, specified in
such application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee shall,
upon the written request of such applicants, mail to each
Securityholder of such series or all Securities, as the case
may be, whose name and address appear in the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02 a copy of
the form of proxy or other communication which is specified
in such request with reasonable
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promptness after a tender to the Trustee of the material to
be mailed and of payment, or provision for the payment, of
the reasonable expenses of mailing, unless within five days
after such tender, the Trustee shall mail to such applicants
and file with the Securities and Exchange Commission,
together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee,
such mailing would be contrary to the best interests of the
holders of Securities of such series or all Securities, as
the case may be, or would be in violation of applicable law.
Such written statement shall specify the basis of such
opinion. If said Commission, after opportunity for a
hearing upon the objections specified in the written
statement so filed, shall enter an order refusing to sustain
any of such objections or if, after the entry of an order
sustaining 1 or more of such objections, said Commission
shall find, after notice and opportunity for hearing, that
all the objections so sustained have been met and shall
enter an order so declaring, the Trustee shall mail copies
of such material to all such Securityholders with reasonable
promptness after the entry of such order and the renewal of
such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their
application.
(c) Each and every holder of Securities, by receiving and holding the
same, agrees with Company, the Guarantor and the Trustee that
neither the Company, the Guarantor nor the Trustee nor any paying
agent shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the holders
of Securities in accordance with the provisions of subsection (b)
of this Section 4.02, regardless of the source from which such
information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a
request made under said subsection (b).
SECTION 4.03. Reports by Guarantor.
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(a) The Guarantor covenants and agrees to file with the Trustee,
within 15 days after the Guarantor is required to file the same
with the Securities and Exchange Commission, copies of the annual
reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as said
Commission may from time to time by rules and regulations
prescribe) which the Guarantor may be required to file with said
Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Guarantor is not required to file
information, documents or reports pursuant to either of such
sections, then to file with the Trustee and said Commission, in
accordance with rules and regulations prescribed from time to
time by said Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant
to Section 13 of the Exchange Act in respect of a security listed
and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations.
(b) The Guarantor covenants and agrees to file with the Trustee and
the Securities and Exchange Commission, in accordance with the
rules and regulations prescribed from time to time by said
Commission, such additional information, documents and reports
with respect to compliance by the Guarantor with the conditions
and covenants provided for in this Indenture as may be required
from time to time by such rules and regulations.
(c) The Guarantor covenants and agrees to transmit by mail to all
holders of Securities, as the names and addresses of such holders
appear upon the Security register, within 30 days after the
filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the
Guarantor pursuant to subsections (a) and (b) of this Section
4.03 as may be required by rules and regulations prescribed from
time to time by the Securities and Exchange Commission.
(d) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information
contained therein, including the
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Guarantor compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on Certificates
and Officers' Certificates).
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such reports
concerning the Trustee and its actions under this Indenture as
may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto. If required by
Section 313(a) of the Trust Indenture Act, the Trustee shall,
within 60 days after each May 15 following the date of this
Indenture deliver to Securityholders a brief report, dated as of
such May 15, which complies with the provisions of such Section
313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with
each stock exchange, if any, upon which the Securities are
listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when the Securities are listed
on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
AN EVENT OF DEFAULT
SECTION 5.01. Events of Default.
The following Events of Default with respect to Securities of any
series or such other events as may be established with respect to the Securities
of that series as contemplated by Section 2.03 hereof shall be "Events of
Default" with respect to Securities of that series:
(a) the Company or the Guarantor defaults in the payment of any
interest upon any Securities of that series when it becomes due
and payable, and continuance of such default for a period of 30
days; provided, however, that a valid extension of an interest
-------- -------
payment period by the Company in accordance with the terms of any
indenture supplemental hereto shall not constitute a default in
the payment of interest for this purpose; or
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(b) the Company or the Guarantor defaults in the payment of all or
any part of the principal of (or premium, if any, on) any
Securities of that series as and when the same shall become due
and payable either at maturity, upon redemption (including
redemption for any sinking fund), by declaration or otherwise;
provided, however, that a valid extension of the maturity of such
-------- -------
Securities in accordance with the terms of any indenture
supplemental hereto shall not constitute a default in the payment
of principal or premium, if any; or
(c) the Company or the Guarantor defaults in the performance, or
breach, of any of its covenants or warranties in this Indenture
(other than a covenant or warranty a default in whose performance
or whose breach is elsewhere in this Section specifically dealt
with and other than those set forth exclusively in terms of any
particular series of Securities established as contemplated in
this Indenture), and continuance of such default or breach for a
period of 90 days after there has been given, by registered or
certified mail, to the Company and the Guarantor by the Trustee
or to the Company, the Guarantor and the Trustee by the holders
of at least 25% in principal amount of the outstanding
Securities, without regard to series, a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company or the Guarantor in
an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Company or the Guarantor or for any
substantial part of its property, or ordering the winding-up or
liquidation of its affairs and such decree or order shall remain
unstayed and in effect for a period of 90 consecutive days; or
(e) the Company or the Guarantor shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such
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law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or the
Guarantor or of any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due; or
(f) in the event the Securities of that series are issued to a
Countrywide Trust or a trustee of such trust in connection with
the issuance of Trust Securities by such Countrywide Trust, such
Countrywide Trust shall have voluntarily or involuntarily
dissolved, wound-up its business or otherwise terminated its
existence except in connection with (i) the distribution of the
Securities to holders of such Trust Securities in liquidation of
their interests in such Countrywide Trust, (ii) the redemption of
all of the outstanding Trust Securities of such Countrywide Trust
or (iii) certain mergers, consolidations or amalgamations, each
as permitted by the Declaration of such Countrywide Trust.
If an Event of Default occurs and is continuing with respect to any
series of Securities, then, and in each and every such case, unless the
principal of all of the Securities of that series shall have already become due
and payable, either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Securities of that series then outstanding hereunder, by
notice in writing to the Company and the Guarantor (and to the Trustee if given
by Securityholders), may declare the entire principal (or, if the Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all
Securities of that series and the interest accrued thereon, if any, and any
other amounts payable under this Indenture to be due and payable immediately,
and upon any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition that
if, at any time after the principal (or, if the Securities are Original Issue
Discount Securities, such portion of the principal as may be specified in the
terms thereof) of the Securities of any series (or of all the Securities, as the
case may be) shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or
entered as hereinafter provided, the Company or the Guarantor shall pay or shall
deposit with the
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Trustee a sum sufficient to pay all matured installments of interest upon all
the Securities of such series (or of all the Securities, as the case may be) and
the principal of and premium, if any, on any and all Securities of such series
(or of all the Securities, as the case may be) which shall have become due
otherwise than by acceleration (with interest upon such principal and premium,
if any, and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest, at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of such series, (or at the respective
rates of interest or Yields to Maturity of all the Securities, as the case may
be) to the date of such payment or deposit) and such amount as shall be
sufficient to cover reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, and all other expenses
and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith, and if any
and all Events of Default under the Indenture, other than the non-payment of the
principal of or premium, if any, on Securities which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as provided
herein -- then and in every such case the holders of a majority in aggregate
principal amount of the Securities of such series (or of all the Securities, as
the case may be) then outstanding, by written notice to the Company and to the
Trustee, may waive all defaults with respect to that series (or with respect to
all Securities, as the case may be, in such case, treated as a single class) and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the Guarantor, the Trustee and the holders of the Securities shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the Guarantor, the Trustee and the
holders of the Securities shall continue as though no such proceeding had been
taken.
SECTION 5.02. Payment of Securities on Default; Suit Therefor.
The Company and the Guarantor covenant that (a) in case default shall
be made in the payment of any installment of interest upon any of the Securities
of any series as and when the
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same shall become due and payable, and such default shall have continued for a
period of 30 days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Securities of any series as and
when the same shall have become due and payable, whether at maturity of the
Securities of that series or upon redemption or by declaration or otherwise --
then, upon demand of the Trustee, the Company or the Guarantor will pay to the
Trustee, for the benefit of the holders of the Securities of that series the
whole amount that then shall have become due and payable on all such Securities
of that series for principal and premium, if any, or interest, or both, as the
case may be, with interest upon the overdue principal and premium, if any, and
(to the extent that payment of such interest is enforceable under applicable law
and, if the Securities are held by a Countrywide Trust or a trustee of such
trust, without duplication of any other amounts paid by the Guarantor or such
Countrywide Trust or trustee in respect thereof) upon the overdue installments
of interest at the rate or Yield to Maturity (in the case of Original Issue
Discount Securities) borne by the Securities of that series; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses or liabilities incurred by the
Trustee hereunder other than through its negligence or bad faith.
In case the Company or the Guarantor shall fail forthwith to pay such
amounts upon such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any actions or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Company or
the Guarantor or any other obligor on such Securities and collect in the manner
provided by law out of the property of the Company or the Guarantor or any other
obligor on such Securities wherever situated the moneys adjudged or decreed to
be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or the Guarantor or any other obligor on the
Securities of any series under Title 11, United States Code, or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the property of the Company or the Guarantor or such other obligor, or in the
case of any other similar judicial proceedings relative to the Company or the
Guarantor or other obligor upon the Securities of any series, or to the
creditors or property of the Company or the Guarantor or such other obligor, the
Trustee, irrespective of whether the principal of the Securities of any
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series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal and interest (or, if the
Securities of that series are Original Issue Discount Securities such portion of
the principal amount as may be specified in the terms of that series) owing and
unpaid in respect of the Securities of such series and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Securityholders allowed in such judicial proceedings
relative to the Company or the Guarantor or any other obligor on the Securities
of any series, or to the creditors or property of the Company or the Guarantor
or such other obligor, unless prohibited by applicable law and regulations, to
vote on behalf of the holders of the Securities or any series in any election of
a trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings, and to collect and receive any moneys or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee
except as a result of negligence or bad faith.
Nothing herein contained shall be construed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any holder thereof or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceeding.
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All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof on any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall be for the ratable benefit of the holders of the
Securities.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Securities, and it shall not be necessary to make any holders of the
Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the following
order, at the date or dates fixed by the Trustee for the distribution of such
moneys, upon presentation of the several Securities in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to such series and reasonable compensation to the Trustee, its
agents, attorneys and counsel, and of all other expenses and liabilities
incurred, and all advances made, by the Trustee except as a result of its
negligence or bad faith;
Second: To the payment of all Senior Indebtedness of the Company if
and to the extent required by Article Fifteen;
Third: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and be
unpaid, to the payment of the amounts then due and unpaid upon Securities of
such series for principal (and premium, if any), and interest on the Securities
of such series, in respect of which or for the benefit of which money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due on such Securities for principal (and premium, if any) and interest,
respectively; and
Fourth: The balance, if any, to the Company.
SECTION 5.04. Proceedings by Securityholders.
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No holder of any Security of any series shall have any right by virtue
of or by availing of any provision of this Indenture to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof with
respect to the Securities of such series specifying such Event of Default, as
hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Securities of that series then outstanding
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action, suit or proceeding, it being understood and
intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of Securities of any series shall have any right in any manner whatever
by virtue of or by availing of any provision of this Indenture to affect,
disturb or prejudice the rights of any other holder of Securities, or to obtain
or seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Securities of the
applicable series.
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Security to receive payment of the principal of
(premium, if any) and interest, if any, on such Security, on or after the same
shall have become due and payable, or to institute suit for the enforcement of
any such payment, shall not be impaired or affected without the consent of such
holder and by accepting a Security hereunder it is expressly understood,
intended and covenanted by the taker and holder of every Security of such series
with every other such taker and holder and the Trustee, that no one or more
holders of Securities of such series shall have any right in any manner
whatsoever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of the holders of any other such
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Securities of series. For the protection and enforcement of the
provisions of this Section, each and every Securityholder and the
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Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 5.05. Proceedings by Trustee.
In case of an Event of Default hereunder the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
Except as otherwise provided in Section 2.08, all powers and remedies
given by this Article Five to the Trustee or to the Securityholders shall, to
the extent permitted by law, be deemed cumulative and not exclusive of any other
powers and remedies available to the Trustee or the holders of the Securities,
by judicial proceedings or otherwise, to enforce the performance or observance
of the covenants and agreements contained in this Indenture or otherwise
established with respect to such series, and no delay or omission of the Trustee
or of any holder of any of the Securities to exercise any right or power
accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such
default or an acquiescence therein; and, subject to the provisions of Section
5.04, every power and remedy given by this Article Five or by law to the Trustee
or to the Securityholders may be exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities of any or all series affected (voting as one class) at the time
outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; provided, however, that (subject to
-------- -------
the provisions of Section 6.01) the Trustee shall have the right to decline to
follow any such direction if the Trustee shall determine that the action so
directed would be unjustly
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prejudicial to the holders not taking part in such direction or if the Trustee
being advised by counsel determines that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith by its board of
directors or trustees, executive committee, or a trust committee of directors or
trustees and/or Responsible Officers shall determine that the action or
proceedings so directed would involve the Trustee in personal liability. Prior
to any declaration accelerating the maturity of any series of the Securities, or
of all the Securities, as the case may be, the holders of a majority in
aggregate principal amount of the Securities of that series at the time
outstanding may on behalf of the holders of all of the Securities of such series
waive any past default or Event of Default, including any default or Event of
Default the conditions for the occurrence of which are established pursuant to
Section 2.03, and its consequences, except a default (a) in the payment of
principal of, premium, if any, or interest on any of the Securities, (b) in
respect of covenants or provisions hereof which cannot be modified or amended
without the consent of the holder of each Security affected, or (c) a default of
the covenants contained in Section 3.08; provided, however, that if the
Securities of such series are held by a Countrywide Trust or a trustee of such
trust, such waiver or modification to such waiver shall not be effective until
the holders of a majority in liquidation preference of Trust Securities of the
applicable Countrywide Trust shall have consented to such waiver or modification
to such waiver; provided, further, that if the consent of the holder of each
outstanding Security is required, such waiver shall not be effective until each
holder of the Trust Securities of the applicable Countrywide Trust shall have
consented to such waiver. Upon any such waiver, the default covered thereby
shall be deemed to be cured for all purposes of this Indenture and the Company,
the Guarantor, the Trustee and the holders of the Securities of such series
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event
of Default hereunder shall have been waived as permitted by this Section 5.07,
said default or Event of Default shall for all purposes of the Securities of
that series (or of all Securities, as the case may be) and this Indenture be
deemed to have been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after the occurrence of a default
with respect to the Securities of any series, mail to all Securityholders of
that series, as the names and addresses of such holders appear upon the Security
register, notice of all defaults with respect to that series known to the
Trustee, unless
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such defaults shall have been cured before the giving of such notice (the term
"defaults" for the purpose of this Section 5.08 being hereby defined to be the
events specified in clauses (a), (b), (c), (d), (e) and (f) of Section 5.01, not
including periods of grace, if any, provided for therein, and irrespective of
the giving of written notice specified in clause (c) of Section 5.01); and
provided that, except in the case of default in the payment of the principal of,
premium, if any, or interest on any of the Securities of such series, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders of such
series; and provided further, that in the case of any default of the character
specified in Section 5.01(c) no such notice to Securityholders of such series
shall be given until at least 60 days after the occurrence thereof but shall be
given within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section 5.09 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders of any series, holding in the aggregate more than 10% in
principal amount of the Securities of that series outstanding, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Security against the
Company on or after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
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With respect to the holders of any series of Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default with
respect to Securities of that series and after the curing or waiving of all
Events of Default which may have occurred, with respect to Securities of that
series, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default with
respect to the Securities of a series has occurred (which has not been cured or
waived) the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to
Securities of a series and after the curing or waiving of all
Events of Default with respect to that series which may have
occurred
(1) the duties and obligations of the Trustee with respect to
Securities of a series shall be determined solely by the
express provisions of this Indenture, and the Trustee shall
not be liable except for the performance of such duties and
obligations with respect to such series as are specifically
set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but, in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or
not
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they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith, in accordance with
the direction of the Securityholders pursuant to Section 5.07,
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Indenture or adequate indemnity against such risk is not
reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, bond, note, debenture or other paper or document believed
by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Company or the
Guarantor mentioned herein shall be sufficiently evidenced by an
Officers' Certificate (unless other evidence in respect thereof
be herein specifically prescribed); and any Board Resolution may
be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company or the
Guarantor, as the case may be;
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(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders, pursuant to the
provisions of this Indenture, unless such Securityholders shall
have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Indenture; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of
Default with respect to a series of the Securities (that has not
been cured or waived) to exercise with respect to Securities of
that series such of the rights and powers vested in it by this
Indenture, and to use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the holders of
not less than a majority in principal amount of the outstanding
Securities of the series affected thereby; provided, however,
that if the payment within a reasonable time to the Trustee of
the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may
require
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reasonable indemnity against such expense or liability as a
condition to so proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents (including any Authenticating Agent) or attorneys, and the
Trustee shall not be responsible for any misconduct or negligence
on the part of any such agent or attorney appointed by it with
due care.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in the
certificate of authentication of the Trustee or the Authenticating Agent) shall
be taken as the statements of the Company and the Guarantor, and the Trustee and
the Authenticating Agent assume no responsibility for the correctness of the
same. The Trustee and the Authenticating Agent make no representations as to
the validity or sufficiency of this Indenture or of the Securities. The Trustee
and the Authenticating Agent shall not be accountable for the use or application
by the Company or the Guarantor of any Securities or the proceeds of any
Securities authenticated and delivered by the Trustee or the Authenticating
Agent in conformity with the provisions of this Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or any
transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not Trustee, Authenticating Agent, paying agent, transfer
agent or Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys received by the
Trustee or any paying agent shall, until used or applied as herein provided, be
held in trust for the purpose for which they were received, but need not be
segregated from other funds except to the extent required by law. The Trustee
and any paying agent shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company
and the Guarantor. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid from time to
time upon the written order of the Company, signed by the Chairman of the
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Board of Directors, the President, a Managing Director, a Vice President, the
Treasurer or an Assistant Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company and the Guarantor covenant and agree to pay to the Trustee
from time to time, and the Trustee shall be entitled to, such compensation as
shall be agreed to in writing among the Company, the Guarantor and the Trustee
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Company and the
Guarantor will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith. The Company and the
Guarantor also covenant to indemnify each of the Trustee or any predecessor
Trustee (and its officers, agents, directors and employees) for, and to hold it
harmless against, any and all loss, damage, claim, liability or expense
including taxes (other than taxes based on the income of the Trustee) incurred
without negligence or bad faith on the part of the Trustee and arising out of or
in connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim of liability in the
premises. The obligations of the Company and the Guarantor under this Section
6.06 to compensate and indemnify the Trustee and to pay or reimburse the Trustee
for expenses, disbursements and advances shall constitute additional
indebtedness hereunder. Such additional indebtedness shall be secured by a lien
prior to that of the Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the benefit of the holders
of particular Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.01(d), Section 5.01(e) or
Section 5.01(f), the expenses (including the reasonable charges and expenses of
its counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
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Except as otherwise provided in Sections 6.01 and 6.02, whenever in
the administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken or omitted by
it under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest" within
the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation organized
and doing business under the laws of the United States of America or any state
or territory thereof or of the District of Columbia or a corporation or other
Person permitted to act as trustee by the Securities and Exchange Commission
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000) and
subject to supervision or examination by federal, state, territorial, or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 6.09 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
records of condition so published.
The Company and the Guarantor may not, nor may any person directly or
indirectly controlling, controlled by, or under common control with the Company
or the Guarantor, serve as Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
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SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign with respect to one or more or all series of
Securities by giving written notice of such resignation to the
Company and the Guarantor and by mailing notice thereof to the
holders of the applicable series of Securities at their addresses
as they shall appear on the Security Register. Upon receiving
such notice of resignation, the Company and the Guarantor shall
promptly appoint a successor trustee or trustees with respect to
the applicable series by written instrument, in duplicate,
executed by order of its Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall
have been so appointed with respect to any series of Securities
and have accepted appointment within 30 days after the mailing of
such notice of resignation to the affected Securityholders, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any
Securityholder who has been a bona fide holder of a Security or
Securities of the applicable series for at least six months may,
subject to the provisions of Section 5.09, on behalf of himself
and all others similarly situated, petition any such court for
the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(b) In case at any time any of the following shall occur --
(1) the Trustee shall fail to comply with the provisions of
Section 6.08 after written request therefor by the Company
or the Guarantor or by any Securityholder who has been a
bona fide holder of a Security or Securities for at least
six months, or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.09 and shall fail to resign
after written request therefor by the Company or the
Guarantor or by any such Securityholder, or
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(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of
its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, the
Company or the Guarantor may remove the Trustee and appoint
a successor Trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of
which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee, or, subject
to the provisions of Section 5.09, any Securityholder who
has been a bona fide holder of a Security or Securities of
the applicable series for at least six months may, on behalf
of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a
successor Trustee.
(c) Upon prior written notice to the Company, the Guarantor and the
Trustee, the holders of a majority in aggregate principal amount
of the Securities of any series at the time outstanding may at
any time remove the Trustee with respect to such series and
nominate a successor Trustee with respect to the applicable
series of Securities or all series, as the case may be, which
shall be deemed appointed as successor Trustee with respect to
the applicable series unless within ten Business Days after such
nomination the Company or the Guarantor objects thereto, in which
case the Trustee so removed or any Securityholder of the
applicable series, upon the terms and conditions and otherwise as
in subsection (a) of this Section 6.10 provided, may petition any
court of competent jurisdiction for an appointment of a successor
Trustee with respect to such series.
(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this
Section 6.10 shall
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become effective upon acceptance of appointment by the successor
Trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor Trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Company and the Guarantor and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the retiring Trustee with respect to all
or any applicable series shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, duties and obligations with respect to such series of its
predecessor hereunder, with like effect as if originally named as Trustee
herein; but, nevertheless, on the written request of the Company or the
Guarantor or of the successor Trustee, the Trustee ceasing to act shall, upon
payment of any amounts then due it pursuant to the provisions of Section 6.06,
execute and deliver an instrument transferring to such successor Trustee all the
rights and powers of the Trustee so ceasing to act and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee thereunder. Upon request of any such successor Trustee,
the Company and the Guarantor shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor Trustee
all such rights and powers. Any Trustee ceasing to act shall, nevertheless,
retain a lien upon all property or funds held or collected by such Trustee to
secure any amounts then due it pursuant to the provisions of Section 6.06.
If a successor Trustee is appointed with respect to the Securities of
one or more (but not all) series, the Company, the Guarantor, the retiring
Trustee and each successor Trustee with respect to the Securities of any
applicable series shall execute and deliver an indenture supplemental hereto
which shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of any series as to which the predecessor Trustee
is not retiring shall continue to be vested in the predecessor Trustee, and
shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the Trust hereunder
by more than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be Trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee.
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No successor Trustee shall accept appointment as provided in this
Section 6.11 unless at the time of such acceptance such successor Trustee shall
be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 6.11, the Company and the Guarantor shall mail notice of the
succession of such Trustee hereunder to the holders of Securities of any
applicable series at their addresses as they shall appear on the Security
register. If the Company and the Guarantor fail to mail such notice within ten
Business Days after the acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Company and the Guarantor.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee, and deliver
such Securities so authenticated; and in case at that time any of the Securities
of any series shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor hereunder
or in the name of the successor Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Securities of such series
or in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or authenticate Securities of any series in the name of
any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
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The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship described in Section 311(b) of the
Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by the
Trustee upon the request of the Company and the Guarantor with power to act on
its behalf and subject to its direction in the authentication and delivery of
Securities of any series issued upon exchange or transfer thereof as fully to
all intents and purposes as though any such Authenticating Agent had been
expressly authorized to authenticate and deliver Securities of such series;
provided that the Trustee shall have no liability to the Company or the
Guarantor for any acts or omissions of the Authenticating Agent with respect to
the authentication and delivery of Securities of any series. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any state or territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority, then for the purposes of this Section 6.14 the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 6.14 without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign with respect to one or
more or all series of Securities by giving
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written notice of resignation to the Trustee and to the Company and the
Guarantor. The Trustee may at any time terminate the agency of any
Authenticating Agent with respect to one or more or all series of Securities by
giving written notice of termination to such Authenticating Agent and to the
Company and the Guarantor. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time any Authenticating Agent shall cease
to be eligible under this Section 6.14, the Trustee may, and upon the request of
the Company and the Guarantor shall, promptly appoint a successor Authenticating
Agent with respect to the applicable series eligible under this Section 6.14,
shall give written notice of such appointment to the Company and the Guarantor
and shall mail notice of such appointment to all holders of the applicable
series of Securities as the names and addresses of such holders appear on the
Security Register. Any successor Authenticating Agent with respect to all or
any series upon acceptance of its appointment hereunder shall become vested with
all rights, powers, duties and responsibilities with respect to such series of
its predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein.
The Company and the Guarantor agree to pay to any Authenticating Agent
from time to time reasonable compensation for its services. Any Authenticating
Agent shall have no responsibility or liability for any action taken by it as
such in accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Securities of any or
all series may take any action (including the making of any demand or request,
the giving of any notice, consent or waiver or the taking of any other action)
the fact that at the time of taking any such action the holders of such
specified percentage have joined therein may be evidenced (a) by any instrument
or any number of instruments of similar tenor executed by such Securityholders
in person or by agent or proxy appointed in writing, or (b) by the record of
such holders of Securities voting in favor thereof at any meeting of such
Securityholders duly called and held in accordance with the provisions of
Article Eight, or (c) by a combination of such instrument or instruments and any
such record of such a meeting
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of such Securityholders or (d) by any other method the Trustee deems
satisfactory.
If the Company or the Guarantor shall solicit from the Securityholders
of any series any request, demand, authorization, direction, notice, consent,
waiver or other action, the Company or the Guarantor may, at its option, as
evidenced by an Officers' Certificate, fix in advance a record date for such
series for the determination of Securityholders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other action, but
the Company or the Guarantor shall have no obligation to do so. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other action may be given before or after the record date,
but only the Securityholders of record at the close of business on the record
date shall be deemed to be Securityholders for the purposes of determining
whether Securityholders of the requisite proportion of outstanding Securities of
that series have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for that
purpose the outstanding Securities of that series shall be computed as of the
record date; provided, however, that no such authorization, agreement or consent
-------- -------
by such Securityholders on the record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Securities shall be proved by the Security
Register or by a certificate of the Security registrar. The Trustee may require
such additional proof of any matter referred to in this Section as it shall deem
necessary.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any Security,
the Company, the Guarantor, the Trustee, any Authenticating Agent, any paying
agent, any transfer agent and any Security registrar may deem the person in
whose name such Security shall be registered upon the Security Register to be,
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and may treat him as, the absolute owner of such Security (whether or not such
Security shall be overdue) for the purpose of receiving payment of or on account
of the principal of, premium, if any, and interest on such Security and for all
other purposes; and neither the Company nor the Guarantor nor the Trustee nor
any Authenticating Agent nor any paying agent nor any transfer agent nor any
Security registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Security.
SECTION 7.04. Securities Owned by Company or the Guarantor Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or the
Guarantor or any other obligor on the Securities or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or the Guarantor or any other obligor on the Securities
shall be disregarded and deemed not to be outstanding for the purpose of any
such determination; provided that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver,
only Securities which the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 7.04 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Securities and that the pledgee is not the Company or the Guarantor or any
such other obligor or Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or the Guarantor or
any such other obligor. In the case of a dispute as to such right, any decision
by the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.01, of the taking of any action by the holders of the
percentage in aggregate principal amount of the Securities specified in this
Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor) the
serial number of which is shown by the evidence to
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be included in the Securities the holders of which have consented to such action
may, by filing written notice with the Trustee at its principal office and upon
proof of holding as provided in Section 7.02, revoke such action so far as
concerns such Security (or so far as concerns the principal amount represented
by any exchanged or substituted Security). Except as aforesaid any such action
taken by the holder of any Security shall be conclusive and binding upon such
holder and upon all future holders and owners of such Security, and of any
Security issued in exchange or substitution therefor, irrespective of whether or
not any notation in regard thereto is made upon such Security or any Security
issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders of any or all series may be called at any
time and from time to time pursuant to the provisions of this Article Eight for
any of the following purposes:
(a) to give any notice to the Company or to the Guarantor or to the
Trustee, or to give any directions to the Trustee, or to consent
to the waiving of any default hereunder and its consequences, or
to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of Article
Five;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article Six;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02;
or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of
such Securities under any other provision of this Indenture or
under applicable law.
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202 SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders of any
or all series to take any action specified in Section 8.01, to be held at such
time and at such place in the Borough of Manhattan, The City of New York, as the
Trustee shall determine. Notice of every meeting of the Securityholders of any
or all series, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be mailed
to holders of Securities of each series affected at their addresses as they
shall appear on the Securities Register for each series affected. Such notice
shall be mailed not less than 20 nor more than 180 days prior to the date fixed
for the meeting.
SECTION 8.03. Call of Meetings by Company, Guarantor or
Securityholders.
In case at any time the Company or the Guarantor pursuant to a
resolution of the Board of Directors, or the holders of at least 10% in
aggregate principal amount of the Securities of any or all series, as the case
may be, then outstanding, shall have requested the Trustee to call a meeting of
Securityholders of any or all series, as the case may be, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company, the Guarantor or such
Securityholders may determine the time and the place in said Borough of
Manhattan for such meeting and may call such meeting to take any action
authorized in Section 8.01, by mailing notice thereof as provided in Section
8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a Person
shall (a) be a holder of one or more Securities with respect to which the
meeting is being held or (b) a Person appointed by an instrument in writing as
proxy by a holder of one or more such Securities. The only Persons who shall be
entitled to be present or to speak at any meeting of Securityholders shall be
the Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel and any representatives of the Guarantor and its
counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem
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advisable for any meeting of Securityholders, in regard to proof of the holding
of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company, by the Guarantor or by Securityholders as provided in Section 8.03, in
which case the Company, the Guarantor or the Securityholders calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by majority vote of the meeting.
Subject to the provisions of Section 7.04, at any meeting each holder
of Securities with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $1,000 principal amount (in the case of
Original Issue Discount Securities, such principal amount to be determined as
provided in the definition "outstanding") of Securities held or represented by
him; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Security challenged as not outstanding and ruled by the chairman
of the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote other than by virtue of Securities held by him or instruments in
writing as aforesaid duly designating him as the Person to vote on behalf of
other Securityholders. Any meeting of Securityholders duly called pursuant to
the provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the meeting
may be held as so adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of holders of
Securities with respect to which such meeting is being held shall be by written
ballots on which shall be subscribed the signatures of such holders or of their
representatives by proxy and the serial number or numbers of the Securities held
or represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in triplicate of all votes cast at the meeting.
A record in duplicate of the proceedings of each meeting of Securityholders
shall be prepared by the secretary of
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the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 8.02. The record shall show the serial numbers of the Securities voting
in favor of or against any resolution. The record shall be signed and verified
by the affidavits of the permanent chairman and secretary of the meeting and one
of the duplicates shall be delivered to the Company and the other to the Trustee
to be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent of
Securityholders.
The Company and the Guarantor, when authorized by resolutions of their
respective Boards of Directors, and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as then in effect), without
the consent of the Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another corporation to the Company
or the Guarantor, or successive successions, and the assumption
by the successor corporation of the covenants, agreements and
obligations of the Company or the Guarantor, as the case may be,
pursuant to Article Ten hereof;
(b) to add to the covenants of the Company or the Guarantor such
further covenants, restrictions or conditions for the protection
of the holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities stating that such covenants are expressly being
included for the benefit of such series) as such Boards of
Directors and the Trustee shall consider to be for the protection
of the holders of such Securities, and to make the occurrence, or
the occurrence and
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continuance, of a default in any of such additional covenants,
restrictions or conditions a default or an Event of Default
permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant,
restriction or condition such supplemental indenture may provide
for a particular period of grace after default (which period may
be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee upon
such default;
(c) to provide for the issuance under this Indenture of Securities in
coupon form (including Securities registrable as to principal
only) and to provide for exchangeability of such Securities with
the Securities issued hereunder in fully registered form and to
make all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained
herein or in any supplemental indenture, or to make such other
provisions in regard to matters or questions arising under this
Indenture; provided that any such action shall not adversely
affect the interests of the holders of the Securities;
(e) to add to, delete from, or revise the terms of Securities of any
series as permitted by Section 2.01 and 2.03, including, without
limitation, any terms relating to the issuance, exchange,
registration or transfer of Securities issued in whole or in part
in the form of one or more Global Securities and the payment of
any principal thereof, or interest or premium, if any, thereon;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities
of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.11;
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(g) to make any change that does not adversely affect the rights of
any Securityholder in any material respect; or
(h) to provide for the issuance of and establish the form and terms
and conditions of the Debt Securities and the Guarantees of any
series, to establish the form of any certifications required to
be furnished pursuant to the terms of this Indenture or any
series of Securities, or to add to the rights of the holders of
any series of Securities.
The Trustee is hereby authorized to join with the Company and the
Guarantor in the execution of any such supplemental indenture, to make any
further appropriate agreements and stipulations which may be therein contained
and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed by the Company, the Guarantor and the Trustee
without the consent of the holders of any of the Securities at the time
outstanding, notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. Supplemental Indentures with Consent of
Securityholders.
With the consent (evidenced as provided in Section 7.01) of the
holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding of all series affected by such supplemental
indenture (voting as a class), the Company and the Guarantor, when authorized by
Board Resolutions, and the Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act then in effect) for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the holders of the Securities of each series so affected;
provided, however, that no such supplemental indenture shall without the consent
of the holders of each Security then outstanding and affected thereby (i) extend
the fixed maturity of any Security of any series, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or any premium thereon, or reduce any
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amount payable on redemption thereof or make the principal thereof or any
interest or premium thereon payable in any coin or currency other than that
provided in the Securities, or reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon an acceleration of
the maturity thereof pursuant to Section 5.01 or the amount thereof provable in
bankruptcy pursuant to Section 5.02, or impair or affect the right of any
Securityholder to institute suit for payment thereof or the right of repayment,
if any, at the option of the holder, without the consent of the holder of each
Security so affected, or (ii) reduce the aforesaid percentage of Securities the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security then affected; provided,
further, that if the Securities of such series are held by a Countrywide Trust
or a trustee of such trust, such supplemental indenture shall not be effective
until the holders of a majority in liquidation preference of Trust Securities of
the applicable Trust shall have consented to such supplemental indenture;
provided further, that if the consent of the Holder of each outstanding Security
is required, such supplemental indenture shall not be effective until each
holder of the Trust Securities of the applicable Countrywide Trust shall have
consented to such supplemental indenture.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of Securityholders of such series with respect to such covenant or
provision, shall be deemed not to affect the rights under this Indenture or the
Securityholders of any other series.
Upon the request of the Company and the Guarantor accompanied by a
copy of resolutions of their respective Boards of Directors certified by their
respective Secretaries or Assistant Secretaries authorizing the execution of any
such supplemental indenture, and upon the filing with the Trustee of evidence of
the consent of Securityholders as aforesaid, the Trustee shall join with the
Company and the Guarantor in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture. The Trustee may receive an Opinion of Counsel as conclusive evidence
that any supplemental indenture executed pursuant to this Article is authorized
or permitted by, and conforms to, the terms of this Article and that it is
proper for the Trustee under the provisions of this Article to join in the
execution hereof.
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Promptly after the execution by the Company, the Guarantor and the
Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Trustee shall transmit by mail, first class postage prepaid, a
notice, prepared by the Company and the Guarantor, setting forth in general
terms the substance of such supplemental indenture, to the Securityholders of
all series affected thereby as their names and addresses appear upon the
Security Register. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions of this
Article Nine shall comply with the Trust Indenture Act, as then in effect. Upon
the execution of any supplemental indenture pursuant to the provisions of this
Article Nine, this Indenture shall be and be deemed to be modified and amended
in accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company, the Guarantor and the holders of Securities of each series affected
thereby shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be part
of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture affecting such series pursuant to the
provisions of this Article Nine may bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company and the Guarantor or the Trustee shall so determine, new Securities of
any series so modified as to conform, in the opinion of the Trustee and the
respective Boards of Directors of the Company and the Guarantor, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared and executed by the Company and the Guarantor, authenticated by the
Trustee or the Authenticating Agent and delivered in exchange for the Securities
of any series then outstanding.
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SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02, may
receive Officers' Certificates and an Opinion of Counsel as conclusive evidence
that any supplemental indenture executed pursuant hereto complies with the
requirements of this Article Nine.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company or Guarantor May Consolidate, etc., on Certain
Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company or the Guarantor with or into
any other corporation or corporations (whether or not affiliated with the
Company or the Guarantor, as the case may be), or successive consolidations or
mergers in which the Company or the Guarantor, as the case may be, or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or other disposition of the property of the Company or the
Guarantor, as the case may be, or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not
affiliated with the Company and the Guarantor, as the case may be, or its
successor or successors) authorized to acquire and operate the same; provided,
--------
however, the Company and the Guarantor hereby covenant and agree that, upon any
- -------
such consolidation, merger, sale, conveyance, transfer or other disposition, the
due and punctual payment, in the case of the Company, of the principal of
(premium, if any) and interest on all of the Debt Securities of all series in
accordance with the terms of each series, according to their tenor or, in the
case of the Guarantor, the performance of all obligations under the Guarantees,
and the due and punctual performance and observance of all the covenants and
conditions of this Indenture with respect to each series or established with
respect to such series to be kept or performed by the Company or the Guarantor,
as the case may be, shall be expressly assumed, by supplemental indenture (which
shall conform to the provisions of the Trust Indenture Act, as then in effect)
satisfactory in form to the Trustee executed and delivered to the Trustee by the
entity formed by such consolidation, or into which the Company or the Guarantor,
as the case may be, shall have been merged, or by the entity which shall have
acquired such property.
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SECTION 10.02. Successor Corporation to be Substituted.
In case of any such consolidation, merger, sale, conveyance, transfer
or other disposition and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of, in the case of the Company, the due and punctual
payment of the principal of and premium, if any, and interest on all of the Debt
Securities or, in the case of the Guarantor, the performance of all obligations
under the Guarantees, and the due and punctual performance and observance of all
of the covenants and conditions of this Indenture to be performed or observed by
the Company or the Guarantor, as the case may be, such successor corporation
shall succeed to and be substituted for the Company or the Guarantor, as the
case may be, with the same effect as if it had been named herein as the Company
or the Guarantor, as the case may be, and thereupon the predecessor corporation
shall be relieved of any further liability or obligation hereunder or upon the
Securities. Such successor corporation thereupon may cause to be signed, and
may issue either in its own name or in the name of Countrywide Home Loans, Inc.
or Countrywide Credit Industries, Inc., any or all of the Debt Securities or
Guaranties, respectively, issuable hereunder which theretofore shall not have
been signed by the Company or the Guarantor and delivered to the Trustee or the
Authenticating Agent; and, upon the order of such successor corporation instead
of the Company or the Guarantor, as the case may be, and subject to all the
terms, conditions and limitations in this Indenture prescribed, the Trustee or
the Authenticating Agent shall authenticate and deliver any Securities which
previously shall have been signed and delivered by the officers of the Company
or the Guarantor, as the case may be, to the Trustee or the Authenticating Agent
for authentication, and any Securities which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee or the
Authenticating Agent for that purpose. All the Securities so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02, may
receive an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or other disposition, and any assumption,
permitted or required by the terms of this Article Ten complies with the
provisions of this Article Ten.
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ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company and the Guarantor shall deliver to the Trustee
for cancellation all Securities theretofore authenticated (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.08) and not theretofore
cancelled, or (b) all the Securities not theretofore cancelled or delivered to
the Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company or the Guarantor shall
deposit with the Trustee, in trust, funds sufficient to pay at maturity or upon
redemption all of the Securities (other than any Securities which shall have
been destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.08) not theretofore cancelled or delivered to the Trustee
for cancellation, including principal and premium, if any, and interest due or
to become due to such date of maturity or redemption date, as the case may be,
but excluding, however, the amount of any moneys for the payment of principal
of, and premium, if any, or interest on the Securities (1) theretofore repaid to
the Company or the Guarantor in accordance with the provisions of Section 11.04,
or (2) paid to any state or to the District of Columbia pursuant to its
unclaimed property or similar laws, and if in either case the Company or the
Guarantor shall also pay or cause to be paid all other sums payable hereunder by
the Company or the Guarantor, then this Indenture shall cease to be of further
effect except for the provisions of Sections 2.05, 2.07, 2.08, 3.01, 3.02, 3.04,
6.06, 6.10 and 11.04 hereof shall survive until such Securities shall mature and
be paid. Thereafter, Sections 6.10 and 11.04 shall survive, and the Trustee, on
demand of the Company and the Guarantor accompanied by an Officers' Certificate
and an Opinion of Counsel and at the cost and expense of the Company and the
Guarantor, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture, the Company and the Guarantor, however, hereby
agreeing to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Trustee in connection with this
Indenture or the Securities.
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be
Held in Trust by Trustee.
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Subject to the provisions of Section 11.04, all moneys and U.S.
Government Obligations deposited with the Trustee pursuant to Sections 11.01 or
11.05 shall be held in trust and applied by it to the payment, either directly
or through any paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Securities for the payment of which
such moneys or U.S. Government Obligations have been deposited with the Trustee,
of all sums due and to become due thereon for principal, premium, if any, and
interest.
The Company and the Guarantor shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 11.05 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys then
held by any paying agent of the Securities (other than the Trustee) shall, upon
demand of the Company or the Guarantor, be repaid to it or paid to the Trustee,
and thereupon such paying agent shall be released from all further liability
with respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying agent
for payment of the principal of, and premium, if any, or interest on Securities
and not applied but remaining unclaimed by the holders of Securities for three
years after the date upon which the principal of, and premium, if any, or
interest on such Securities, as the case may be, shall have become due and
payable, shall be repaid to the Company or the Guarantor by the Trustee or such
paying agent on written demand; and the holder of any of the Securities shall
thereafter look only to the Company or the Guarantor for any payment which such
holder may be entitled to collect and all liability of the Trustee or such
paying agent with respect to such moneys shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations.
The Company and the Guarantor shall be deemed to have been Discharged
(as defined below) from its respective obligations with respect to any series of
Securities on the 91st
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day after the applicable conditions set forth below have been satisfied with
respect to such series of Securities:
(1) The Company or the Guarantor shall have deposited or caused to be
deposited irrevocably with the Trustee or the Defeasance Agent
(as defined below) as trust funds in trust, specifically pledged
as security for, and dedicated solely to, the benefit of the
holders of the Securities of such series (i) money in an amount,
or (ii) U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with
their terms will provide, not later than one day before the due
date of any payment, money in an amount, or (iii) a combination
of (i) and (ii), sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee and the
Defeasance Agent, if any, to pay and discharge each installment
of principal (including any mandatory sinking fund payments) of,
and interest and premium, if any, on, the outstanding Securities
of such series on the dates such installments of principal,
interest or premium are due;
(2) if the Securities of such series are then listed on any national
securities exchange, the Company or the Guarantor, as the case
may be, shall have delivered to the Trustee and the Defeasance
Agent, if any, an Opinion of Counsel to the effect that the
exercise of the option under this Section 11.05 would not cause
such Securities to be delisted from such exchange;
(3) no Event of Default or event which with notice or lapse of time
would become an Event of Default with respect to the Securities
of such series shall have occurred and be continuing on the date
of such deposit; and
(4) the Company or the Guarantor, as the case may be, shall have
delivered to the Trustee and the Defeasance Agent, if any, an
Opinion of Counsel to the effect that holders of the Securities
of such series will not recognize income, gain or loss for United
States federal income tax purposes as a result of the exercise of
the option under this Section 11.05 and will be subject to United
States federal income tax on the same amount and in the
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same manner and at the same times as would have been the case if
such option had not been exercised, and, in the case of the
Securities of such series being Discharged, such opinion shall be
accompanied by a private letter ruling to that effect received
from the United States Internal Revenue Service or a revenue
ruling pertaining to a comparable form of transaction to that
effect published by the United States Internal Revenue Service.
"Discharged" means that the Company and the Guarantor shall be deemed
to have paid and discharged the entire indebtedness represented by, and
obligations under, the Securities of such series and to have satisfied all the
obligations under this Indenture relating to the Securities of such series (and
the Trustee, at the expense of the Company and the Guarantor, shall execute
proper instruments acknowledging the same), except (A) the rights of holders of
Securities of such series to receive, from the trust fund described in clause
(1) above, payment of the principal of and the interest and premium, if any, on
such Securities when such payments are due; (B) the Company's and the
Guarantor's obligations with respect to such Securities under Sections 2.05,
2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04; and (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which is
eligible to act as Trustee hereunder and which assumes all of the obligations of
the Trustee necessary to enable the Trustee to act under this Section 11.05. In
the event such a Defeasance Agent is appointed pursuant to this Section, the
following conditions shall apply:
1. The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth
such Defeasance Agent's rights and responsibilities;
2. The Defeasance Agent shall provide verification to the Trustee
acknowledging receipt of sufficient money and/or U.S. Government
Obligations to meet the applicable conditions set forth in this
Section 11.05;
3. The Trustee shall determine whether the Company and the Guarantor
shall be deemed to have been Discharged from its respective
obligations with respect to any series of Securities.
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ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTOR
SECTION 12.01. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest on any Debt Security or any Guarantee, or for any claim based thereon
or otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company or the Guarantor in this Indenture or in
any supplemental indenture, or in any such Security, or because of the creation
of any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or the Guarantor or of any successor corporation of the Company or the
Guarantor, either directly or through the Company or the Guarantor or any
successor corporation of the Company or the Guarantor, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in this
Indenture contained by the Company or the Guarantor shall bind to successors and
assigns whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company or the Guarantor shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company or the Guarantor, as the
case may be.
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SECTION 13.03. Surrender of Company Powers.
The Company or the Guarantor by instrument in writing executed by
authority of 2/3 (two-thirds) of its Board of Directors and delivered to the
Trustee may surrender any of the powers reserved to the Company or the Guarantor
as the case may be, and thereupon such power so surrendered shall terminate both
as to the Company or the Guarantor, as the case may be, and as to any successor
corporation.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Securities on the Company or the Guarantor may be given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company or the
Guarantor, as the case may be, with the Trustee for the purpose) to the Company,
or the Guarantor, as the case may be, 155 North Lake Avenue, Pasadena,
California 91101, Attention: Corporate Secretary. Any notice, direction,
request or demand by any Securityholder to or upon the Trustee shall be deemed
to have been sufficiently given or made, for all purposes, if given or made in
writing at the office of the Trustee, addressed to the Trustee, 101 Barclay
Street, 21 West, New York, New York 10286, Attention: Corporate Trust Trustee
Administration.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be governed
by and construed in accordance with the laws of said State, without regard to
conflict of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Company or the Guarantor to the
Trustee to take any action under any of the provisions of this Indenture, the
Company or the Guarantor, as the case may be, shall furnish to the Trustee an
Officers' Certificate stating that in the opinion of the signers all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent have been complied with.
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Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07. Legal Holidays.
Subject to Section 2.03, in any case where the date of payment of
interest on or principal of the Securities will be in The City of New York, New
York a legal holiday or a day on which banking institutions are authorized by
law to close, the payment of such interest on or principal of the Securities
need not be made on such date but may be made on the next succeeding day not in
the City a legal holiday or a day on which banking institutions are authorized
by law to close, with the same force and effect as if made on the date of
payment and no interest shall accrue for the period from and after such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture which
is required to be included in this Indenture by any of Sections 310 to 317,
inclusive, of the Trust Indenture Act, such required provision shall control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.
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SECTION 13.11. Separability.
In case any one or more of the provisions contained in this Indenture
or in the Securities of any series shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
such Securities, but this Indenture and such Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
SECTION 13.12. Assignment.
The Company and the Guarantor will have the right at all times to
assign any of their respective rights or obligations under this Indenture to a
direct or indirect wholly-owned Subsidiary of the Company or the Guarantor,
provided that, in the event of any such assignment, the Company or the
Guarantor, as the case may be, will remain liable for all such obligations.
Subject to the foregoing, the Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors and assigns.
This Indenture may not otherwise be assigned by the parties thereto.
SECTION 13.13. Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities held by
any Countrywide Trust or a trustee of such trust, if the Institutional Trustee
of such trust fails to enforce its rights under this Indenture as the holder of
the series of Securities held as the assets of such Countrywide Trust after the
holders of a majority in liquidation amount of the Capital Securities have so
directed the Institutional Trustee, any holder of Capital Securities may
institute legal proceedings directly against the Company to enforce such
Institutional Trustee's rights under this Indenture without first instituting
any legal proceedings against such Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if an Event of Default has occurred and
is continuing and such event is attributable to the failure of the Company to
pay interest or principal on the applicable series of Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), the Company acknowledges that a holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the applicable series of
Securities having a principal amount equal to the aggregate liquidation amount
of the Capital Securities of such holder on or after the respective due date
specified in the applicable series of Securities.
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The Guarantor acknowledges that, with respect to any Securities held
by any Countrywide Trust or a trustee of such trust, if the Institutional
Trustee of such Trust fails to enforce its rights as holder of Securities held
as assets of such Countrywide Trust, after the holders of a majority in
liquidation amount of the Capital Securities have so directed the Institutional
Trustee, any holder of Capital Securities may institute legal proceedings
directly against the Guarantor to enforce the Institutional Trustee's rights
against the Guarantor under this Indenture without first instituting any legal
proceedings against such Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Guarantor to pay
interest or principal on the applicable series of Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), the Guarantor acknowledges that a holder of Capital Securities
may also directly institute a proceeding for enforcement of payment to such
holder of the principal of or interest on the applicable series of Securities
having a principal amount equal to the aggregate liquidation amount of the
Capital Securities of such holder on or after the respective due date specified
in the applicable series of Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Applicability of Article.
The provisions of this Article shall be applicable to the Debt
Securities of any series which are redeemable before their maturity or to any
sinking fund for the retirement of Debt Securities of a series except as
otherwise specified as contemplated by Section 2.03 for Debt Securities of such
series.
SECTION 14.02. Notice of Redemption; Selection of Debt Securities.
In case the Company shall desire to exercise the right to redeem all,
or, as the case may be, any part of the Debt Securities of any series in
accordance with their terms, it shall fix a date for redemption and shall mail a
notice of such redemption at least 30 and not more than 60 days prior to the
date fixed for redemption to the holders of Debt Securities of such series so to
be redeemed as a whole or in part at their last addresses as the same appear on
the Security Register. Such mailing shall be by first class mail. The notice
if mailed in
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the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the holder of any Debt
Security of a series designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other Debt
Security of such series.
Each such notice of redemption shall specify the CUSIP number of the
Debt Securities to be redeemed, the date fixed for redemption, the redemption
price at which Debt Securities of such series are to be redeemed, the place or
places of payment, that payment will be made upon presentation and surrender of
such Debt Securities, that interest accrued to the date fixed for redemption
will be paid as specified in said notice, and that on and after said date
interest thereon or on the portions thereof to be redeemed will cease to accrue.
If less than all the Debt Securities of such series are to be redeemed the
notice of redemption shall specify the numbers of the Debt Securities of that
series to be redeemed. In case any Debt Security of a series is to be redeemed
in part only, the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the date fixed
for redemption, upon surrender of such Debt Security, a new Debt Security or
Debt Securities of that series in principal amount equal to the unredeemed
portion thereof and having endorsed thereon a duly executed Guarantee will be
issued.
Prior to the redemption date specified in the notice of redemption
given as provided in this Section, the Company will deposit with the Trustee or
with one or more paying agents an amount of money sufficient to redeem on the
redemption date all the Debt Securities so called for redemption at the
appropriate redemption price, together with accrued interest to the date fixed
for redemption.
If all, or less than all, the Debt Securities of a series are to be
redeemed, the Company will give the Trustee notice not less than 45 or 60 days,
respectively, prior to the redemption date as to the aggregate principal amount
of Debt Securities of that series to be redeemed and the Trustee shall select,
in such manner as in its sole discretion it shall deem appropriate and fair, the
Debt Securities of that series or portions thereof (in integral multiples of
$1,000, except as otherwise set forth in the applicable form of Debt Security)
to be redeemed.
SECTION 14.03. Payment of Securities Called for Redemption.
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If notice of redemption has been given as provided in Section 14.02 or
Section 14.04, the Debt Securities or portions of Debt Securities of the series
with respect to which such notice has been given shall become due and payable on
the date and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for
redemption, and on and after said date (unless the Company shall default in the
payment of such Debt Securities at the redemption price, together with interest
accrued to said date) interest on the Debt Securities or portions of Debt
Securities of any series so called for redemption shall cease to accrue. On
presentation and surrender of such Debt Securities at a place of payment
specified in said notice, the said Debt Securities or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption.
Upon presentation of any Debt Security of any series redeemed in part
only, the Company shall execute and the Trustee shall authenticate and make
available for delivery to the holder thereof, at the expense of the Company, a
new Debt Security or Debt Securities of such series of authorized denominations,
in principal amount equal to the unredeemed portion of the Debt Security so
presented and having endorsed thereon a duly executed Guarantee.
SECTION 14.04. Mandatory and Optional Sinking Fund.
The minimum amount of any sinking fund payment provided for by the
terms of Debt Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Debt Securities of any series is herein referred to as an
"optional sinking fund payment". The last date on which any such payment may be
made is herein referred to as a "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any Debt Securities of a series in cash, the Company may
at its option (a) deliver to the Trustee Debt Securities of that series
theretofore purchased by the Company and (b) may apply as a credit Debt
Securities of that series which have been redeemed either at the election of the
Company pursuant to the terms of such Debt Securities or through the application
of optional sinking fund payments pursuant to the next succeeding paragraph, in
each case in satisfaction of all or any part of any mandatory sinking fund
payment, provided that such Debt Securities have not been previously so
credited. Each such Debt Security so delivered or applied as a credit shall be
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credited at the sinking fund redemption price for such Debt Securities and the
amount of any mandatory sinking fund shall be reduced accordingly. If the
Company intends so to deliver or credit such Debt Securities with respect to any
mandatory sinking fund payment it shall deliver to the Trustee at least 60 days
prior to the next succeeding sinking fund payment date for such series (a) a
certificate signed by the Treasurer or an Assistant Treasurer of the Company
specifying the portion of such sinking fund payment, if any, to be satisfied by
payment of cash and the portion of such sinking fund payment, if any, which is
to be satisfied by delivering and crediting such Debt Securities and (b) any
Debt Securities to be so delivered. All Debt Securities so delivered to the
Trustee shall be cancelled by the Trustee and no Debt Securities shall be
authenticated in lieu thereof. If the Company fails to deliver such certificate
and Debt Securities at or before the time provided above, the Company shall not
be permitted to satisfy any portion of such mandatory sinking fund payment by
delivery or credit of Debt Securities.
At its option the Company may pay into the sinking fund for the
retirement of Debt Securities of any particular series, on or before each
sinking fund payment date for such series, any additional sum in cash as
specified by the terms of such series of Debt Securities. If the Company
intends to exercise its right to make any such optional sinking fund payment, it
shall deliver to the Trustee at least 60 days prior to the next succeeding
sinking fund payment date for such series a certificate signed by the Treasurer
or an Assistant Treasurer of the Company stating that the Company intends to
exercise such optional right and specifying the amount which the Company intends
to pay on such sinking fund payment date. If the Company fails to deliver such
certificate at or before the time provided above, the Company shall not be
permitted to make any optional sinking fund payment with respect to such sinking
fund payment date. To the extent that such right is not exercised in any year
it shall not be cumulative or carried forward to any subsequent year.
If the sinking fund payment or payments (mandatory or optional) made
in cash plus any unused balance of any preceding sinking fund payments made in
cash shall exceed $50,000 (or a lesser sum if the Company shall so request) with
respect to the Debt Securities of any particular series, it shall be applied by
the Trustee or one or more paying agents on the next succeeding sinking fund
payment date to the redemption of Debt Securities of such series at the sinking
fund redemption price together with accrued interest to the date fixed for
redemption. The Trustee shall select, in the manner provided in Section 14.02,
for redemption on such sinking fund payment date a sufficient principal amount
of Debt Securities of such series to absorb said cash, as nearly as may be, and
the Trustee shall, at the expense
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and in the name of the Company, thereupon cause notice of redemption of Debt
Securities of such series to be given in substantially the manner and with the
effect provided in Sections 14.02 and 14.03 for the redemption of Debt
Securities of that series in part at the option of the Company, except that the
notice of redemption shall also state that the Debt Securities of such series
are being redeemed for the sinking fund. Any sinking fund moneys not so applied
or allocated by the Trustee or any paying agent to the redemption of Debt
Securities of that series shall be added to the next cash sinking fund payment
received by the Trustee or such paying agent and, together with such payment,
shall be applied in accordance with the provisions of this Section 14.04. Any
and all sinking fund moneys held by the Trustee or any paying agent on the
maturity date of the Debt Securities of any particular series, and not held for
the payment or redemption of particular Debt Securities of such series, shall be
applied by the Trustee or such paying agent, together with other moneys, if
necessary, to be deposited sufficient for the purpose, to the payment of the
principal of the Debt Securities of that series at maturity.
On or before each sinking fund payment date, the Company shall pay to
the Trustee or to one or more paying agents in cash a sum equal to all interest
accrued to the date fixed for redemption on Debt Securities to be redeemed on
the next following sinking fund payment date pursuant to this Section.
Neither the Trustee nor any paying agent shall redeem any Debt
Securities of a series with sinking fund moneys, and the Trustee shall not mail
any notice of redemption of Debt Securities for such series by operation of the
sinking fund, during the continuance of a default in payment of interest on such
Debt Securities or of any Event of Default (other than an Event of Default
occurring as a consequence of this paragraph), except that if the notice of
redemption of any Securities shall theretofore have been mailed in accordance
with the provisions hereof, the Trustee or any paying agent shall redeem such
Debt Securities if cash sufficient for that purpose shall be deposited with the
Trustee or such paying agent for that purpose in accordance with the terms of
this Article Fourteen. Except as aforesaid, any moneys in the sinking fund for
such series at the time when any such default or Event of Default shall occur
and any moneys thereafter paid into the sinking fund shall, during the
continuance of such default or Event of Default, be held as security for the
payment of all such Debt Securities; provided, however, that in case such Event
of Default or default, shall have been cured or waived as provided herein, such
moneys shall thereafter be applied on the next succeeding sinking fund payment
date on which such moneys may be applied pursuant to the provisions of this
Section 14.04.
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ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company and the Guarantor covenant and agree, and each holder of
Securities issued hereunder and under any supplemental indenture or by any
resolutions by the Boards of Directors of the Company and the Guarantor
("Additional Provisions") by such Securityholder's acceptance thereof likewise
covenants and agrees, that all Securities shall be issued subject to the
provisions of this Article Fifteen; and each holder of a Security, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest on all Debt Securities and the payment by the Guarantor of any
obligation due under any Guarantees issued hereunder and under any Additional
Provisions shall, to the extent and in the manner hereinafter set forth, be
subordinated and junior in right of payment to the prior payment in full of all
Senior Indebtedness of the Company or the Guarantor, as the case may be, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article Fifteen shall prevent the occurrence of
any default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company
or the Guarantor in the payment of principal, premium, interest or any other
payment due on any Senior Indebtedness of the Company or the Guarantor, as the
case may be (after any applicable grace period with respect to such payment
default has elapsed with such default not having been cured or waived or ceasing
to exist), or in the event that the maturity of any Senior Indebtedness of the
Company or the Guarantor, as the case may be, has been accelerated because of a
default, then, in either case, no payment shall be made by the Company or the
Guarantor, as the case may be, with respect to the principal (including
redemption and sinking fund payments, if any) of, or premium, if any, or
interest on the Securities, including payment with respect to any obligation due
under the Guarantees.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is
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prohibited by the preceding paragraph of this Section 15.02, such payment shall
be held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or the Guarantor or distribution of
assets of the Company or the Guarantor of any kind or character, whether in
cash, property or securities, to creditors upon any dissolution or winding-up or
liquidation or reorganization of the Company or the Guarantor, whether voluntary
or involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due or to become due upon all Senior Indebtedness of the Company or
the Guarantor, as the case may be, shall first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any payment
is made by the Company or the Guarantor, as the case may be, on account of the
principal (and premium, if any) or interest on the Securities; and upon any such
dissolution or winding-up or liquidation or reorganization, any payment by the
Company or the Guarantor, or distribution of assets of the Company or the
Guarantor of any kind or character, whether in cash, property or securities, to
which the Securityholders or the Trustee would be entitled to receive from the
Company or the Guarantor, as the case may be, except for the provisions of this
Article Fifteen, shall be paid by the Company or the Guarantor, as the case may
be, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Securityholders or
by the Trustee under the Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Company or the Guarantor, as the case may
be (pro rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders, as calculated by the Company or the
Guarantor, as the case may be) or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness in
full, in money or money's worth, after giving effect to any concurrent payment
or distribution to or for the holders of such Senior Indebtedness, before any
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payment or distribution is made to the Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or the Guarantor of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee before all Senior Indebtedness of the Company or the
Guarantor is paid in full, or provision is made for such payment in money in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the holders of such
Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, and their respective
interests may appear, as calculated by the Company or the Guarantor, for
application to the payment of all Senior Indebtedness of the Company or the
Guarantor, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the benefit of
the holders of such Senior Indebtedness.
For purposes of this Article Fifteen, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company or the
Guarantor as reorganized or readjusted, or securities of the Company or the
Guarantor or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated at least to the extent
provided in this Article Fifteen with respect to the Securities to the payment
of all Senior Indebtedness of the Company or the Guarantor, as the case may be,
that may at the time be outstanding, provided that (i) such Senior Indebtedness
is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company or the
Guarantor with, or the merger of the Company or the Guarantor into, another
corporation or the liquidation or dissolution of the Company or the Guarantor
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article Ten of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 15.03 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article Ten
of this Indenture. Nothing in Section 15.02 or in this Section 15.03 shall
apply to claims of,
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or payments to, the Trustee under or pursuant to Section 6.06 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness of the
Company or the Guarantor then outstanding, the Securityholders shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company or the
Guarantor, as the case may be, applicable to such Senior Indebtedness until all
amounts owing on the Securities shall be paid in full; and, for the purposes of
such subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders or
the Trustee would be entitled except for the provisions of this Article Fifteen,
and no payment over pursuant to the provisions of this Article Fifteen to or for
the benefit of the holders of such Senior Indebtedness by Securityholders or the
Trustee, shall, as between (i) the Company, its creditors other than holders of
Senior Indebtedness of the Company, and the holders of the Securities, or (ii)
the Guarantor, its creditors other than the holders of Senior Indebtedness of
the Guarantor, and the holders of the Securities, be deemed to be a payment by
the Company or the Guarantor, as the case may be, to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article
Fifteen are and are intended solely for the purposes of defining the relative
rights of the holders of the Securities, on the one hand, and the holders of
such Senior Indebtedness, on the other hand.
Nothing contained in this Article Fifteen or elsewhere in this
Indenture, any Additional Provisions or in the Securities is intended to or
shall impair, as between (i) the Company, its creditors other than the holders
of Senior Indebtedness of the Company, and the holders of the Securities, or
(ii) the Guarantor, its creditors other than the holders of Senior Indebtedness
of the Guarantor, and the holders of the Securities, the obligation of the
Company or the Guarantor, as the case may be, which is absolute and
unconditional, to pay to the holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the holders of the Securities and creditors
of the Company or the Guarantor, as the case may be, other than the holders of
Senior Indebtedness of the Company or the Guarantor, as the case may be, nor
shall anything herein or therein prevent the Trustee or the holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
default under the Indenture, subject to the rights, if any,
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under this Article Fifteen of the holders of such Senior Indebtedness in respect
of cash, property or securities of the Company or the Guarantor, as the case may
be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company or the
Guarantor referred to in this Article Fifteen, the Trustee, subject to the
provisions of Article Six of this Indenture, and the Securityholders shall be
entitled to conclusively rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders, for
the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company or the Guarantor, as the case may be, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Fifteen.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article Fifteen and appoints the Trustee such Securityholder's
attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company and the Guarantor.
The Company or the Guarantor shall give written notice to a
Responsible Officer of the Trustee within five days of becoming aware of any
Default, Event of Default or any fact known to the Company or the Guarantor that
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article Fifteen.
Notwithstanding the provisions of this Article Fifteen or any other provision of
this Indenture or any Additional Provisions, the Trustee shall not be charged
with knowledge of the existence of any facts that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Securities pursuant
to the provisions of this Article Fifteen, unless and until a Responsible
Officer of the Trustee shall have received written notice thereof from the
Company or the Guarantor or a holder or holders of Senior Indebtedness or from
any trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Article Six of this Indenture, shall
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be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 15.06 at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (or premium, if any) or
interest on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which they were received, and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to such date.
The Trustee, subject to the provisions of Article Six of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company or the Guarantor, as the case may be (or a trustee
on behalf of such holder), to establish that such notice has been given by a
holder of such Senior Indebtedness or a trustee on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Fifteen, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Fifteen, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Fifteen in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture or any Additional Provisions shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company or
the Guarantor, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article Fifteen,
and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture or any
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Additional Provisions against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of such Senior Indebtedness and, subject
to the provisions of Article Six of this Indenture, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Company, the Guarantor or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article Fifteen or otherwise.
Nothing in this Article Fifteen shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of
the Company or the Guarantor to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or the Guarantor, as the case may be, or by any act or
failure to act, in good faith, by any such holder, or by any noncompliance by
the Company or the Guarantor, as the case may be, with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof that any such
holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Company or the Guarantor may, at any
time and from time to time, without the consent of or notice to the Trustee or
the Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article
Fifteen or the obligations hereunder of the holders of the Securities to the
holders of such Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in
any manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company or the Guarantor, as the
case may be, and any other Person.
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The Bank of New York hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written.
COUNTRYWIDE HOME LOANS, INC.
By
----------------------------------
Name:
Title:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By
----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By
----------------------------------
Name:
Title:
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EXHIBIT 4.7
-------------------------------------
FIRST SUPPLEMENTAL INDENTURE
among
COUNTRYWIDE HOME LOANS, INC., as Issuer,
COUNTRYWIDE CREDIT INDUSTRIES, INC., as Guarantor,
and
THE BANK OF NEW YORK
Dated as of __________, 1996
-------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Definition of Terms........................................ 2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1 Designation and Principal Amount........................... 3
SECTION 2.2 Maturity................................................... 3
SECTION 2.3 Form and Payment........................................... 3
SECTION 2.4 Global Debenture........................................... 4
SECTION 2.5 Interest................................................... 5
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1 Special Event Redemption................................... 7
SECTION 3.2 Optional Redemption by Company............................. 7
SECTION 3.3 No Sinking Fund............................................ 8
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 Extension of Interest Payment Period....................... 8
SECTION 4.2 Notice of Extension........................................ 9
ARTICLE V
EXPENSES AND GUARANTEE
SECTION 5.1 Payment of Expenses........................................ 10
SECTION 5.2 Payment Upon Resignation or Removal........................ 10
SECTION 5.3 Guarantee of Payment of Expenses........................... 11
ARTICLE VII
FORM OF DEBENTURE
SECTION 7.1 Form of Debenture.......................................... 11
ii
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ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES
SECTION 8.1 Original Issue of Debentures............................... 23
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Ratification of Indenture.................................. 23
SECTION 9.2 Trustee Not Responsible for Recitals....................... 23
SECTION 9.3 Governing Law.............................................. 23
SECTION 9.4 Separability............................................... 23
SECTION 9.5 Counterparts............................................... 24
iii
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of ___________, 1996 (the "First
Supplemental Indenture"), among Countrywide Home Loans, Inc., a New York
corporation (the "Company"), Countrywide Credit Industries, Inc., a Delaware
corporation (the "Guarantor"), and The Bank of New York as trustee (the
"Trustee"), under the Indenture dated as of ____________, 1996 among the
Company, the Guarantor and the Trustee (the "Indenture").
WHEREAS, the Company and the Guarantor executed and delivered the Indenture
to the Trustee to provide for the future issuance of the Company's unsecured
junior subordinated debt securities guaranteed by the Guarantor, to be issued
from time to time in one or more series as might be determined by the Company
under the Indenture, in an unlimited aggregate principal amount which may be
authenticated and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Debt Securities to be known
as its ____% Junior Subordinated Deferrable Interest Debentures due December 1,
2026 (the "Debentures"), and the Guarantor desires to provide for the issuance
of a Guarantee of such Debt Securities (the "Debenture Guarantee"), the form and
substance of such Debentures and Debenture Guarantee and the terms, provisions
and conditions thereof to be set forth as provided in the Indenture and this
First Supplemental Indenture;
WHEREAS, Countrywide Capital I, a Delaware statutory business trust (the
"Trust"), has offered to the public $___ million aggregate liquidation amount of
its ____% Capital Trust Pass-through Securities (the "Capital Securities"),
representing undivided beneficial interests in the assets of the Trust and
proposes to invest the proceeds from such offering, together with the proceeds
of the issuance and sale by the Trust to the Guarantor of $_________ million
aggregate liquidation amount of its ____% Common Securities, in $___________
million aggregate principal amount of the Debentures; and
WHEREAS, the Company and the Guarantor have requested that the Trustee
execute and deliver this First Supplemental Indenture; all requirements
necessary to make this First Supplemental Indenture a valid instrument in
accordance with its terms, and to make the Debentures, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, and to make the Debenture Guarantee endorsed thereon when executed
by the Guarantor a valid obligation of the Guarantor, have been performed; and
the execution and delivery of this First Supplemental Indenture has been duly
authorized in all respects:
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NOW THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, the Company and the Guarantor covenant
and agree with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definition of Terms.
-------------------
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used in this
First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of this
First Supplemental Indenture;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the Declaration:
(i) Business Day; (ii) Clearing Agency; (iii) Delaware Trustee; (iv) Depositary;
(v) Dissolution Tax Opinion; (vi) Distribution; (vii) Capital Security
Certificate; (viii) Pricing Agreement; (ix) Institutional Trustee; (x) Regular
Trustees; (xi) Tax Event; (xii) Redemption Tax Opinion, and (xiii) Underwriting
Agreement;
(g) the following terms have the meanings given to them in this Section
1.1(g):
"Additional Interest" shall have the meaning set forth in Section 2.5(c).
-------------------
"Compounded Interest" shall have the meaning set forth in Section 4.1.
-------------------
"Debentures" shall have the meaning set forth in Section 2.1.
----------
2
<PAGE>
"Declaration" means the Amended and Restated Declaration of Trust of
-----------
Countrywide Capital I, a Delaware statutory business trust, dated as of
___________, 1996.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
-----------------
"Dissolution Event" means that, as a result of the occurrence and
-----------------
continuation of a Tax Event, the Trust is to be dissolved in accordance with the
Declaration, and the Debentures held by the Institutional Trustee are to be
distributed to the holders of the Trust Securities issued by the Trust pro rata
--- ----
in accordance with the Declaration.
"Extended Interest Payment Period" shall have the meaning set forth in
--------------------------------
Section 4.1.
"Global Debenture" shall have the meaning set forth in Section 2.4(a)(i).
----------------
"Maturity Date" means the date on which the Debentures mature and on which
-------------
the entire principal amount shall become due and payable together with any
accrued and unpaid interest thereon including Compounded Interest and Additional
Interest, if any.
"Non Book-Entry Capital Securities" shall have the meaning set forth in
---------------------------------
Section 2.4(a)(ii).
"Optional Redemption Price" shall have the meaning set forth in Section
-------------------------
3.2(a).
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1 Designation and Principal Amount.
--------------------------------
There is hereby authorized (a) a series of Debt Securities designated the
"____% Junior Subordinated Deferrable Interest Debentures due December 1, 2026",
limited in aggregate principal amount to $___________ (the "Debentures"), which
amount shall be as set forth in any written order of the Company for the
authentication and delivery of Debentures pursuant to Section 2.04 of the
Indenture and (b) a Guarantee of such Debt Securities.
SECTION 2.2 Maturity.
--------
The Maturity Date is December 1, 2026.
SECTION 2.3 Form and Payment.
----------------
3
<PAGE>
Except as provided in Section 2.4, the Debentures shall be issued in fully
registered certificated form without interest coupons. Principal and interest
on the Debentures issued in certificated form will be payable, the transfer of
such Debentures will be registrable and such Debentures will be exchangeable for
Debentures bearing identical terms and provisions at the office or agency of the
Trustee; provided, however, that payment of interest may be made at the option
-------- -------
of the Company by check mailed to the holder of any Debenture at such address as
shall appear in the Security Register. Notwithstanding the foregoing, so long
as the holder of any Debentures is the Institutional Trustee, the payment of the
principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Debentures held by the Institutional Trustee will be
made at such place and to such account as may be designated by the Institutional
Trustee.
SECTION 2.4 Global Debenture.
----------------
(a) In connection with a Dissolution Event,
(i) the Debentures in certificated form may be presented to the
Trustee by the Institutional Trustee in exchange for a global Debenture in
an aggregate principal amount equal to the aggregate principal amount of
all outstanding Debentures (a "Global Debenture"), to be registered in the
name of the Depositary, or its nominee, and delivered by the Trustee to the
Depositary for crediting to the accounts of its participants pursuant to
the instructions of the Regular Trustees which instructions shall be
provided in accordance with the terms of the Declaration. The Company upon
any such presentation shall execute a Global Debenture in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Indenture and this First Supplemental
Indenture. Payments on the Debentures issued as a Global Debenture will be
made to the Depositary; and
(ii) if any Capital Securities are held in non book-entry
certificated form, the Debentures in certificated form may be presented to
the Trustee by the Institutional Trustee and any Capital Security
Certificate which represents Capital Securities other than Capital
Securities held by the Clearing Agency or its nominee ("Non Book-Entry
Capital Securities") will be deemed to represent beneficial interests in
Debentures presented to the Trustee by the Institutional Trustee having an
aggregate principal amount equal to the aggregate liquidation amount of the
Non Book-Entry Capital Securities until such Capital Security Certificates
are presented to the Security Registrar for transfer or reissuance at which
time such Capital Security Certificates will be
4
<PAGE>
cancelled and a Debenture, registered in the name of the holder of the
Capital Security Certificate or the transferee of the holder of such
Capital Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the Capital
Security Certificate cancelled, will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance with
the Indenture and this First Supplemental Indenture. On issue of such
Debentures, Debentures with an equivalent aggregate principal amount that
were presented by the Institutional Trustee to the Trustee will be deemed
to have been cancelled.
(b) A Global Debenture may be transferred, in whole but not in part,
only by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary, another nominee of the Depositary, or a successor
Depositary selected or approved by the Company, or a nominee of such successor
Depositary.
(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the Depositary
shall no longer be registered or in good standing under the Securities Exchange
Act of 1934, as amended, or other applicable statute or regulation, and a
successor Depositary is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such condition, as the case may
be, the Company will execute, and, subject to Article II of the Indenture, the
Trustee, upon written notice from the Company, will authenticate and make
available for delivery Debentures in definitive registered form without coupons,
in authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such Global Debenture.
In addition, the Company may at any time determine that the Debentures shall no
longer be represented by a Global Debenture. In such event the Company will
execute, and subject to Section 2.07 of the Indenture, the Trustee, upon receipt
of an Officers' Certificate evidencing such determination by the Company, will
authenticate and deliver Debentures in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount equal
to the principal amount of the Global Debenture in exchange for such Global
Debenture. Upon the exchange of the Global Debenture for such Debentures in
definitive registered form without coupons, in authorized denominations, the
Global Debenture shall be cancelled by the Trustee. Such Debentures in
definitive registered form issued in exchange for the Global Debenture shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such
5
<PAGE>
Debentures to the Depositary for delivery to the Persons in whose names such
Debentures are so registered.
SECTION 2.5 Interest.
--------
(a) Each Debenture will bear interest at the rate of ____% per annum
(the "Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the Coupon Rate, compounded semiannually,
payable (subject to the provisions of Article Four) semiannually in arrears on
June 1 and December 1 of each year (each, an "Interest Payment Date," commencing
on June 1, 1997), to the Person in whose name such Debenture or any predecessor
Debenture is registered, at the close of business on the regular record date for
such interest installment, which, in respect of any Debentures of which the
Institutional Trustee is the holder of a Global Debenture, shall be the close of
business on the Business Day next preceding that Interest Payment Date.
Notwithstanding the foregoing sentence, if (i) the Capital Securities are no
longer in book-entry only form, (ii) after a Dissolution Event the Debentures
are not in book-entry only form or (iii) pursuant to the provisions of Section
2.11(c) of the Indenture the Debentures are not represented by a Global
Debenture, the Company shall select a regular record date for such interest
installment which shall be any date more than one Business Day before an
Interest Payment Date.
(b) The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than a
full semiannual period for which interest is computed, will be computed on the
basis of the actual number of days elapsed in such a period (assuming each full
month elapsed in such period consists of 30 days). In the event that any date
on which interest is payable on the Debentures is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
(c) If, at any time while the Institutional Trustee is the holder of any
Debentures, the Trust or the Institutional Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any
6
<PAGE>
such case, the Company will pay as additional interest ("Additional Interest")
on the Debentures held by the Institutional Trustee, such additional amounts as
shall be required so that the net amounts received and retained by the Trust and
the Institutional Trustee after paying any such taxes, duties, assessments or
other such governmental charges will be equal to the amounts the Trust and the
Institutional Trustee would have received had no such taxes, duties, assessments
or other government charges been imposed.
ARTICLE III
REDEMPTION OF THE DEBENTURES
SECTION 3.1 Special Event Redemption.
------------------------
If a Tax Event has occurred and is continuing and the Company has received
a Redemption Tax Opinion, then, notwithstanding Section 3.2(a) but subject to
Section 3.2(b), the Company shall have the right upon not less than 30 days nor
more than 60 days notice to the holders of the Debentures to redeem the
Debentures, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event (the "90 Day Period") at a redemption price equal
to 100% of the principal amount to be redeemed plus any accrued and unpaid
interest thereon to the date of such redemption (the "Redemption Price"),
provided that if at the time there is available to the Company the opportunity
- --------
to eliminate, within the 90 Day Period and before any notice has been given to
the holders of the Debentures, the adverse effects of such Tax Event by taking
some ministerial action ("Ministerial Action"), such as filing a form or making
an election, or pursuing some other similar reasonable measure which has no
adverse effect on the Company, the Trust, the Guarantor or the holders of the
Trust Securities issued by the Trust, the Company shall pursue such Ministerial
Action in lieu of redemption, and, provided, further, that the Company shall
-------- -------
have no right to redeem the Debentures while the Trust is pursuing any
Ministerial Action pursuant to its obligations under the Declaration. The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or such earlier time as the Company determines, provided that
--------
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., New York time, on the date such Redemption Price
is to be paid.
SECTION 3.2 Optional Redemption by Company.
------------------------------
(a) Subject to the provisions of Section 3.2(b) and to the provisions
of Article Fourteen of the Indenture, except as otherwise may be specified in
this First Supplemental Indenture, the Company shall have the right to redeem
the Debentures without
7
<PAGE>
premium or penalty, in whole or in part, at any time and from time to time, on
or after December 1, 2006, at a redemption price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon to the date
of such redemption (the "Optional Redemption Price"). Any redemption pursuant
to this paragraph will be made upon not less than 30 days nor more than 60 days
notice to the holder of the Debentures, at the Optional Redemption Price. If
the Debentures are only partially redeemed pursuant to this Section 3.2(a), the
Debentures will be redeemed pro rata or by lot or by any other method utilized
--- ----
by the Trustee; provided, that if at the time of redemption the Debentures are
--------
registered as a Global Debenture, the Depositary shall determine, in accordance
with its procedures, the principal amount of such Debentures held by each holder
of Debentures to be redeemed. The Optional Redemption Price shall be paid prior
to 12:00 noon, New York time, on the date of such redemption or at such earlier
time as the Company determines, provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Optional Redemption Price by 10:00 a.m.,
New York time, on the date such Optional Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would result in the delisting of
the Capital Securities issued by the Trust from any national securities
exchange or other organization on which the Capital Securities are then
listed, the Company shall not be permitted to effect such partial
redemption and may only redeem the Debentures in whole.
SECTION 3.3 No Sinking Fund.
---------------
The Debentures are not entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 Extension of Interest Payment Period.
------------------------------------
The Company shall have the right, at any time and from time to time during
the term of the Debentures, to defer payments of interest on the Debentures by
extending the interest payment period of such Debentures for a period not
exceeding 10 consecutive semiannual periods (the "Extended Interest Payment
Period"), during which Extended Interest Payment Period no interest shall
(except on the date on which such Extended Interest Payment Period terminates)
be due and payable; provided that no Extended Interest Payment Period shall be
-------- ----
initiated while accrued interest with respect to prior, completed Extended
Interest Payment Periods is unpaid or while the Company is in default in the
payment of interest that has
8
<PAGE>
become due and payable on the Debentures, and provided further that no Extended
-------- -------
Interest Payment Period may extend beyond the Maturity Date. To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this Section
4.1, will bear interest thereon at the Coupon Rate compounded semiannually for
each semiannual period of the Extended Interest Payment Period ("Compounded
Interest"). On the date on which any Extended Interest Payment Period ends, the
Company shall pay all interest then accrued and unpaid on the Debentures,
including any Additional Interest and Compounded Interest (together, "Deferred
Interest"), that shall be payable to the holders of the Debentures in whose
names the Debentures are registered in the Security Register on the record date
for the payment of interest immediately preceding such date. Before the
termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that each such Extended Interest Payment Period,
together with all such previous and further extensions thereof, shall not exceed
10 consecutive semiannual periods, or extend beyond the Maturity Date. Upon the
termination of any Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. The Company may prepay
at any time all or any portion of the interest accrued during an Extended
Interest Payment Period.
SECTION 4.2 Notice of Extension.
-------------------
(a) If the Institutional Trustee is the only registered holder of the
Debentures at the time the Company opts to initiate an Extended Interest
Payment Period, the Company shall give written notice to the Regular
Trustees, the Institutional Trustee and the Trustee of its initiation of
such Extended Interest Payment Period one Business Day before the earlier
of (i) the next succeeding date on which distributions on the Trust
Securities issued by the Trust are payable, or (ii) the date the Trust is
required to give notice of the record date, or the date such distributions
are payable, to any national securities exchange or other organization on
which the Capital Securities are then listed or other applicable self-
regulatory organization or to holders of the Capital Securities issued by
the Trust, in each case with respect to distributions on the Trust
Securities the payment of which is being deferred.
(b) If the Institutional Trustee is not the only holder of the
Debentures at the time the Company opts to initiate an Extended Interest
Payment Period, the Company shall give the holders of the Debentures and
the Trustee written notice of its initiation of such Extended Interest
Payment Period at
9
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least ten Business Days before the earlier of (i) the next succeeding
Interest Payment Date, or (ii) the date the Company is required to give
notice of the record date or payment date of such interest payment to any
national securities exchange or other organization on which the Capital
Securities are then listed or other applicable self-regulatory organization
or to holders of the Debentures, in each case with respect to interest
payments the payment of which is being deferred.
(c) The semiannual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the 10
semiannual periods permitted in the maximum Extended Interest Payment
Period permitted under Section 4.1.
ARTICLE V
EXPENSES AND GUARANTEE
SECTION 5.1 Payment of Expenses.
-------------------
In connection with the offering, sale and issuance of the Debentures to the
Institutional Trustee and in connection with the sale of the Trust Securities by
the Trust, the Company, in its capacity as borrower with respect to the
Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures and Debt Guarantee, including commissions to the
underwriters payable pursuant to the Underwriting Agreement and the Pricing
Agreement and compensation of the Trustee under the Indenture in accordance
with the provisions of Section 6.06 of the Indenture;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization, maintenance
and dissolution of the Trust, the offering, sale and issuance of the Trust
Securities (including commissions to the underwriters in connection
therewith), the fees and expenses of the Institutional Trustee (including
all costs and expenses relating to the enforcement by the Institutional
Trustee of the rights of the holders thereof the Preferred Securities),
Delaware Trustee and the Regular Trustees, the costs and expenses relating
to the operation of the Trust, including without limitation, costs and
expenses of accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses
incurred in
10
<PAGE>
connection with the acquisition, financing, and disposition of Trust
assets);
(c) be primarily and fully liable for any indemnification obligations
arising with respect to the Declaration; and
(d) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
SECTION 5.2 Payment Upon Resignation or Removal.
-----------------------------------
Upon termination of this First Supplemental Indenture or the Indenture or
the removal or resignation of the Trustee, unless otherwise stated, the Company
shall pay to the Trustee all amounts accrued to the date of such termination,
removal or resignation. Upon termination of the Declaration or the removal or
resignation of the Delaware Trustee or the Institutional Trustee, as the case
may be, pursuant to Section 5.7 of the Declaration, the Company shall pay to the
Delaware Trustee or the Institutional Trustee, as the case may be, all amounts
accrued to the date of such termination, removal or resignation.
SECTION 5.3 Guarantee of Payment of Expenses.
--------------------------------
The Guarantor hereby fully and unconditionally guarantees the due and
punctual payment of all amounts that become due and payable by the Company to
any Person pursuant to Section 5.1 or Section 5.2.
ARTICLE VII
FORM OF DEBENTURE
SECTION 7.1 Form of Debenture.
-----------------
The Debentures and the Trustee's certificate of authentication to be
endorsed thereon are to be substantially in the following forms:
(FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE; INSERT-This Debenture
is a Global Debenture within the meaning of the Indenture hereinafter referred
to and is registered in the name of a Depositary or a nominee of a Depositary.
This Debenture is exchangeable for Debentures registered in the name of a person
other than the Depositary or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this
11
<PAGE>
Debenture (other than a transfer of this Debenture as a whole by the Depositary
to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Debenture is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any
Debenture issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]
No. _________________ CUSIP No. _______________
COUNTRYWIDE HOME LOANS, INC.
______% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE ______
COUNTRYWIDE HOME LOANS, INC., a New York corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ____________ or
registered assigns, the principal sum of ________________ Dollars ($_________ )
on December 1 , 2026, and to pay interest on said principal sum from ________
__, 199_, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
semiannually (subject to deferral as set forth herein) in arrears on June 1 and
December 1 of each year commencing June 1, 1997, at the rate of ______% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded
semiannually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on this Debenture is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debenture (or one or more Predecessor
Securities, as defined in said Indenture) is registered
12
<PAGE>
at the close of business on the regular record date for such interest
installment, which shall be the close of business on the Business Day next
preceding such Interest Payment Date. [IF PURSUANT TO THE PROVISIONS OF THE
INDENTURE THE DEBENTURES ARE NO LONGER REPRESENTED BY A GLOBAL Debenture --
which shall be the close of business on the ____ Business Day next preceding
such Interest Payment Date.] Any such interest installment not punctually paid
or duly provided for shall forthwith cease to be payable to the registered
holders on such regular record date and may be paid to the Person in whose name
this Debenture (or one or more Predecessor Securities) is registered at the
close of business on a special record date to be fixed by the Trustee for the
payment of such defaulted interest, notice whereof shall be given to the
registered holders of this series of Debentures not less than 10 days prior to
such special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
-------- -------
option of the Company by check mailed to the registered holder at such address
as shall appear in the Security Register. Notwithstanding the foregoing, so
long as the holder of this Debenture is the Institutional Trustee, the payment
of the principal of (and premium, if any) and interest on this Debenture will be
made at such place and to such account as may be designated by the Institutional
Trustee.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her attorney-in-
fact for any and all such purposes. Each holder hereof, by his or her
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
13
<PAGE>
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
COUNTRYWIDE HOME LOANS, INC.
By:
--------------------------------
Name:
Title:
Attest:
By:
----------------------------
Name:
Title:
14
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
Dated ________________
The Bank of New York,
as Trustee
By____________________
Authorized Signatory
[FORM OF GUARANTEE]
FOR VALUE RECEIVED, COUNTRYWIDE CREDIT INDUSTRIES, INC., a Delaware
corporation (the "Guarantor"), hereby fully and unconditionally guarantees to
the holder of the Security upon which this Guarantee is endorsed the due and
punctual payment of the principal of, sinking fund payment, if any, premium, if
any, or interest on said Security, when and as the same shall become due and
payable, whether at maturity, upon redemption or otherwise, according to the
terms thereof and of the Indenture referred to therein.
The Guarantor agrees to determine, at least one Business Day prior to the
date upon which a payment of principal of, sinking fund payment, if any,
premium, if any, or interest on said Security is due and payable, whether the
Company has available the funds to make such payment as the same shall become
due and payable. In case of the failure of the Company punctually to pay any
such principal, sinking fund payment, if any, premium, if any, or interest, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether at maturity, upon redemption,
or otherwise, and as if such payment were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Security or said Indenture, the absence of
any action to enforce the same, any waiver or consent by the holder of said
Security with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any
15
<PAGE>
right to require a proceeding first against the Company, protest or notice with
respect to said Security or indebtedness evidenced thereby, and all demands
whatsoever and covenants that this Guarantee will not be discharged except by
complete performance of the obligations contained in said Security and in this
Guarantee.
The Guarantor shall be subrogated to all rights of the holder of said
Security against the Company in respect of any amounts paid by the Guarantor
pursuant to the provisions of this Guarantee; provided, however, that the
Guarantor shall not, without the consent of the holders of all of the Securities
then outstanding, be entitled to enforce or to receive any payments arising out
of or based upon such right of subrogation until the principal of and premium,
if any, and interest on all Securities shall have been paid in full or payment
thereof shall have been provided for in accordance with said Indenture.
Notwithstanding anything to the contrary contained herein, if following any
payment of principal or interest by the Company on the Securities to the holders
of the Securities it is determined by a final decision of a court of competent
jurisdiction that such payment shall be avoided by a trustee in bankruptcy
(including any debtor-in-possession) as a preference under 11 U.S.C. Section 547
and such payment is paid by such holder to such trustee in bankruptcy, then and
to the extent of such repayment, the obligations of the Guarantor hereunder
shall remain in full force and effect.
The obligations of the Guarantor under this Guarantee are, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Guarantee is issued
subject to the provisions of the Indenture with respect thereto.
Each holder of the Security upon which this Guarantee is endorsed, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each holder of the Security upon which this Guarantee is
endorsed, by his or her acceptance thereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each holder upon said provisions.
This Guarantee shall not be valid or become obligatory for any purpose with
respect to a Security until the certificate of
16
<PAGE>
authentication on such Security shall have been signed by the Trustee (or the
Authentication Agent).
This Guarantee shall be governed by the laws of the State of New York.
17
<PAGE>
IN WITNESS WHEREOF, COUNTRYWIDE CREDIT INDUSTRIES, INC. has caused this
Guarantee to be signed in its corporate name by the facsimile signature of two
of its officers thereunto duly authorized and has caused a facsimile of its
corporate seal to be affixed hereunto or imprinted or otherwise reproduced
hereon.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
______________________________{Seal} _______________________
{Title} {Title}
18
<PAGE>
(REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debt Securities
of the Company specified in the Indenture, all issued or to be issued in one or
more series under and pursuant to an Indenture dated as of _________ __, 1996,
duly executed and delivered between the Company and The Bank of New York as
Trustee (the "Trustee"), as supplemented by the First Supplemented Indenture
dated as of ________ __, 1996, between the Company and the Trustee (the
Indenture as so supplemented, the "Indenture"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the series of Debt Securities
(referred to herein as the "Debentures") of which this Debenture is a part. By
the terms of the Indenture, the Debt Securities are issuable in series that may
vary as to amount, date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Debentures is limited in aggregate
principal amount as specified in said First Supplemental Indenture.
The Company shall have the right to redeem this Debenture at the
option of the Company, without premium or penalty, in whole or in part at any
time and from time to time on or after December 1, 2006 (an "Optional
Redemption"), or at any time in certain circumstances upon the occurrence of a
Tax Event, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued but unpaid interest, to the date of such redemption
(the "Optional Redemption Price"). Any redemption pursuant to this paragraph
will be made upon not less than 30 days nor more than 60 days notice, at the
Optional Redemption Price. If the Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Debentures will be redeemed pro
---
rata or by lot or by any other method utilized by the Trustee; provided that if,
- ----
at the time of redemption, the Debentures are registered as a Global Debenture,
the Depositary shall determine the principal amount of such Debentures held by
each Debentureholder to be redeemed in accordance with its procedures.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for the unredeemed portion hereof will be
issued in the name of the holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
19
<PAGE>
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debt Securities of each series affected at the
time outstanding, as specified in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the Debt
Securities; provided, however, that no such supplemental indenture shall (i)
among other things, extend the fixed maturity of any Debt Securities of any
series, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon, or reduce any premium payable upon the
redemption thereof, without the consent of the holder of each Debt Security so
affected, or (ii) reduce the aforesaid percentage of Debt Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holder of each Debt Security then outstanding and
affected thereby. The Indenture also contains provisions permitting the holders
of a majority in aggregate principal amount of the Debt Securities of any series
at the time outstanding affected thereby, on behalf of all of the holders of the
Debt Securities of such series, to waive any past default in the performance of
any of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default in
the payment of the principal of or premium, if any, or interest on any of the
Debt Securities of such series. Any such consent or waiver by the registered
holder of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Debenture and of any Debenture issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debenture at the time and place and at the
rate and in the money herein prescribed.
The Company shall have the right at any time during the term of the
Debentures and from time to time to defer payments of interest on the Debentures
by extending the interest payment period of the Debentures for up to 10
consecutive semiannual periods (each, an "Extended Interest Payment Period"),
and on the date on which each such Extended Interest Payment Period ends the
Company shall pay all interest then accrued and unpaid, together with interest
thereon, compounded semiannually at the rate specified for
20
<PAGE>
the Debentures to the extent that payment of such interest is enforceable under
applicable law; provided that no Extended Interest Payment Period may be
-------- ----
initiated while accrued interest with respect to prior completed Extended
Interest Payment Periods is unpaid or while the Company is in default in the
payment of interest that has become due and payable on the Debentures, and
provided further that no Extended Interest Payment Period may last beyond the
- -------- -------
Maturity Date. Before the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided that each such Extended Interest Payment Period together with all such
previous and further extensions thereof shall not exceed 10 consecutive
semiannual periods or extend beyond the Maturity Date. At the termination of
any such Extended Interest Payment Period and upon the payment of all accrued
and unpaid interest and any additional amounts then due, the Company may
commence a new Extended Interest Payment Period, subject to the above
requirements.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Security Register of the Company, upon surrender of this Debenture
for registration of transfer at the office or agency of the Trustee in the City
and State of New York accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and the Security registrar
may deem and treat the registered holder hereof as the absolute owner hereof
(whether or not this Debenture shall be overdue and notwithstanding any notice
of ownership or writing hereon made by anyone other than the Security registrar)
for the purpose of receiving payment of or on account of the principal hereof
and premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or
21
<PAGE>
director, past, present or future, as such, of the Company or of any predecessor
or successor corporation, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issuance hereof, expressly waived and released.
[The Debentures of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.]
[This Global Debenture is exchangeable for Debentures in definitive form only
under certain limited circumstances set forth in the Indenture. Debentures of
this series so issued are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.] As provided in the
Indenture and subject to certain limitations [herein and] therein set forth,
Debentures of this series [so issued] are exchangeable for a like aggregate
principal amount of Debentures of this series of a different authorized
denomination, as requested by the holder surrendering the same. All terms used
in this Debenture that are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE
AND THE DEBENTURES WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
22
<PAGE>
ARTICLE VIII
ORIGINAL ISSUE OF DEBENTURES
SECTION 8.1 Original Issue of Debentures.
----------------------------
Debentures in the aggregate principal amount of $___________ may, upon
execution of this First Supplemental Indenture, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Debentures to or upon the written order of the
Company, signed by its Chairman, its President, any Managing Director or any
Vice President and its Treasurer or an Assistant Treasurer, without any further
action by the Company.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Ratification of Indenture.
-------------------------
The Indenture, as supplemented by this First Supplemental Indenture, is in
all respects ratified and confirmed, and this First Supplemental Indenture shall
be deemed part of the Indenture in the manner and to the extent herein and
therein provided.
SECTION 9.2 Trustee Not Responsible for Recitals.
------------------------------------
The recitals herein contained are made by the Company and the Guarantor and
not by the Trustee, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representation as to the validity or
sufficiency of this First Supplemental Indenture.
SECTION 9.3 Governing Law.
-------------
This First Supplemental Indenture and each Debenture shall be deemed to be
a contract made under the internal laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State without
regard to conflict of laws principles thereof.
SECTION 9.4 Separability.
------------
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Debentures, but this First Supplemental
Indenture and the
23
<PAGE>
Debentures shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.
SECTION 9.5 Counterparts.
------------
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgements and as of the day and year first above written.
COUNTRYWIDE HOME LOANS, INC.
By: ___________________________
Name:
Title:
[Seal]
Attest:______________________
Title:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: ___________________________
Name:
Title:
Attest:______________________
Title:
THE BANK OF NEW YORK
as Trustee
By: ___________________________
Name:
Title:
Attest:______________________
Title:
25
<PAGE>
EXHIBIT 4.10
====================================
CAPITAL SECURITIES GUARANTEE AGREEMENT
Countrywide Capital I
Dated as of ______, 1996
=====================================
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust Indenture Section of Guarantee
Act of 1939, as amended Agreement
- -------------------------- --------------------
310(a).............................................................4.1(a)
310(b).............................................................4.1(c)
310(c).......................................................Inapplicable
311(a).............................................................2.2(a)
311(b).............................................................2.2(b)
311(c).......................................................Inapplicable
312(a).............................................................2.2(a)
312(b).............................................................2.2(b)
313...................................................................2.3
314(a)................................................................2.4
314(b).......................................................Inapplicable
314(c)................................................................2.5
314(d).......................................................Inapplicable
314(f).......................................................Inapplicable
315(a).............................................................3.1(b)
315(b)................................................................2.7
315(c).............................................................3.1(a)
315(d).............................................................3.1(a)
316(a)........................................................5.4(a),.2.6
_____________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation ..................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application .................. 5
SECTION 2.2 Lists of Holders of Capital Securities ............ 5
SECTION 2.3 Reports by the Capital Securities Guarantee
Trustee ........................................... 6
SECTION 2.4 Periodic Reports to Capital Guarantee
Trustee ........................................... 6
SECTION 2.5 Evidence of Compliance with Conditions
Precedent ......................................... 6
SECTION 2.6 Events of Default; Waiver ......................... 6
SECTION 2.7 Events of Default; Notice ......................... 6
SECTION 2.8 Conflicting Interests ............................. 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
Capital Securities Guarantee Trustee
SECTION 3.1 Powers and Duties of the Capital Guarantee
Trustee .................. ....................... 7
SECTION 3.2 Certain Rights of Capital Securities Guarantee
Trustee ........................................... 9
SECTION 3.3 Not Responsible for Recitals or Issuance of
Capital Securities Guarantee ...................... 12
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee;
Eligibility ....................................... 12
SECTION 4.2 Appointment, Removal and Resignation of
Capital Securities Guarantee Trustee .............. 13
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee ........................................ 14
SECTION 5.2 Waiver of Notice and Demand ...................... 14
SECTION 5.3 Obligations Not Affected ......................... 14
SECTION 5.4 Rights of Holders ................................ 15
SECTION 5.5 Guarantee of Payment ............................. 16
SECTION 5.6 Subrogation ...................................... 16
SECTION 5.7 Independent Obligations .......................... 16
i
<PAGE>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions ....................... 16
SECTION 6.2 Ranking .......................................... 17
ARTICLE VII
TERMINATION
SECTION 7.1 Termination ...................................... 17
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation ...................................... 18
SECTION 8.2 Indemnification ................................. 18
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns ........................... 18
SECTION 9.2 Amendments ....................................... 19
SECTION 9.3 Notices .......................................... 19
SECTION 9.4 Benefit .......................................... 20
SECTION 9.5 Governing Law .................................... 20
ii
<PAGE>
CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Capital Securities Guarantee"), dated
as of ______, 1996, is executed and delivered by Countrywide Credit Industries,
Inc., a Delaware corporation (the "Guarantor"), and The Bank of New York, a New
York banking corporation, as trustee (the "Capital Securities Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Capital Securities (as defined herein) of Countrywide Capital I, a
Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of ______, 1996, among the trustees of the Issuer named
therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof _______ preferred securities, having an aggregate
liquidation amount of $___________, designated the ____% Capital Trust Pass-
through Securities (the "Capital Securities");
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Capital Securities Guarantee, to pay to the Holders
of the Capital Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Capital Securities Guarantee for the benefit of the holders of the
Common Securities (as defined in the Declaration), except that if an Event of
Default (as defined in the Declaration), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Capital Securities to receive Guarantee Payments under this Capital Securities
Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Capital Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Capital Securities
Guarantee for the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
------------------------------
In this Capital Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Capital Securities Guarantee but
not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee has
the same meaning throughout;
(c) all references to "the Capital Securities Guarantee" or "this
Capital Securities Guarantee" are to this Capital Securities
Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Capital Securities Guarantee to Articles
and Sections are to Articles and Sections of this Capital
Securities Guarantee, unless otherwise specified;
(e) terms defined in the Declaration as at the date of execution of
this Capital Securities Guarantee or in the Trust Indenture Act,
as the case may be, have the same meanings when used in this
Capital Securities Guarantee, unless otherwise defined in this
Capital Securities Guarantee or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and vice versa.
"Corporate Trust Office" means the office of the Capital Securities
----------------------
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is located
at 101 Barclay Street, 21 West, New York, New York 10286.
"Covered Person" means any Holder or beneficial owner of Capital
--------------
Securities.
"Debentures" means the series of junior subordinated debt securities
----------
of the Countrywide Home Loans, Inc. designated
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the "____% Junior Subordinated Deferrable Interest Debentures due December 1,
2026" held by the Institutional Trustee (as defined in the Declaration) of the
Issuer.
"Event or Default" means a default by the Guarantor on any of its
----------------
payment or other obligations under this Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
------------------
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) that are required to be paid on such Capital Securities to
the extent the Issuer shall have funds available therefor, (ii) the redemption
price, including all accrued and unpaid Distributions to the date of redemption
(the "Redemption Price") to the extent the Issuer has funds available therefor,
with respect to any Capital Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with the distribution of Debentures to the
Holders in exchange for Capital Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available therefor, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an Indenture Event
of Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of the Common Securities to receive payments under the Common
Securities Guarantee are subordinated to the rights of Holders of Capital
Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and records
------
of the Issuer, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Capital Securities Guarantee Trustee,
------------------
any Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
"Majority in liquidation amount of the Securities" means, except as
------------------------------------------------
provided by the Trust Indenture Act, a vote by Holder(s) of Capital Securities,
voting separately as a class, of
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more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all Capital Securities.
"Officers' Certificate" means, with respect to any Person, a
----------------------
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
------
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Capital Securities Guarantee Trustee" means The Bank of New York, a
------------------------------------
New York banking corporation, until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Capital Securities Guarantee and thereafter means each such
Successor Capital Securities Guarantee Trustee.
"Responsible Officer" means, with respect to the Capital Securities
-------------------
Guarantee Trustee, any officer within the Corporate Trust Office of the Capital
Securities Guarantee Trustee, including any vice president, any assistant vice
president, any assistant secretary, the treasurer, any assistant treasurer or
other officer of the Corporate Trust Office of the
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Capital Securities Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Capital Securities Guarantee Trustee" means a successor
----------------------------------------------
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended.
"Trust Securities" means the Common Securities and the Capital
----------------
Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
--------------------------------
(a) This Capital Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Capital Securities
Guarantee and shall, to the extent applicable, be governed by such provisions;
and
(b) if and to the extent that any provision of this Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Capital Securities
--------------------------------------
(a) The Guarantor shall provide the Capital Securities Guarantee
Trustee with a list, in such form as the Capital Securities Guarantee Trustee
may reasonably require, of the names and addresses of the Holders of the Capital
Securities ("List of Holders") as of such date, (i) within 1 Business Day after
January 1 and June 30 of each year, and (ii) at any other time within 30 days of
receipt by the Guarantor of a written request for a List of Holders as of a date
no more than 14 days before such List of Holders is given to the Capital
Securities Guarantee Trustee, provided that the Guarantor shall not be obligated
--------
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Capital Securities Guarantee
Trustee by the Guarantor. The Capital Securities Guarantee Trustee may destroy
any List of
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Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
---------------------------------------------------
Within 60 days after May 15 of each year, the Capital Securities
Guarantee Trustee shall provide to the Holders of the Capital Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Capital Securities Guarantee Trustee shall also comply with the requirements
of Section 313 (d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
--------------------------------------------------------
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such documents, reports and information as required by Section 314 (if
any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
------------------------------------------------
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with any conditions precedent provided for
in this Capital Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
-------------------------
The Holders of a Majority in liquidation amount of Capital Securities
may, by vote or consent, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and shall be deemed to
have been cured, for every purpose of this Capital Securities Guarantee, but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon.
SECTION 2.7 Events of Default; Notice
-------------------------
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(a) The Capital Securities Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Capital Securities, notices of all Events
of Default actually known to a Responsible Officer of the Capital Securities
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, however, that the Capital Securities Guarantee Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Capital Securities Guarantee Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Capital Securities Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Capital Securities Guarantee Trustee charged with the administration of this
Capital Securities Guarantee shall have obtained actual knowledge, thereof.
SECTION 2.8 Conflicting Interests
---------------------
The Indenture, the Debt Securities (as defined therein) issued or to
be issued thereunder, the Declaration, the Trust Securities issued or to be
issued thereunder and the Capital Securities Guarantees and Common Securities
Guarantees in connection therewith shall be deemed to be specifically described
in this Capital Securities Guarantee for the purposes of clause (i) of the
proviso contained in Section 310(b)(1) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
-------------------------------------------------------------
(a) This Capital Securities Guarantee shall be held by the Capital
Securities Guarantee Trustee for the benefit of the Holders of the Capital
Securities, and the Capital Securities Guarantee Trustee shall not transfer this
Capital Securities Guarantee to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 5.4 (b) or to a Successor
Capital Securities Guarantee Trustee on acceptance by such Successor Capital
Securities Guarantee Trustee of its appointment to act as Successor Capital
Securities Guarantee Trustee. The right, title and interest of the Capital
Securities
7
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Guarantee Trustee shall automatically vest in any Successor Capital Securities
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Capital Securities Guarantee Trustee has occurred and is continuing, the
Capital Securities Guarantee Trustee shall enforce this Capital Securities
Guarantee for the benefit of the Holders of the Capital Securities.
(c) The Capital Securities Guarantee Trustee, before the occurrence
of any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Capital Securities Guarantee, and no implied covenants shall
be read into this Capital Securities Guarantee against the Capital Securities
Guarantee Trustee. In case an Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.6) and is actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee, the Capital Securities
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Capital Securities Guarantee, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be
construed to relieve the Capital Securities Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Securities
Guarantee Trustee shall be determined solely by the express provisions
of this Capital Securities Guarantee, and the Capital Securities
Guarantee Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Capital Securities Guarantee, and no implied covenants or obligations
shall be read into this Capital Securities Guarantee against the
Capital Securities Guarantee Trustee; and
8
<PAGE>
(B) in the absence of bad faith on the part of the Capital
Securities Guarantee Trustee, the Capital Securities Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Capital Securities Guarantee Trustee and
conforming to the requirements of this Capital Securities Guarantee;
but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Capital Securities Guarantee Trustee, the Capital Securities Guarantee
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Capital Securities
Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Capital Securities Guarantee Trustee, unless it shall be proved that the
Capital Securities Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Capital Securities Guarantee Trustee, or exercising any trust or power
conferred upon the Capital Securities Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall require
the Capital Securities Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Capital Securities Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds is not reasonably assured to it
under the terms of this Capital Securities Guarantee or indemnity,
reasonably satisfactory to the Capital Securities Guarantee Trustee,
against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
------------------------------------------------------
(a) Subject to the provisions of Section 3.1:
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<PAGE>
(i) The Capital Securities Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Capital Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Capital Securities
Guarantee, the Capital Securities Guarantee Trustee shall deem it desirable
that a matter be proved or established before taking, suffering or omitting
any action hereunder, the Capital Securities Guarantee Trustee (unless
other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of
its employees. The Capital Securities Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of
this Capital Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Capital Securities Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Capital Securities Guarantee
Trustee such security and indemnity, reasonably satisfactory to the Capital
Securities Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses and the
10
<PAGE>
expenses of the Capital Securities Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances as may be
requested by the Capital Securities Guarantee Trustee; provided, however,
that nothing contained in this Section 3.2(a) (vi) shall be taken to
relieve the Capital Securities Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers
vested in it by this Capital Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Capital Securities
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(viii) The Capital Securities Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys, and
the Capital Securities Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Capital Securities Guarantee Trustee or
its agents hereunder shall bind the Holders of the Capital Securities, and
the signature of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the Capital
Securities Guarantee Trustee to so act or as to its compliance with any of
the terms and provisions of this Capital Securities Guarantee, both of
which shall be conclusively evidenced by the Capital Securities Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Capital Securities
Guarantee the Capital Securities Guarantee Trustee shall deem it desirable
to receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Capital Securities Guarantee Trustee
(i) may request instructions from the Holders of a Majority in liquidation
amount of the Capital Securities, (ii) may refrain from enforcing such
remedy or right or taking such
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<PAGE>
other action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions.
(xi) The Capital Securities Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Capital Securities Guarantee.
(b) No provision of this Capital Securities Guarantee shall be deemed
to impose any duty or obligation on the Capital Securities Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal or
in which the Capital Securities Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law to perform any such act or acts or
to exercise any such right, power, duty or obligation. No permissive power or
authority available to the Capital Securities Guarantee Trustee shall be
construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of
-------------------------------------------
Capital Securities Guarantee
----------------------------
The recitals contained in this Capital Securities Guarantee shall be
taken as the statements of the Guarantor, and the Capital Securities Guarantee
Trustee does not assume any responsibility for their correctness. The Capital
Securities Guarantee Trustee makes no representation as to the validity or
sufficiency of this Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
-------------------------------------------------
(a) There shall at all times be a Capital Securities Guarantee
Trustee, as holder of the Capital Securities Guarantee for the benefit of the
Holders, which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to
12
<PAGE>
exercise corporate trust powers, having a combined capital and surplus of
at least 50 million U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a) (ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Capital Securities Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Capital Securities
Guarantee Trustee shall immediately resign in the manner and with the effect set
out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital
-----------------------------------------------
Guarantee Trustee
-----------------
(a) Subject to Section 4.2(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Securities Guarantee Trustee and
delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee appointed to office
shall hold office until a Successor Capital Securities Guarantee Trustee shall
have been appointed or until its removal or resignation. The Capital Securities
Guarantee Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Capital Securities
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Capital Securities Guarantee Trustee has been
appointed and has accepted such appointment by an instrument in writing executed
by such Successor Capital Securities Guarantee Trustee and delivered to
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the Guarantor and the resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery of an instrument of removal or resignation, the Capital
Securities Guarantee Trustee resigning or being removed may petition any court
of competent jurisdiction for appointment of a Successor Capital Securities
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Capital Securities Guarantee
Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Capital Securities Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal
or resignation of the Capital Securities Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee Trustee
all amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
---------
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
---------------------------
The Guarantor hereby waives notice of acceptance of this Capital
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
------------------------
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The obligations, covenants, agreements and duties of the Guarantor
under this Capital Securities Guarantee shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Capital Securities or the extension of
time for the performance of any other obligation under, arising out of, or in
connection with, the Capital Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
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There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
-----------------
(a) The Holders of a Majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Capital Securities Guarantee
Trustee in respect of this Capital Securities Guarantee or to direct the
exercise of any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Capital Securities Guarantee.
(b) Any Holder of Capital Securities may institute a legal proceeding
directly against the Guarantor to enforce the Capital Securities Guarantee
Trustee's rights under this Capital Securities Guarantee, without first
instituting any legal proceeding against the Issuer, the Capital Securities
Guarantee Trustee or any other Person or entity. The Guarantor waives any right
or remedy to require that any such action be brought first against the Issuer or
any other Person before so proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
--------------------
This Capital Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.6 Subrogation
-----------
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Capital Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Capital
Securities Guarantee, if, after giving effect to any such payment, any amounts
are due and unpaid under this Capital Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with
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respect to the Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Capital Securities Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 5.3
hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
--------------------------
So long as any Capital Securities remain outstanding, if (i) the
Guarantor shall be in default with respect to its Guarantee Payments or other
obligations hereunder, or (ii) there shall have occurred and be continuing an
Event of Default or an event of default under the Declaration, then (a) the
Guarantor shall not, and shall cause the Debenture Issuer not to, declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of shares of the Company's or the
Guarantor's capital stock or rights to acquire such capital stock in connection
with the satisfaction by the Debenture Issuer or the Guarantor, respectively, of
their obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Debenture Issuer's or the Guarantor's capital stock or
rights to acquire such capital stock or the exchange or conversion of one class
or series of the Debenture Issuer's or the Guarantor's capital stock for another
class or series of the Debenture Issuer's or the Guarantor's capital stock or
rights to acquire such capital stock, (iii) the purchase of fractional interests
in shares of the Debenture Issuer's or the Guarantor's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged or (iv) dividends or distributions made on the
Debenture Issuer's or the Guarantor's capital stock or rights to acquire such
stock with the Debenture Issuer's or the Guarantor's capital stock or rights to
acquire such stock) or make any guarantee payments with respect to the foregoing
and (b) the Guarantor shall not, and shall cause the Debenture Issuer to not,
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Guarantor or the Debenture Issuer which rank pari passu with or junior to the
Debentures.
SECTION 6.2 Ranking
-------
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other
17
<PAGE>
liabilities, present and future, of the Guarantor, including its guarantee with
respect to the Debentures under the Indenture and (ii) senior to the Guarantor's
capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
-----------
This Capital Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Capital Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Capital Securities
or (iii) upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
Capital Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Capital Securities
must restore payment of any sums paid under the Capital Securities or under this
Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Capital
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust or the Guarantor and upon such information,
opinions, reports or statements presented to the Trust or the Guarantor by any
Person as to matters the Indemnified Person reasonably believes are within such
other Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust or the Guarantor, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
18
<PAGE>
existence and amount of assets from which Distributions to Holders of Capital
Securities might properly be paid.
SECTION 8.2 Indemnification
---------------
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
----------------------
All guarantees and agreements contained in this Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding.
SECTION 9.2 Amendments
----------
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Capital Securities Guarantee may only be amended with the prior approval of the
Holders of at least a Majority in liquidation amount of the Securities. The
provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Notices
-------
All notices provided for in this Capital Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) If given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or such
other address as the Capital
19
<PAGE>
Securities Guarantee Trustee may give notice of to the Holders of the Capital
Securities):
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopy:
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Capital Securities):
Countrywide Credit Industries, Inc.
155 North Lake Avenue
Pasadena, California 91101
Attention: Corporate Secretary
Telecopy:
(c) If given to any Holder of Capital Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
-------
This Capital Securities Guarantee is solely for the benefit of the
Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.5 Governing Law
-------------
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
20
<PAGE>
THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and year
first above written.
COUNTRYWIDE CREDIT INDUSTRIES,
INC., as Guarantor
By:_______________________________
Name:
Title:
THE BANK OF NEW YORK, as Capital
Securities Guarantee Trustee
By:_______________________________
Name:
Title:
21
<PAGE>
DRAFT -- 11/26/96 212-859-8171
December __, 1996 (Fax: 212-859-8588)
Countrywide Credit Industries, Inc.
Countrywide Home Loans, Inc.
Countrywide Capital I
155 North Lake Avenue
Pasadena, California 91101
Ladies and Gentlemen:
We are acting as special counsel to Countrywide Home Loans, Inc., a
New York corporation (the "Company") and a wholly owned subsidiary of
Countrywide Credit Industries, Inc., a Delaware corporation ("CCI"), CCI and
Countrywide Capital I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), in connection with the proposed issuance by the
Company of ___% Junior Subordinated Deferrable Interest Debentures due December
1, 2026 (the "Subordinated Debt Securities"), and the proposed purchase of the
Subordinated Debt Securities by the Trust with the proceeds of its issuance of
___% Capital Trust Pass-through Securities/SM/ (the "Capital Securities"),
all as contemplated by the joint Registration Statement on Form S-3 (File Nos.
333-14111, 333-14111-01, 333-14111-02 and 333-14111-03) (as amended by Amendment
No. 3 thereto) of the Company, CCI, the Trust and Countrywide Capital II,
another statutory business trust formed under the laws of the State of Delaware
(the "Registration Statement"). Terms with initial capitals used in this letter
and not otherwise defined herein have the meanings set forth in the Registration
Statement.
You have requested our opinion concerning (a) the characterization of
the Trust and the Subordinated Debt Securities for United States federal income
tax purposes, and (b) the section of the Registration Statement captioned
"United States Federal Income Taxation." In expressing our opinion, we have
examined and relied upon the Registration Statement, the Declaration and the
Indenture (each, in the form filed as an Exhibit to the Registration Statement),
certain representations of officers of CCI and the Company (the
"Representations"), and such other materials as we have deemed necessary or
appropriate.
- ----------
/SM/ Salomon Brothers Inc has filed applications with the United States Patent
and Trademark Office for the registration of the Capital Trust Pass-through
Securities service mark.
<PAGE>
Countrywide Credit Industries, Inc.
Countrywide Home Loans, Inc.
Countrywide Capital I -2- December ___, 1996
We have assumed, with your permission, that the facts stated in the Registration
Statement and the Representations are true and complete, that the Indenture and
the Declaration will be executed in the forms filed as Exhibits to the
Registration Statement, that the Trust will be administered in accordance with
the terms of the Declaration, that the Subordinated Debt Securities will be
issued and administered in accordance with the terms of the Indenture and that
the Capital Securities will be issued and administered in accordance with the
terms of the Declaration.
Our opinion is based upon the provisions of the United States Internal
Revenue Code of 1986, as amended, existing and proposed Treasury regulations
promulgated thereunder, judicial decisions and rulings and other pronouncements
of the Internal Revenue Service (the "Service"), all as in effect on the date
hereof. The application of some of these provisions, regulations, decisions,
rulings and other pronouncements is uncertain in the absence of definitive
guidance and may be subject to differing interpretations. Our opinion does not
bind the Service and there can be no assurance that the Service or a court of
law would agree with the conclusions expressed in our opinion. Further, all
such provisions, regulations, decisions, rulings and other pronouncements are
subject to change, possibly with retroactive effect. Accordingly, there can be
no assurance that future changes in law will not affect the conclusion set forth
herein.
In particular, on March 19, 1996, President Clinton announced a
proposal which would treat as equity for federal income tax purposes securities
like the Subordinated Debt Securities that are issued on or after December 7,
1995. On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman Bill Archer issued a joint statement
indicating their intent that this proposal would have an effective date no
earlier than the date of "appropriate Congressional action." If such a proposal
is enacted, there is no assurance that the effective date guidance contained in
the joint statement will be incorporated into the proposal.
Characterization of the Trust. Based upon and subject to the
foregoing, it is our opinion that, for federal income tax purposes, the Trust
will be characterized as a grantor trust, and will not be characterized as an
association taxable as a corporation. Accordingly, for income tax purposes,
each holder of Capital Securities generally will be considered the owner of an
undivided interest in the Subordinated Debt Securities owned by the Trust, and
each US Holder will be required to include all income or gain recognized for
income tax purposes with respect to its allocable share of the Subordinated Debt
Securities on its own income tax return.
<PAGE>
Countrywide Credit Industries, Inc.
Countrywide Home Loans, Inc.
Countrywide Capital I -3- December ___, 1996
Characterization of the Subordinated Debt Securities. Based upon and
subject to the foregoing, and although there is no controlling authority
directly on point, it is our opinion that the Subordinated Debt Securities
should be characterized as indebtedness of the Company for federal income tax
purposes.
"United States Federal Income Taxation" Section. Based upon and
subject to the foregoing, and based upon the assumptions and subject to the
qualifications and limitations set forth in such section, we hereby affirm that
(a) it is our opinion, as of the date hereof, that the statements in the section
of the Registration Statement captioned "United States Federal Income Taxation"
summarize the material federal income tax consequences of the purchase,
ownership and disposition of the Capital Securities, and (b) to the extent such
statements constitute statements of law or legal conclusions with respect
thereto, such statements represent our opinion, as of the date hereof, with
respect to the matters set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the captions
"United States Federal Income Taxation" and "Legal Matters" therein. In giving
this consent, we do not hereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended.
No opinion is expressed on any matter other than that specifically
referred to herein.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: ____________________________________
Lee S. Parker
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 23, 1996, accompanying the consolidated
financial statements and schedules of Countrywide Credit Industries, Inc. and
Subsidiaries appearing in the Annual Report on Form 10-K for the year ended
February 29, 1996, which is incorporated by reference in this Amendment No. 3 to
the Registration Statement on Form S-3 (Registration Nos. 333-14111, 333-14111-
01, 333-14111-02, 333-14111-03) (the "Amendment"). We consent to the
incorporation by reference in this Amendment of the aforementioned report and to
the use of our name as it appears under the caption "Experts."
GRANT THORNTON LLP
/s/ GRANT THORNTON LLP
Los Angeles, California
November 29, 1996
<PAGE>
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
COUNTRYWIDE HOME LOANS, INC.
(Exact name of obligor as specified in its charter)
New York 13-2631719
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
155 North Lake Avenue
Pasadena, California 91101
(Address of principal executive offices) (Zip code)
----------------------
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-2641992
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
155 North Lake Avenue
Pasadena, California 91101
(Address of principal executive offices) (Zip code)
_____________________
Subordinated Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 11th day of October, 1996.
THE BANK OF NEW YORK
By: /s/ Paul J. Schmalzel
___________________________
Name: Paul J. Schmalzel
Title: Assistant Treasurer
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1996,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 2,461,550
Interest-bearing balances............. 835,563
Securities:
Held-to-maturity securities........... 802,064
Available-for-sale securities......... 2,051,263
Federal funds sold in domestic of-
fices of the bank:
Federal funds sold...................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ................. 27,820,159
LESS: Allowance for loan and
lease losses .............. 509,817
LESS: Allocated transfer risk
reserve...................... 1,000
Loans and leases, net of unearned
income, allowance, and reserve 27,309,342
Assets held in trading accounts......... 837,118
Premises and fixed assets (including
capitalized leases)................... 614,567
Other real estate owned................. 51,631
Investments in unconsolidated
subsidiaries and associated
companies............................. 225,158
Customers' liability to this bank on
acceptances outstanding............... 800,375
Intangible assets....................... 436,668
Other assets............................ 1,247,908
-----------
Total assets............................ $41,558,682
===========
LIABILITIES
Deposits:
In domestic offices................... $18,851,327
Noninterest-bearing ....... 7,102,645
Interest-bearing ......... 11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs.... 10,965,604
Noninterest-bearing .................. 37,855
Interest-bearing ..................... 10,927,749
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased............... 1,224,886
Securities sold under agreements
to repurchase....................... 29,728
Demand notes issued to the U.S.
Treasury.............................. 118,870
Trading liabilities..................... 673,944
Other borrowed money:
With original maturity of one year
or less............................. 2,713,248
With original maturity of more than
one year............................ 20,780
Bank's liability on acceptances exe-
cuted and outstanding................. 803,292
Subordinated notes and debentures....... 1,022,860
Other liabilities....................... 1,590,564
-----------
Total liabilities....................... 38,015,103
-----------
EQUITY CAPITAL
Common stock............................ 942,284
Surplus................................. 525,666
Undivided profits and capital
reserves.............................. 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 3,197
Cumulative foreign currency transla-
tion adjustments...................... (5,765)
-----------
Total equity capital.................... 3,543,579
-----------
Total liabilities and equity
capital .............................. $41,558,682
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot }
Thomas A. Renyi } Directors
Alan R. Griffith }
- --------------------------------------------------------------------------------
-5-
