<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1996
REGISTRATION NOS. 333- AND 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
AND
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
(REGISTRATION NOS. 33-59559 AND 33-59559-01)
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
COUNTRYWIDE HOME LOANS, INC.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
--------------
NEW YORK DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
13-2631719 13-2641992
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
155 NORTH LAKE AVENUE
PASADENA, CA 91101
(818) 304-8400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
DAVID S. LOEB
DIRECTOR
COUNTRYWIDE HOME LOANS, INC.
AND
PRESIDENT AND CHAIRMAN OF THE BOARD
COUNTRYWIDE CREDIT INDUSTRIES, INC.
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
JACOBSON ONE WORLD TRADE CENTER
ONE NEW YORK PLAZA NEW YORK, NEW YORK 10048
NEW YORK, NEW YORK 10004 (212) 839-5300
(212) 859-8000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement, as
determined by market conditions.
--------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
(Continued on next page)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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, Dated May 15, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus Dated , 1996)
U.S. $1,000,000,000
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES E
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST UNCONDITIONALLY GUARANTEED BY
[LOGO]COUNTRYWIDE/SM/
---------------------
CREDIT INDUSTRIES, INC.
--------------
Countrywide Home Loans, Inc. (formerly known as Countrywide Funding
Corporation) ("CHL") may offer from time to time its Medium-Term Notes, Series
E (the "Notes"), each of which will be unconditionally guaranteed as to payment
of principal, premium, if any, and interest by Countrywide Credit Industries,
Inc. (the "Guarantor" or "CCI"). Each Note will mature nine months or more from
the date of issue, as selected by the purchaser and agreed to by CHL and may be
subject to redemption or repayment prior to maturity. The aggregate initial
offering price of the Notes to be offered will not exceed U.S. $1,000,000,000
or its equivalent in foreign currencies or currency units. The Notes may be
denominated in U.S. dollars or in such foreign currencies or currency units
(the "Specified Currency") as may be designated by CHL.
Unless otherwise specified in the applicable Pricing Supplement, each Note
will bear interest at a fixed rate (a "Fixed Rate Note"), which may be zero in
the case of certain Notes issued at a price representing a substantial discount
from the principal amount payable upon maturity, or at a floating rate (a
"Floating Rate Note"). Unless otherwise specified in the applicable Pricing
Supplement, the Interest Payment Dates for each Fixed Rate Note will be January
15 and July 15 of each year and at maturity or such date of earlier redemption
or repayment. The Interest Payment Dates for each Floating Rate Note will be
established on the date of issue of such Note and will be set forth in the
applicable Pricing Supplement. Interest rates and interest rate formulas are
subject to change by CHL, but no change will affect any Note already issued or
as to which an offer to purchase has been accepted by CHL.
Each Note will be represented by either a global security registered in the
name of a nominee of The Depository Trust Company, as depositary (a "Book-Entry
Note"), or a certificate issued in definitive form (a "Certificated Note"), as
set forth in the applicable Pricing Supplement. Beneficial interests in Book-
Entry Notes will be shown on, and transfers thereof will be effected only
through, records maintained by the Depositary (with respect to interests of its
participants) and by its participants (with respect to beneficial owners'
interests). Book-Entry Notes will not be issuable as Certificated Notes, except
under the limited circumstances described herein.
The Specified Currency, any applicable interest rate or interest rate
formula, the Stated Maturity Date, the Interest Payment Dates, if any, and any
redemption or repayment provisions for each Note and whether such Note will be
a Book-Entry Note or a Certificated Note will be established at the time of
issuance of such Note and set forth therein and in the applicable Pricing
Supplement.
The indenture pursuant to which the Notes will be issued does not contain any
restrictions on the ability of the Guarantor, CHL or any of their respective
affiliates to incur additional indebtedness (secured or unsecured). As of
February 29, 1996, the Guarantor did not have any secured indebtedness
outstanding, and CHL had $990,275,609 aggregate principal amount of secured
indebtedness outstanding, all of which was short-term indebtedness. As of such
date, CHL had $4,907,242,373 aggregate principal amount of unsecured and
unsubordinated indebtedness outstanding, which indebtedness ranked pari passu
in right of payment with CHL's other unsecured and unsubordinated indebtedness
and will rank pari passu in right of payment with the Notes. See "Description
of Debt Securities and Guarantees--General" in, and Note D to CCI's
Consolidated Financial Statements incorporated by reference into, the
accompanying Prospectus.
FOR A DESCRIPTION OF CERTAIN RISK FACTORS RELATING TO INVESTMENTS IN THE
NOTES, SEE "RISK FACTORS" ON PAGE S-2 OF THIS PROSPECTUS SUPPLEMENT.
----------
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, THE
PROSPECTUS, OR ANY SUPPLEMENT HERETO. 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Agents' Commission or Proceeds to
Public(1)(2) Discount(2)(3) Company(2)(3)(4)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................ % %- % %- %
- ------------------------------------------------------------------------------------------------
Total................... U.S. $1,000,000,000 U.S. $ -$ U.S. $ -$
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Unless otherwise specified in the applicable Pricing Supplement, the Price
to Public will be 100% of the principal amount of the Notes being issued.
(2) Or the equivalent thereof in a Specified Currency other than U.S. dollars.
(3) CHL will pay to Lehman Brothers, Lehman Brothers Inc., Goldman, Sachs &
Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan Securities Inc., NationsBanc Capital Markets,
Inc. and Salomon Brothers Inc (each, an "Agent," and collectively, the
"Agents") a commission, which may be in the form of a discount, ranging
from % to % of the principal amount of any Note (or, in the case of
any Original Issue Discount Security (as defined herein), the price to
public), depending on its maturity, sold through such Agent, except that
the commission payable by CHL to the Agents with respect to Notes with
maturities of greater than 30 years will be negotiated at the time of the
sale thereof. Unless otherwise specified in the applicable Pricing
Supplement, any Note sold to an Agent as principal will be purchased by
such Agent at a price equal to 100% of the principal amount thereof less a
percentage of the principal amount equal to the commission applicable to an
agency sale of a Note of identical maturity and may be resold by such Agent
to one or more investors or other purchasers at varying prices related to
prevailing market prices at the time of such resale, as determined by such
Agent, or if so agreed, at a fixed public offering price. CHL has agreed to
indemnify the Agents against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
(4) Before deducting other expenses payable by CHL estimated at U.S. $1,175,000.
----------
The Notes are being offered on a continuous basis by CHL through the Agents,
each of which has agreed to use its reasonable best efforts to solicit
purchases of the Notes. CHL also may sell Notes to any Agent acting as
principal for resale to one or more investors or other purchasers or may sell
Notes directly to investors on its own behalf. Unless otherwise specified in
the applicable Pricing Supplement, the Notes will not be listed on any
securities exchange, and there can be no assurance that the Notes offered by
this Prospectus Supplement and the accompanying Prospectus will be sold or that
there will be a secondary market for the Notes. CHL reserves the right to
withdraw, cancel or modify the offer made hereby without notice. CHL and the
Agents may reject any offer to purchase Notes in whole or in part. See "Plan of
Distribution of Notes" herein.
----------
LEHMAN BROTHERS
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
, 1996
<PAGE>
IN CONNECTION WITH THE DISTRIBUTION OF NOTES UNDERWRITTEN BY AN AGENT ACTING
AS PRINCIPAL ON A FIXED PRICE BASIS, SUCH AGENT MAY OVER-ALLOT OR EFFECT
TRANSACTIONS IN THE NOTES WITH A VIEW TO STABILIZING OR MAINTAINING THE MARKET
PRICE OF THE NOTES AT LEVELS OTHER THAN THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF
INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT.
RISK FACTORS
INDEX RISK
An investment in the Notes indexed, as to principal, premium, if any, or
interest, to one or more currencies or currency units (including exchange rates
and swap indices between currencies or currency units), commodities, interest
rates or other indices entails significant risks that are not associated with
similar investments in a conventional fixed rate or floating rate debt
security. Such risks include, without limitation, the possibility that such
index or indices may be subject to significant changes, that the resulting
interest rate will be less than that payable on a conventional fixed rate or
floating rate debt security issued at the same time, that the repayment of
principal or premium, if any, can occur at a time other than that expected by
the investor, and that the investor could lose all or a substantial portion of
principal or premium, if any, payable on the Maturity Date (as defined below).
Such risks depend on a number of interrelated factors, including economic,
financial and political events, over which CHL and the Guarantor have no
control. Additionally, if the formula used to determine the amount of
principal, premium, if any, or interest payable with respect to such Notes
contains a multiple or leverage factor, the effect of any change in the
applicable index or indices will be magnified. In recent years, values of
certain indices have been highly volatile and such volatility may be expected
to continue in the future. Fluctuations in the value of any particular index
that have occurred in the past are not necessarily indicative, however, of
fluctuations in such value that may occur in the future. The secondary market
for such Notes will be affected by a number of factors independent of the
creditworthiness of CHL and the value of the applicable index or indices,
including the complexity and volatility of such index or indices, the method of
calculating the principal, premium, if any, and interest in respect of such
Notes, the time remaining to the maturity of such Notes, the outstanding amount
of such Notes and market interest rates generally. The credit ratings assigned
to CHL's medium-term note program may not reflect the potential impact of all
risks related to structure and other factors on the market value of the Notes.
Accordingly, prospective investors should consult their own financial and legal
advisors as to the risks entailed by an investment in the Notes and the
suitability of such Notes in light of their particular circumstances.
FOREIGN CURRENCY RISKS
Governing Laws and Judgments. The Notes will be governed by and construed in
accordance with the laws of the State of New York. Courts in the United States
have not customarily rendered judgments for money damages denominated in any
currency or currency unit other than U.S. dollars. The Judiciary Law of the
State of New York provides, however, that an action based upon an obligation
denominated in a currency
or currency unit other than U.S. dollars will be rendered in the foreign
currency or currency unit of the underlying obligation and converted into U.S.
dollars at a rate of exchange prevailing on the date of the entry of the
judgment or decree.
Exchange Rates and Exchange Controls. An investment in Notes that are
denominated in a foreign currency or currency unit entails significant risks
that are not associated with a similar investment in a security denominated in
U.S. dollars. Such risks include, without limitation, the possibility of
significant changes in rates of exchange between the U.S. dollar and the
various foreign currencies or currency units and the possibility of the
imposition or modification of exchange controls by either the United States or
S-2
<PAGE>
foreign governments. Such risks generally depend on economic and political
events and on the supply of and demand for the relevant currencies, factors
over which CHL and the Guarantor have no control. In recent years, rates of
exchange between the U.S. dollar and foreign currencies and currency units
have been highly volatile and such volatility may be expected in the future.
Fluctuations in any particular exchange rate that have occurred in the past
are not necessarily indicative, however, of fluctuations in such rate that may
occur during the term of any Note. Depreciation of the applicable foreign
currency or currency unit against the U.S. dollar would result in a decrease
in the effective yield of such Note, in the value of the principal and
premium, if any, payable on the Maturity Date of such Note and, generally, in
the market value of such Note.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL OF THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED AND/OR PAYABLE IN A
FOREIGN CURRENCY OR CURRENCY UNIT, AND CHL AND THE GUARANTOR DISCLAIM ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE INVESTORS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME
TO TIME. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED AND/OR
PAYABLE IN CURRENCIES OR CURRENCY UNITS OTHER THAN U.S. DOLLARS. SUCH NOTES
ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH
RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in a Specified Currency other than U.S. dollars or ECU (as defined
below) will not be sold in, or to residents of, the country of the Specified
Currency in which particular Notes are denominated.
The information set forth in this Prospectus Supplement is directed to
prospective investors who are United States residents, and CHL and the
Guarantor disclaim any responsibility to advise prospective investors who are
residents of countries other than the United States with respect to any
matters that may affect the purchase, holding or receipt of payments of
principal of, or premium, if any, or interest on, the Notes. Such persons
should consult their own advisors with regard to such matters.
Governments or monetary authorities have imposed from time to time, and may
in the future impose, exchange controls which could affect exchange rates as
well as the availability of the Specified Currency on the applicable Interest
Payment Date or Maturity Date of a Note. Even if there are no actual exchange
controls, it is possible that on such Interest Payment Date or Maturity Date
the Specified Currency for such Note would not be available to CHL due to
circumstances beyond the control of CHL. In that event, CHL will make the
required payments in U.S. dollars on the basis of the Exchange Rate (as
defined below) two Business Days (as defined below) prior to the Interest
Payment Date or the Maturity Date, as the case may be (or, if no rate is
quoted for such Specified Currency on such date, the last date such rate is
quoted). See "Description of Notes--Payment Currency."
Currency Exchange. Purchasers are required to pay for the Notes in the
currency or currency unit in which such Notes are denominated (the "Specified
Currency"), unless otherwise provided in the applicable Pricing Supplement.
Currently, there are limited facilities in the United States for conversion of
U.S. dollars into foreign currencies or currency units and vice versa, and
many banks do not offer non-U.S. dollar denominated checking or savings
account facilities in the United States. Upon request, the Agents will arrange
for the conversion of U.S. dollars into a Specified Currency other than U.S.
dollars to enable purchasers to pay for the Notes. Such request must be made
on the trade date. Each such conversion will be made by the Agents on such
terms and subject to such conditions, limitations and charges as the Agents
may from time to time establish in accordance with their regular foreign
exchange practice. All costs of exchange will be borne by the investors in the
Notes.
References herein to "U.S. dollars," "dollar," "U.S. $" or "$" are to the
currency of the United States of America.
S-3
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
supplements, and to the extent inconsistent therewith, replaces, the
description of the general terms and provisions of the Debt Securities set
forth in the accompanying Prospectus, to which description reference is hereby
made. Unless otherwise specified in a Pricing Supplement, the terms of the
Notes will be as set forth below.
GENERAL
The Notes are to be issued as a series of Debt Securities limited to U.S.
$1,000,000,000, or its equivalent in one or more foreign currencies or currency
units, aggregate initial offering price under an Indenture dated as of January
1, 1992, as amended, supplemented or modified from time to time, including
Supplemental Indenture No. l thereto dated as of June 15, 1995 (collectively,
the "Indenture"), among CHL, the Guarantor and The Bank of New York, as trustee
(the "Trustee"), which is described more fully under "Description of Debt
Securities and Guarantees" in the accompanying Prospectus. The statements
herein concerning the Notes and the Indenture do not purport to be complete and
are qualified in their entirety by reference to the provisions of the
Indenture, including the definitions of certain terms used herein without
definition.
The Notes will be offered on a continuous basis and will mature on any day
nine months or more from their dates of issue, as specified in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, interest-bearing Notes will be either Fixed Rate Notes or Floating
Rate Notes, as specified in the applicable Pricing Supplement. Notes also may
be issued that do not bear any interest currently or that bear interest at a
below market rate.
Each Note will be represented by either a global security registered in the
name of a nominee of The Depository Trust Company, New York, New York ("DTC"),
as depositary (a "Book-Entry Note"), or a certificate issued in definitive form
(a "Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in Book-Entry Notes will be shown on, and transfers
thereof will be effected only through, records maintained by DTC (with respect
to interests of its Participants (as defined below)) and by its Participants
(with respect to interests of beneficial owners (as defined below)). Book-Entry
Notes will not be issuable as Certificated Notes, except under the limited
circumstances described herein.
Unless otherwise specified in the applicable Pricing Supplement, the minimum
denomination of Notes will be $1,000 or the equivalent thereof in the Specified
Currency (if other than U.S. dollars), and integral multiples of $1,000 in
excess thereof or the equivalent thereof in such Specified Currency.
Interest rates offered by CHL with respect to the Notes may differ depending
upon, among other things, the principal amount of the Notes the applicable
Agent expects to sell to an investor in a single transaction and the price at
which such Agent purchases such Notes from CHL (or, in connection with agent
sales, such Agent's commission). Notes with similar terms but different
interest rates may be offered concurrently to different investors. Notes with
different variable terms also may be offered concurrently to different
investors.
Unless otherwise specified herein or in the applicable Pricing Supplement,
"Exchange Rate" means, with respect to a Specified Currency (other than
European Currency Units ("ECU")), the noon Dollar buying rate for such
Specified Currency for cable transfers quoted by the Exchange Rate Agent (as
specified in the applicable Pricing Supplement) in The City of New York on the
Record Date or Special Record Date (each as defined below) or the fifteenth day
immediately preceding the Maturity Date or on such other date provided in the
applicable Note or in the Indenture, as the case may be, as certified for
customs purposes by the Federal Reserve Bank of New York. With respect to ECU,
"Exchange Rate" means the exchange rate between U.S. dollars and ECU reported
by the Council of the European Communities on the applicable Record Date or
Special Record Date with respect to an Interest Payment Date or the fifteenth
day immediately preceding the Maturity Date or on such other date as provided
in the applicable Note or in the Indenture, as the case may be.
S-4
<PAGE>
Certificated Notes may be presented for registration of transfer or exchange
at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The
City of New York. Registration of transfers or exchanges of Book-Entry Notes
may be effected only through a participating member of the Depositary (as
defined below).
The Notes will constitute unsecured and unsubordinated indebtedness of CHL
and will rank pari passu in right of payment with CHL's other unsecured and
unsubordinated indebtedness. As of February 29, 1996, the Guarantor did not
have any secured indebtedness outstanding, and CHL had $990,275,609 aggregate
principal amount of secured indebtedness outstanding, all of which was short-
term indebtedness. As of such date, CHL had $4,907,242,373 aggregate principal
amount of unsecured and unsubordinated indebtedness outstanding, which
indebtedness ranked pari passu in right of payment with CHL's other unsecured
and unsubordinated indebtedness and will rank pari passu in right of payment
with the Notes. See "Description of Debt Securities and Guarantees--General"
and "--Guarantees" in the accompanying Prospectus. A substantial portion of the
assets of CHL may be pledged under various credit agreements among CHL and
various lending institutions. See Note D to CCI's Consolidated Financial
Statements incorporated by reference into the accompanying Prospectus.
The Indenture does not contain any provisions that would limit the ability of
CHL, the Guarantor or any of their respective affiliates to incur indebtedness
(secured or unsecured) or that would afford Holders of the Notes protection in
the event of a highly leveraged transaction, restructuring, change in control,
merger or similar transaction involving CHL or the Guarantor that may adversely
affect Holders of the Notes.
If so specified in the applicable Pricing Supplement, the Notes will be
redeemable at the option of CHL or repayable at the option of the Holder prior
to maturity. See "--Redemption and Repayment" below. The Notes will not be
subject to any sinking fund.
"Business Day" means (A) any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law, regulation or executive order to close in (i) New York, New
York or Los Angeles, California, or (ii) if the Specified Currency specified in
the applicable Pricing Supplement is other than U.S. dollars, the Principal
Financial Center (as defined below), and (B) with respect to Floating Rate
Notes as to which LIBOR (as defined below) is an applicable Base Rate, a London
Banking Day (as defined below). "Principal Financial Center" means the capital
city of the country issuing the related Specified Currency, except that with
respect to Australian dollars, Deutsche marks, Dutch guilders, Italian lire,
Swiss francs and ECU, the "Principal Financial Center" shall be Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. "London
Banking Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
The "Maturity Date" means the earlier of the date on which the principal of a
Note is redeemed (the "Redemption Date") or repaid (the "Repayment Date") or
the date on which the Note will mature (the "Stated Maturity Date").
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on Floating
Rate Notes will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from such calculation
on Floating Rate Notes will be rounded to the nearest cent (with one-half cent
being rounded upward).
The Pricing Supplement relating to each Note will describe the following
terms: (1) the Specified Currency; (2) whether such Note is a Fixed Rate Note,
a Floating Rate Note or such other Note as is specified in such Pricing
Supplement; (3) if other than 100%, the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Note will be issued to the
public (the "Issue Price"); (4) the trade date; (5) the date on which such Note
will be issued (the "Issue Date"); (6) the Stated Maturity Date and whether the
Stated Maturity Date may be extended by CHL, and if so, the Extension Periods
and Final
S-5
<PAGE>
Maturity Date (each as defined below); (7) if such Note is a Fixed Rate Note,
the rate per annum at which such Note will bear interest, if any, and the
Interest Payment Dates (as defined below) and whether such rate may be reset by
CHL prior to the Stated Maturity Date and, if so, the date(s) and basis or
formula therefor; (8) if such Note is a Floating Rate Note, whether it is a
"Floating Rate/Fixed Rate Note" and, if so, the Fixed Rate Commencement Date
and Fixed Interest Rate (each as defined below), as well as the Base Rate, the
Initial Interest Rate, the Interest Determination Dates, the Interest Reset
Dates, the Interest Payment Dates, the Index Maturity, the Maximum Interest
Rate and/or the Minimum Interest Rate, if any, and the Spread and/or Spread
Multiplier, if any (each as defined below), and any other terms relating to the
particular method of calculating the interest rate for such Note, and whether
the Spread and/or Spread Multiplier may be reset by CHL prior to the Stated
Maturity Date and, if so, the date(s) and basis or formula therefor; (9)
whether such Note may be redeemed at the option of CHL, or repaid at the option
of the Holder, prior to maturity, and if so, the earliest date of redemption
(the "Initial Redemption Date") and optional date(s) of repayment (each, an
"Optional Repayment Date") and the other provisions relating to such redemption
or repayment; (10) whether such Note will be issued initially as a Book-Entry
Note or a Certificated Note; and (11) any other terms of such Note not
inconsistent with the provisions of the Indenture.
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
Principal, premium, if any, and interest will be paid by CHL in the Specified
Currency. If and as specified in the applicable Pricing Supplement, at the
request of a Holder of a Note payable in a Specified Currency other than U.S.
dollars, payments of principal, premium, if any, and interest in respect of
such Note will be paid in U.S. dollars. Under such circumstances, CHL will be
required to tender payment in U.S. dollars at the Exchange Rate, and any costs
associated with such conversion would be borne by such Holder through deduction
from such payments. Such Holder may elect to receive payments in U.S. dollars
by delivering a written request to the Trustee not later than the close of
business on the Record Date immediately preceding the Interest Payment Date or
the fifteenth day immediately preceding the Maturity Date, as the case may be.
Such election will remain in effect until revoked by written notice from such
Holder to the Trustee, but written notice of any such revocation must be
received by the Trustee not later than the close of business on the Record Date
immediately preceding the Interest Payment Date or the fifteenth day
immediately preceding the Maturity Date, as the case may be. Upon request, the
Trustee will mail a copy of a form of request to any Holder.
Unless otherwise specified in the applicable Pricing Supplement, interest on
the certificated Notes due on any Interest Payment Date other than the Maturity
Date will be paid, except as provided below, by mailing a check in the
Specified Currency (from an account at a bank located outside of the United
States if such check is payable in a Specified Currency other than U.S.
dollars) to the Holder at the address of such Holder appearing on the Security
Register on the applicable Record Date. Unless otherwise specified in the
applicable Pricing Supplement, the first payment of interest on any Note
originally issued between a Record Date and an Interest Payment Date will be
made on the Interest Payment Date following the next Record Date to the Holder
on such next Record Date. Notwithstanding the foregoing, on any Interest
Payment Date other than the Maturity Date, a Holder of U.S. $10,000,000 (or the
equivalent thereof in a Specified Currency other than U.S. dollars) or more in
aggregate principal amount of Notes (whether or not having identical terms and
provisions) shall be entitled: (i) if the Specified Currency is U.S. dollars,
to receive such payment by wire transfer of immediately available funds to an
account maintained by the payee with a bank located in the United States, but
only if appropriate wire transfer instructions have been received in writing by
the Trustee not later than the Record Date immediately preceding such Interest
Payment Date, and (ii) if the Specified Currency is other than U.S. dollars, to
receive such payment by wire transfer of immediately available funds to an
account maintained by the payee with a bank located in a jurisdiction in which
payment in such Specified Currency is then lawful. CHL will pay any
administrative costs imposed by banks in connection with making payments by
wire transfer, but any tax, assessment or other governmental charge imposed
upon payments will be borne by the Holders of the Notes in respect of which
payments are made. Beneficial owners of Global Notes (as defined below) will be
paid in accordance with the procedures of the Depositary and its Participants
in effect from time to time as described under "--Book-Entry Notes" below.
S-6
<PAGE>
Unless otherwise specified in the applicable Pricing Supplement, payments of
principal, premium, if any, and interest on the Maturity Date will be made in
immediately available funds in the Specified Currency upon presentation and
surrender of Notes at the Corporate Trust Office of the Trustee. In the case of
such payments in a Specified Currency other than U.S. dollars, Notes shall be
presented and surrendered to the Trustee in time for the Trustee to make such
payments in accordance with its normal procedures.
If any Interest Payment Date other than the Maturity Date for any Floating
Rate Note would otherwise fall on a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next Business Day, except that
if interest thereon is determined by reference to LIBOR and such next Business
Day falls in the next calendar month, such Interest Payment Date shall be the
immediately preceding Business Day. If the Maturity Date for any Fixed Rate
Note or Floating Rate Note or the Interest Payment Date for any Fixed Rate Note
falls on a day which is not a Business Day, payment of principal, premium, if
any, and interest with respect to such Note will be made on the next Business
Day with the same force and effect as if made on such date, and no interest on
such payment will accrue to such next Business Day.
Any interest not punctually paid or duly provided for with respect to a Note
("Defaulted Interest") will forthwith cease to be payable to the Holder thereof
on the applicable Record Date and may either be paid to the person in whose
name such Note is registered at the close of business on a special record date
(the "Special Record Date") for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to the Holder of such Note
not less than ten days prior to such Special Record Date, or may be paid at any
time in any other lawful manner, all as more completely provided in the
Indenture.
Unless otherwise specified in the applicable Pricing Supplement, the "Record
Date" with respect to any Interest Payment Date for Floating Rate Notes shall
be the fifteenth day immediately preceding such Interest Payment Date, and for
Fixed Rate Notes shall be the December 31 or June 30 immediately preceding such
Interest Payment Date, in each case whether or not such date shall be a
Business Day.
PAYMENT CURRENCY
If any payment of principal, premium, if any, or interest in respect of any
Note is to be made in a Specified Currency other than U.S. dollars and such
Specified Currency is not available to CHL for making such payment due to the
imposition of exchange controls or other circumstances beyond the control of
CHL, CHL will be entitled to satisfy its obligations to the Holder of such Note
by making such payment in U.S. dollars on the basis of the Exchange Rate (as
defined below) two Business Days prior to the Interest Payment Date or the
Maturity Date, as the case may be (or, if no rate is quoted for such Specified
Currency on such date, the last date such Exchange Rate is quoted). Any payment
made under such circumstances in U.S. dollars where the required payment is in
a Specified Currency other than U.S. dollars will not constitute an Event of
Default under the Indenture. For purposes of this section, the "Exchange Rate"
for a foreign currency or ECU will be the noon Dollar selling rate for such
foreign currency or ECU for cable transfers quoted by the Exchange Rate Agent
in The City of New York, as certified for customs purposes by the Federal
Reserve Bank of New York.
If payment on any Note is required to be made in ECU and ECU is unavailable
due to the imposition of exchange controls or other circumstances beyond the
control of CHL, or is no longer used in the European Monetary System, all
payments due on that Interest Payment Date or Maturity Date with respect to
such Note shall be made in U.S. dollars. The amount so payable on any date in
ECU shall be converted into U.S. dollars, at a rate determined by the Exchange
Rate Agent as of the second Business Day prior to the date on which such
payment is due on the following basis. The component currencies of the ECU for
this purpose (the "Components") shall be the currency amounts which were
components of the ECU as of the last date on which the ECU was used in the
European Monetary System. The equivalent of the ECU in U.S. dollars shall be
calculated by aggregating the U.S. dollar equivalents of the Components. The
U.S. dollar equivalent of each of the Components shall be determined by the
Exchange Rate Agent on the basis of the most recently available Exchange Rate.
S-7
<PAGE>
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into
two or more currencies, the amount of that currency as a Component shall be
replaced by amounts of such two or more currencies (in appropriate
proportions), the sum of which shall be equal to the amount of the former
component currency.
All determinations referred to above made by an Exchange Rate Agent shall be
at its sole discretion (except to the extent expressly provided that any
determination is subject to approval) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder of such Note and
such Exchange Rate Agent shall have no liability therefor.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Issue Date at the rate per
annum stated on the face thereof until the principal amount thereof is paid or
made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, interest on each Fixed Rate Note will be payable semi-
annually in arrears on each January 15 and July 15 (each, an "Interest Payment
Date") and on the Maturity Date. Each payment of interest shall include
interest accrued from and including the Issue Date or the most recent Interest
Payment Date to which interest has been paid or duly provided for, as the case
may be, to, but excluding, the applicable Interest Payment Date or the Maturity
Date, as the case may be (each, an "Interest Period"). Unless otherwise
specified in the applicable Pricing Supplement, interest on the Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest at a rate determined by reference
to an interest rate basis (each, a "Base Rate"), which may be adjusted by a
Spread and/or Spread Multiplier. The applicable Pricing Supplement will
designate one or more of the following Base Rates as applicable to each
Floating Rate Note: (a) the Commercial Paper Rate (as defined below), (b)
LIBOR, (c) the Certificate of Deposit Rate (as defined below), (d) the Federal
Funds Rate (as defined below), (e) the Prime Rate (as defined below), (f) the
Treasury Rate (as defined below), (g) the CMT Rate (as defined below), (h) the
11th District Cost of Funds Rate (as defined below) or (i) such other interest
rate basis or formula as is set forth in such Pricing Supplement and in such
Floating Rate Note. The "Index Maturity" for any Floating Rate Note is the
period of maturity of the instrument or obligation from which the Base Rate is
calculated.
Unless otherwise specified in the applicable Pricing Supplement, the interest
rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate, or the lowest, highest or average of two or more specified
Base Rates, (a) plus or minus the Spread, if any, and/or (b) multiplied by the
Spread Multiplier, if any. The "Spread" is the number of basis points (one
basis point equals one-hundredth of a percentage point) specified in the
applicable Pricing Supplement as being applicable to the interest rate for such
Floating Rate Note, and the "Spread Multiplier" is the percentage specified in
the applicable Pricing Supplement as being applicable to the interest rate for
such Floating Rate Note.
If a Floating Rate Note is designated as a "Floating Rate/Fixed Rate Note,"
unless otherwise specified in the applicable Pricing Supplement, the interest
rate will be calculated in the same manner as any other Floating Rate Note
until a designated date when the interest rate will become fixed (the "Fixed
Rate Commencement Date"). The interest rate in effect for the period commencing
on the Fixed Rate Commencement Date and continuing until the Maturity Date will
be the rate per annum specified in the applicable Pricing Supplement as the
"Fixed Interest Rate" or, if no Fixed Interest Rate is specified, the interest
rate in effect on the day immediately preceding the Fixed Rate Commencement
Date. Unless
S-8
<PAGE>
otherwise specified herein or in the applicable Pricing Supplement, the Fixed
Rate Commencement Date shall also constitute an Interest Payment Date for
purposes of calculating and paying interest. Unless otherwise specified herein
or in the applicable Pricing Supplement, the Floating Rate/Fixed Rate Note
shall be treated as a Floating Rate Note until the Fixed Rate Commencement Date
and as a Fixed Rate Note from the Fixed Rate Commencement Date and thereafter.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or
ceiling, on the rate of interest which may accrue during any Interest Period
("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the rate
of interest which may accrue during any Interest Period ("Minimum Interest
Rate"). In addition to any Maximum Interest Rate which may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on a
Floating Rate Note will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by United States law of general
application.
Except as provided below, the rate of interest on each Floating Rate Note
will be reset daily, weekly, monthly, quarterly, semi-annually or annually, as
specified in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement, the "Interest Reset Date" will be, in the
case of Floating Rate Notes which reset (a) daily, each Business Day; (b)
weekly, the Wednesday of each week (with the exception of weekly reset Floating
Rate Notes as to which the Treasury Rate is an applicable Base Rate, which will
reset the Tuesday of each week, except as specified below); (c) monthly, the
third Wednesday of each month (with the exception of monthly reset Floating
Rate Notes as to which the 11th District Cost of Funds Rate is an applicable
Base Rate, which will reset on the first calendar day of each month); (d)
quarterly, the third Wednesday of March, June, September and December; (e)
semi-annually, the third Wednesday of the two months specified in the
applicable Pricing Supplement; and (f) annually, the third Wednesday of the
month specified in the applicable Pricing Supplement. If an Interest Reset Date
for any Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Reset Date shall be postponed to the next Business Day, except
that if interest thereon is determined by reference to LIBOR and such next
Business Day falls in the next calendar month, such Interest Reset Date shall
be the immediately preceding Business Day.
The interest rate in effect on each day will be (i) if such day is an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date (as defined below) immediately preceding such Interest Reset
Date or (ii) if such day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately preceding the most
recent Interest Reset Date. The "Interest Determination Date" means the
Commercial Paper Rate Determination Date, the LIBOR Determination Date, the CD
Rate Determination Date, the Federal Funds Rate Determination Date, the Prime
Rate Determination Date, the Treasury Rate Determination Date, the CMT Rate
Determination Date or the 11th District Rate Determination Date (each as
defined below), as the case may be. If interest on a Floating Rate Note is
determined by reference to two or more Base Rates, the "Interest Determination
Date" means the most recent Business Day which is at least two Business Days
prior to the applicable Interest Reset Date on which each Base Rate shall be
determinable. Each Base Rate shall be determined and compared as of such date,
and the applicable interest rate shall take effect on the related Interest
Reset Date.
Interest on Floating Rate Notes will be payable on the Interest Payment Dates
specified in the applicable Pricing Supplement (each, an "Interest Payment
Date") and on the Maturity Date. Unless otherwise specified in the applicable
Pricing Supplement, interest payments shall be the amount of interest accrued
from and including the most recent Interest Payment Date to which interest has
been paid or duly provided for, or, if no interest has been paid or duly
provided for, from and including the Issue Date to but excluding the applicable
Interest Payment Date or the Maturity Date, as the case may be (each, an
"Interest Period").
With respect to a Floating Rate Note, accrued interest shall be calculated by
multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factor calculated for each day in the Interest Period for which
accrued interest is being calculated. The interest factor for each such day is
computed by dividing the interest rate
S-9
<PAGE>
applicable to such day by 360, if an applicable Base Rate is the Commercial
Paper Rate, Certificate of Deposit Rate, Federal Funds Rate, Prime Rate, 11th
District Cost of Funds Rate or LIBOR, or by the actual number of days in the
year, if an applicable Base Rate is the Treasury Rate or CMT Rate. If more than
one Base Rate is applicable to a Floating Rate Note, the interest factor will
be calculated in the same manner as if only the Base Rate specified for such
purpose in the applicable Pricing Supplement applied.
Unless otherwise specified in the applicable Pricing Supplement, The Bank of
New York will be the calculation agent (the "Calculation Agent") with respect
to the Floating Rate Notes. Upon the request of the Holder of any Floating Rate
Note, the Calculation Agent will provide the interest rate then in effect and,
if determined, the interest rate which will become effective on the next
Interest Reset Date with respect to such Floating Rate Note. The "Calculation
Date," if applicable, pertaining to a Floating Rate Note will be the earlier of
(i) the 10th day after the Interest Determination Date pertaining to a Base
Rate or, if such day is not a Business Day, the next Business Day or (ii) the
Business Day immediately preceding the applicable Interest Payment Date or the
Maturity Date, as the case may be.
The interest rate in effect with respect to a Floating Rate Note from the
Issue Date to the first Interest Reset Date (the "Initial Interest Rate") will
be specified in the applicable Pricing Supplement. The interest rate for each
subsequent Interest Reset Date, except in the case of a Floating Rate/Fixed
Rate Note for the period subsequent to the Fixed Rate Commencement Date, will
be determined by the Calculation Agent as follows.
COMMERCIAL PAPER RATE
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each applicable Interest Reset Date will be
determined by the Calculation Agent as of the second Business Day prior to such
Interest Reset Date (a "Commercial Paper Rate Determination Date") and will be
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates," or any successor
publication ("H.15(519)"), under the heading "Commercial Paper." In the event
that such rate is not published prior to 3:00 P.M., New York City time, on the
Calculation Date, then the Commercial Paper Rate will be the Money Market Yield
on such Commercial Paper Rate Determination Date of the rate for commercial
paper of the specified Index Maturity as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 P.M. Quotations
for U.S. Governmental Securities" ("Composite Quotations") under the heading
"Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation
Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate will be the Money Market Yield of
the arithmetic mean of the offered rates as of 11:00 A.M., New York City time,
on such Commercial Paper Rate Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent for
commercial paper of the specified Index Maturity, placed for an industrial
issuer whose bond rating is "AA," or the equivalent, from a nationally
recognized statistical rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting offered rates as
mentioned in this sentence, the Commercial Paper Rate for such Interest Reset
Date will be the Commercial Paper Rate in effect on such Commercial Paper Rate
Determination Date.
"Money Market Yield" will be a yield (expressed as a percentage) calculated
in accordance with the following formula:
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the Interest Period for which interest is being
calculated corresponding to the Index Maturity specified in the applicable
Pricing Supplement.
S-10
<PAGE>
LIBOR
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for
each applicable Interest Reset Date will be determined by the Calculation Agent
as follows:
(i) If "LIBOR Reuters" is specified in the applicable Pricing Supplement,
on the second London Banking Day prior to the applicable Interest Reset
Date (a "LIBOR Determination Date"), the Calculation Agent will determine
LIBOR as the arithmetic mean of the offered rates for deposits in U.S.
dollars for the period of the Index Maturity which appear on the "Reuters
Screen LIBO Page" at approximately 11:00 A.M., London time, on such LIBOR
Determination Date. "Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuter Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks).
If "LIBOR Telerate" is specified in the applicable Pricing Supplement or
if no other method is specified in such Pricing Supplement as the method
for determining LIBOR, on the LIBOR Determination Date, the Calculation
Agent will determine LIBOR as the rate for deposits in U.S. dollars for the
period of the Index Maturity which appears on "Telerate Page 3750" at
approximately 11:00 A.M., London time, on such LIBOR Determination Date.
"Telerate Page 3750" means the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace such page on that
service for the purpose of displaying London interbank offered rates of
major banks).
(ii) If LIBOR Reuters is specified in the applicable Pricing Supplement
and fewer than two offered rates for the applicable Index Maturity appear
on the Reuters Screen LIBO Page or if LIBOR Telerate is applicable for
determining LIBOR and no rate appears on Telerate Page 3750, as applicable,
the Calculation Agent will request the principal London offices of each of
four major banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in U.S. dollars for the period of the Index Maturity
commencing on the second London Banking Day following such LIBOR
Determination Date to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Determination Date and
in a principal amount equal to an amount of not less than U.S. $1,000,000
that is representative of a single transaction in such market at such time.
If at least two such quotations are provided, LIBOR will be the arithmetic
mean of such quotations. If fewer than two quotations are provided, LIBOR
in respect of that LIBOR Determination Date will be the arithmetic mean of
rates quoted by three major banks in The City of New York selected by the
Calculation Agent at approximately 11:00 A.M., New York City time, on such
LIBOR Determination Date for loans in U.S. dollars to leading European
banks, for the period of the Index Maturity designated in the applicable
Pricing Supplement commencing on the second London Banking Day following
such LIBOR Determination Date and in the principal amount equal to an
amount of not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if fewer
than three banks selected as aforesaid by the Calculation Agent are quoting
rates as mentioned in this sentence, LIBOR in effect for such Interest
Reset Date will be LIBOR in effect on such LIBOR Determination Date.
CERTIFICATE OF DEPOSIT RATE
Unless otherwise specified in the applicable Pricing Supplement, the
"Certificate of Deposit Rate" for each applicable Interest Reset Date will be
determined by the Calculation Agent as of the second Business Day prior to the
Interest Reset Date (a "CD Rate Determination Date") and will be the rate for
negotiable certificates of deposit having the Index Maturity designated in the
applicable Pricing Supplement as published in H.15(519) under the heading "CDs
(Secondary Market)." In the event that such rate is not published prior to 3:00
P.M., New York City time, on the Calculation Date pertaining to such CD Rate
Determination Date, then the Certificate of Deposit Rate will be the rate on
such CD Rate Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Certificates of Deposit." If by 3:00
P.M., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the
S-11
<PAGE>
Certificate of Deposit Rate will be calculated by the Calculation Agent and
will be the arithmetic mean of the secondary market offered rates as of 10:00
A.M., New York City time, on such CD Rate Determination Date of three leading
non-bank dealers (which may include one or more of the Agents or their
affiliates) in negotiable U.S. dollar certificates of deposit in The City of
New York selected by the Calculation Agent for negotiable certificates of
deposit of major United States money center banks (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index
Maturity designated in the applicable Pricing Supplement in a denomination of
U.S. $5,000,000; provided, however, that if the dealers selected as aforesaid
by such Calculation Agent are not quoting offered rates as mentioned in this
sentence, the Certificate of Deposit Rate for such Interest Reset Date will be
the Certificate of Deposit Rate in effect on such CD Rate Determination Date.
FEDERAL FUNDS RATE
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" for each applicable Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest Reset
Date (a "Federal Funds Rate Determination Date") and will be the rate on such
Federal Funds Rate Determination Date for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)." In the event that such
rate is not published prior to 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Federal Funds Rate Determination Date, the
Federal Funds Rate will be the rate on such Federal Funds Rate Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate." If by 3:00 P.M., New York City time, on such Calculation
Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the Federal Funds Rate will be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for transactions in
overnight Federal Funds arranged by three leading brokers of Federal Funds
transactions in The City of New York selected by the Calculation Agent as of
9:00 A.M., New York City time, on such Federal Funds Rate Determination Date;
provided, however, that if the three brokers selected as aforesaid by the
Calculation Agent are not quoting rates as mentioned in this sentence, the
Federal Funds Rate for such Interest Reset Date will be the Federal Funds Rate
in effect on such Federal Funds Rate Determination Date.
PRIME RATE
Unless otherwise specified in the applicable Pricing Supplement, the "Prime
Rate" for each applicable Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest Reset
Date (a "Prime Rate Determination Date") and will be the rate on such date as
such rate is published in H.15(519) under the heading "Bank Prime Loan." If
such rate is not published prior to 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Prime Rate Determination Date, then the
Calculation Agent shall determine the Prime Rate as the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the "Reuters
Screen USPRIME1 Page" as such bank's prime rate or base lending rate as in
effect for such Prime Rate Determination Date. "Reuters Screen USPRIME1 Page"
means the display designated as page "USPRIME1" on the Reuter Monitor Money
Rates Service (or such other page as may replace the USPRIME1 Page on that
service for the purpose of displaying prime rates or base lending rates of
major United States banks). If fewer than four such rates but more than one
such rate appear on the Reuters Screen USPRIME1 Page for such Prime Rate
Determination Date, the Calculation Agent shall determine the Prime Rate as the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by a 360-day year as of the close of business in The
City of New York on such Prime Rate Determination Date by three major money
center banks in The City of New York selected by the Calculation Agent. If
fewer than two such rates appear on the Reuters Screen USPRIME1 Page, the
Calculation Agent shall determine the Prime Rate as the arithmetic mean on the
basis of the prime rates quoted as of the close of business in The City of New
York on such Prime Rate Determination Date by three substitute banks or trust
companies that are organized and doing business under the laws of the United
States or any state thereof, have total equity capital of at least U.S.
$500,000,000 and are subject to supervision or examination by Federal or state
authorities; provided, however, that if fewer
S-12
<PAGE>
than three such substitute banks or trust companies are quoting prime rates as
mentioned in this sentence, the Prime Rate for such Interest Reset Date will be
the Prime Rate in effect on such Prime Rate Determination Date.
TREASURY RATE
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Treasury Rate Determination Date (as
defined below), the rate for the auction held on such Treasury Rate
Determination Date of direct obligations of the United States ("Treasury
bills") having the Index Maturity designated in the applicable Pricing
Supplement as published in H.15(519) under the heading "Treasury bills--auction
average (investment)" or, if not so published by 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Treasury Rate Determination Date,
the auction average rate (expressed as a bond equivalent, on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury bills having the Index
Maturity designated in the applicable Pricing Supplement are not published or
reported as provided above by 3:00 P.M., New York City time, on such
Calculation Date or if no such auction is held on such Treasury Rate
Determination Date, then the Treasury Rate will be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent for the issue of Treasury
bills with a remaining maturity closest to the Index Maturity designated in the
applicable Pricing Supplement; provided, however, that if the dealers selected
as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in
this sentence, the Treasury Rate for such Interest Reset Date will be the
Treasury Rate in effect on such Treasury Rate Determination Date.
The "Treasury Rate Determination Date" will be the day of the week in which
the applicable Interest Reset Date falls on which Treasury bills would normally
be auctioned. Treasury bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is normally
held on the following Tuesday; provided, however, that if such auction is held
on the preceding Friday, such Friday will be the Treasury Rate Determination
Date pertaining to the Interest Reset Date occurring in the next week; and,
provided, further that if an auction falls on an Interest Reset Date, then such
Interest Reset Date will be the first Business Day following such auction.
Treasury Rate Notes, like other Notes, are not obligations of the United
States government and are not guaranteed by the United States government.
CMT RATE
Unless otherwise specified in the applicable Pricing Supplement, the "CMT
Rate" for each applicable Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest Reset
Date (the "CMT Rate Determination Date"), and will be the rate displayed on the
Designated CMT Telerate Page (as defined below) under the caption ". . .
Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . .
Mondays Approximately 3:45 P.M.," under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page
is 7055, the rate on such CMT Rate Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the week, or the month, as applicable,
ended immediately preceding the week or the month, as applicable, in which the
applicable CMT Rate Determination Date occurs. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such CMT Rate Determination Date,
then the CMT Rate for such CMT Rate Determination Date will be such treasury
constant maturity rate for the Designated CMT Maturity Index as published in
the relevant H.15(519). If such rate is no longer published in the relevant
H.15(519), or if not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CMT Rate Determination Date, then the CMT
Rate for
S-13
<PAGE>
such CMT Rate Determination Date will be such treasury constant maturity rate
for the Designated CMT Maturity Index (or other United States Treasury rate for
the Designated CMT Maturity Index) for the CMT Rate Determination Date with
respect to such Interest Reset Date as may then be published by either the
Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided by
3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT
Rate Determination Date, then the CMT Rate for such CMT Rate Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity,
based on the arithmetic mean of the secondary market closing offer side prices
as of approximately 3:30 P.M., New York City time, on such CMT Rate
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a "Reference
Dealer") in The City of New York selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent
cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT
Rate Determination Date will be calculated by the Calculation Agent and will be
a yield to maturity based on the arithmetic mean of the secondary market offer
side prices as of approximately 3:30 P.M., New York City time, on such CMT Rate
Determination Date of three Reference Dealers in The City of New York (from
five such Reference Dealers selected by the Calculation Agent and eliminating
the highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the
next highest to the Designated CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in an amount of at
least U.S. $100,000,000. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate for such Interest Reset Date will be the CMT
Rate in effect on such CMT Rate Determination Date. If two Treasury Notes with
an original maturity as described in the second preceding sentence have
remaining terms to maturity equally close to the Designated CMT Maturity Index,
the quotes for the Treasury Note with the shorter remaining term to maturity
will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as published in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as published in H.15(519).
If no such page is specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
Treasury Notes (either one, two, three, five, seven, ten, twenty or thirty
years) specified in the applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.
11TH DISTRICT COST OF FUNDS RATE
Unless otherwise specified in the applicable Pricing Supplement, the "11th
District Cost of Funds Rate" for each applicable Interest Reset Date will be
determined by the Calculation Agent as of the last Business Day of the month
prior to such Interest Reset Date (the "11th District Rate Determination
Date"), and will be the rate equal to the monthly weighted average cost of
funds for the calendar month preceding such 11th District Rate Determination
Date as set forth under the caption "11th District" on Telerate Page 7058 as of
11:00 A.M., San Francisco time, on such 11th District Rate Determination Date.
If such rate does not appear
S-14
<PAGE>
on Telerate Page 7058 on any related 11th District Rate Determination Date, the
11th District Cost of Funds Rate for such 11th District Rate Determination Date
shall be the monthly weighted average cost of funds paid by member institutions
of the Eleventh Federal Home Loan Bank District that was most recently
announced by the Federal Home Loan Bank ("FHLB") of San Francisco as such cost
of funds for the calendar month preceding the date of such announcement. If the
FHLB of San Francisco fails to announce such rate for the calendar month next
preceding such 11th District Rate Determination Date, then the 11th District
Cost of Funds Rate for such Interest Reset Date will be the 11th District Cost
of Funds Rate in effect on such 11th District Rate Determination Date.
RESET NOTES
The Pricing Supplement relating to each Note will indicate whether CHL has
the option with respect to such Note to reset the interest rate, in the case of
a Fixed Rate Note, or to reset the Spread and/or Spread Multiplier, in the case
of a Floating Rate Note (in each case, a "Reset Note"), and, if so, (i) the
date or dates on which such interest rate or such Spread and/or Spread
Multiplier, as the case may be, may be reset (each an "Optional Interest Reset
Date") and (ii) the basis or formula, if any, for such resetting.
CHL may exercise such option with respect to a Note by notifying the Trustee
of such exercise at least 45 but not more than 60 calendar days prior to an
Optional Interest Reset Date for such Note. If the Company so notifies the
Trustee of such exercise, not later than 40 calendar days prior to such
Optional Interest Reset Date the Trustee will send by telegram, telex,
facsimile transmission or letter (first class, postage prepaid) to the Holder
of such Note a notice (the "Reset Notice") indicating (i) that CHL has elected
to reset the interest rate, in the case of a Fixed Rate Note, or the Spread
and/or Spread Multiplier, in the case of a Floating Rate Note, (ii) such new
interest rate or such new Spread and/or Spread Multiplier, as the case may be,
and (iii) the provisions, if any, for redemption by CHL during the period from
such Optional Interest Reset Date to the next Optional Interest Reset Date or,
if there is no such next Optional Interest Reset Date, to the Stated Maturity
Date of such Note (each such period, a "Subsequent Interest Period"), including
the date or dates on which, or the period or periods during which, and the
price or prices at which such redemption may occur during such Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 calendar days prior to an
Optional Interest Reset Date for a Note, CHL may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Reset
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Subsequent Interest Period commencing on such Optional Interest
Reset Date by causing the Trustee to send by telegram, telex, facsimile
transmission or letter (first class, postage prepaid) notice of such higher
interest rate or higher Spread and/or Spread Multiplier, as the case may be, to
the Holder of such Note. Such notice shall be irrevocable. All Notes with
respect to which the interest rate or Spread and/or Spread Multiplier is reset
on an Optional Interest Reset Date, and with respect to which Holders of such
Notes have not surrendered such Notes for repayment (or have validly revoked
any such surrender) pursuant to the next paragraph, will bear such higher
interest rate, in the case of a Fixed Rate Note, or higher Spread and/or Spread
Multiplier, in the case of a Floating Rate Note.
If CHL elects prior to an Optional Interest Reset Date to reset the interest
rate or the Spread and/or Spread Multiplier of a Note, the Holder of such Note
will have the option to elect repayment of such Note by CHL on such Optional
Interest Reset Date at a price equal to the principal amount thereof plus any
accrued interest to such Optional Interest Reset Date. In order to obtain
repayment of such Note to be so repaid on such Optional Interest Reset Date,
the Holder thereof must follow the procedures set forth below under "Redemption
and Repayment" for optional repayment, except that the period for delivery of
such Note or notification to the Trustee shall be at least 25 but not more than
35 calendar days prior to such Optional Interest Reset Date. A Holder who has
tendered a Note for repayment following receipt of a Reset Notice may revoke
such tender for repayment by written notice to the Trustee received prior to
5:00 P.M., New York City time, on the 10th calendar day prior to such Optional
Interest Reset Date.
S-15
<PAGE>
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether CHL has
the option to extend the Stated Maturity Date of such Note for one or more
periods of one to five whole years (each such period, an "Extension Period") up
to but not beyond the date (the "Final Stated Maturity Date") set forth in such
Pricing Supplement.
CHL may exercise such option with respect to a Note by notifying the Trustee
of such exercise at least 45 but not more than 60 calendar days prior to the
Stated Maturity Date of such Note in effect prior to the exercise of such
option (the "Current Stated Maturity Date"). If CHL so notifies the Trustee of
such exercise, not later than 40 calendar days prior to the Current Stated
Maturity Date the Trustee will send by telegram, telex, facsimile transmission
or letter (first class, postage prepaid) to the Holder of such Note a notice
(the "Extension Notice") relating to such Extension Period, indicating (i) that
CHL has elected to extend the Current Stated Maturity Date of such Note, (ii)
the new Stated Maturity Date and the Final Stated Maturity Date, (iii) in the
case of a Fixed Rate Note, the interest rate applicable to the Extension Period
or, in the case of a Floating Rate Note, the Spread and/or Spread Multiplier
applicable to the Extension Period, and (iv) the provisions, if any, for
redemption by CHL during the Extension Period, including the date or dates on
which, or the period or periods during which, and the price or prices at which
such redemption may occur during the Extension Period. Upon the sending by the
Trustee of an Extension Notice to the Holder of a Note, the Current Stated
Maturity Date of such Note shall be extended automatically, and, except as
modified by the Extension Notice and as described in the next two paragraphs,
such Note will have the same terms as prior to the sending of such Extension
Notice.
Notwithstanding the foregoing, not later than 20 calendar days prior to the
Current Stated Maturity Date of a Note, CHL may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Extension
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period by causing the Trustee to send by telegram,
telex, facsimile transmission or letter (first class, postage prepaid) notice
of such higher interest rate or higher Spread and/or Spread Multiplier, as the
case may be, to the Holder of such Note. Such notice shall be irrevocable. All
Notes with respect to which the Current Stated Maturity Date is extended, and
with respect to which the Holders of such Notes have not surrendered such Notes
for repayment (or have validly revoked any such surrender) pursuant to the next
paragraph, will bear such higher interest rate, in the case of a Fixed Rate
Note, or higher Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, for the Extension Period.
If CHL elects to extend the Current Stated Maturity Date of a Note, the
Holder of such Note will have the option to elect repayment of such Note by CHL
on the Current Stated Maturity Date at a price equal to the principal amount
thereof plus any accrued interest to the Current Stated Maturity Date. In order
for a Note to be so repaid on the Current Stated Maturity Date, the Holder
thereof must follow the procedures set forth below under "Redemption and
Repayment" for optional repayment, except that the period for delivery of such
Note or notification to the Trustee shall be at least 25 but not more than 35
calendar days prior to the Current Stated Maturity Date. A Holder who has
tendered a Note for repayment following receipt of an Extension Notice may
revoke such tender for repayment by written notice to the Trustee received
prior to 5:00 P.M., New York City time on the 10th calendar day prior to the
Current Stated Maturity Date.
RENEWABLE NOTES
If so indicated in the applicable Pricing Supplement, the term of all or any
portion of a Note may be renewed beyond the Stated Maturity Date by the Holder
in accordance with the procedures described in such Pricing Supplement.
S-16
<PAGE>
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "--Reset Notes," "--Extension of Maturity" and "--
Renewable Notes."
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same Specified Currency,
Issue Date, Stated Maturity Date, redemption and/or repayment provisions, if
any, reset and/or extension provisions, if any, Interest Payment Dates, if
any, and, in the case of Fixed Rate Notes, interest rate or, in the case of
Floating Rate Notes, Base Rate or Rates, Initial Interest Rate, Index
Maturity, Interest Reset Dates, Spread and/or Spread Multiplier, if any,
Minimum Interest Rate, if any, and/or Maximum Interest Rate, if any, will be
represented by one or more global securities (each, a "Global Note"). Each
Global Note representing Book-Entry Notes will be deposited with, or on behalf
of, DTC, or such other depositary as is specified in the Pricing Supplement
(the "Depositary"), and registered in the name of a nominee of such
Depositary. Global Notes may not be transferred except as a whole by the
applicable Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any nominee to a successor of such Depositary or a nominee of
such successor.
Book-Entry Notes will not be exchangeable for Certificated Notes and, except
under the limited circumstances described below, will not otherwise be
issuable in definitive form.
DTC has advised CHL and the Agents as follows:
DTC will initially act as securities depositary for the Global Notes. The
Global Notes will be issued as fully registered securities registered in
the name of Cede & Co. (DTC's partnership nominee). One fully registered
Global Note will be issued with respect to each $200,000,000 of principal
amount of Notes.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. DTC holds
securities that its participants ("Participants") deposit with it. DTC also
facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to DTC's system
is also available to others such as securities brokers and dealers, banks,
and trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
Purchases of securities under DTC's system must be made by or through
Direct Participants, which will receive a credit for the securities on
DTC's records. The ownership interest of each actual purchaser of each
security (a "beneficial owner") is in turn recorded on the Direct
Participant's and Indirect Participant's records. Beneficial owners will
not receive written confirmation from DTC of their purchase, but such
beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participant or Indirect Participant through which
the beneficial owner entered into the transaction. Transfers of ownership
interests in the securities are to be accomplished by entries made on the
books of Participants acting on behalf of beneficial owners. Beneficial
owners will not receive certificates representing their ownership
S-17
<PAGE>
interests in securities, except in the event that use of the book-entry
system for the securities is discontinued.
To facilitate subsequent transfers, all securities deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the
securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such securities are credited, which may or
may not be the beneficial owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to beneficial owners is
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to
securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the securities are credited on the record date (identified
in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the securities will
be made to DTC. DTC's practice is to credit Direct Participants' accounts
on the payable date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by Participants to beneficial owners
will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
Participant and not of DTC, the applicable Paying Agent, or CHL, subject to
any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal and interest to DTC is the responsibility of CHL
or the applicable Paying Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the beneficial owners shall be the responsibility of Direct
Participants and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Global Notes at any time by giving reasonable notice to CHL,
the Trustee or the applicable Paying Agent. Under such circumstances, in
the event that a successor securities depositary is not obtained, the
Global Notes are required to be printed and delivered.
CHL may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). In that event, the
Global Notes will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that CHL believes to be reliable, but CHL takes
no responsibility for the accuracy thereof.
So long as the Depositary for a Global Note, or its nominee, is the
registered owner of such Global Note, such Depositary or such nominee, as the
case may be, will be considered the sole owner or Holder of the Book-Entry
Notes represented by such Global Note for all purposes under the Indenture
governing such Book-Entry Notes. Except as set forth below, owners of
beneficial interests in such Global Notes will not be entitled to have Notes
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of Certificated Notes and will not be
considered the owners or Holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the
procedures of the Depositary and, if such person is not a Participant, those of
the Participant
S-18
<PAGE>
through which such person owns its interests, in order to exercise any rights
of a Holder under the Indenture or such Note. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to transfer beneficial interests in a Global Note.
Principal, premium, if any, and interest payments on Notes registered in the
name of or held by the Depositary or its nominee will be made to the Depositary
or its nominee, as the case may be, as the registered owner or the Holder of
the Global Note representing such Book-Entry Notes. None of CHL, the Guarantor,
the Trustee, the Calculation Agent, any Paying Agent or the Security Registrar
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Note for such Book-Entry Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
If the Depositary is at any time unwilling, unable or ineligible to continue
as Depositary and a successor Depositary is not appointed by CHL within 60 days
or if an Event of Default under the Indenture has occurred and is continuing,
CHL will issue Certificated Notes in exchange for the Global Note or Notes
representing such Book-Entry Notes. In addition, CHL may at any time and in its
sole discretion determine not to have any Notes in registered form represented
by one or more Global Notes and, in such event, will issue Certificated Notes
in exchange for all Global Notes representing such Notes. In any such instance,
an owner of a beneficial interest in a Global Note will be entitled to physical
delivery of Certificated Notes represented by such Global Note equal in
principal amount to such beneficial interest and to have such Notes registered
in its name.
REDEMPTION AND REPAYMENT
If so specified in the applicable Pricing Supplement, CHL may at its option
on and after the Initial Redemption Date, if any, set forth in a Note redeem
such Note in whole or, from time to time, in part in increments of $1,000
(provided that any remaining principal amount thereof shall not be less than
$100,000 (or such other amount in a foreign currency or currency unit as is
specified in the applicable Pricing Supplement), or, if another minimum
denomination is set forth in the applicable Pricing Supplement, then such
minimum denomination) at the sum of (i) 100% of the unpaid principal amount
thereof or the portion thereof redeemed (or, if such Note is an Original Issue
Discount Security (as defined below), the Amortized Face Amount (as defined
below) determined as of the Redemption Date as provided below), plus (ii) the
Initial Redemption Percentage specified in the applicable Pricing Supplement
(as adjusted by the Annual Redemption Percentage Reduction, if applicable)
multiplied by the unpaid principal amount or the portion thereof redeemed (or,
if such Note is an Original Issue Discount Security, the Issue Price thereof,
net of any portion of such Issue Price which has been deemed paid prior to
redemption (by reason of any payments, other than a payment of qualified stated
interest, in excess of the original issue discount accrued to the date of such
payment), or the portion of such Issue Price (or such net amount) proportionate
to the portion of the unpaid principal amount of the Note redeemed), plus (iii)
accrued interest to the Redemption Date (or, if such Note is an Original Issue
Discount Security, any accrued interest to the Redemption Date the payment of
which would constitute qualified stated interest payments within the meaning of
Treasury Regulation Section 1.1273-1(c) under the Internal Revenue Code of
1986, as amended (the "Code"), as in effect on the date hereof). Such Initial
Redemption Percentage shall decline at each anniversary of the Initial
Redemption Date by an amount equal to the Annual Redemption Percentage
Reduction, if any, specified in the applicable Pricing Supplement, until the
Initial Redemption Percentage equals zero percent. CHL may exercise such option
by causing the Trustee to mail a notice of such redemption to the Holder of
such Note not less than 30 but not more than 60 days prior to the Redemption
Date. In the event of redemption of such Note in part only, a new Note or Notes
for the unredeemed portion thereof shall be issued in the name of the Holder
thereof upon the cancellation thereof. If less than all of the Notes with like
tenor and terms to such Note are to be redeemed, the Notes to be redeemed shall
be selected by the Trustee by such method as the Trustee shall deem fair and
appropriate.
S-19
<PAGE>
An "Original Issue Discount Security" means any Note that has been issued at
an Issue Price lower, by an amount that equals or exceeds a de minimis amount
(as determined under United States Federal income tax rules applicable to
original issue discount instruments), than the principal amount thereof. The
"Amortized Face Amount" of such Note shall be the amount equal to the sum of
(a) the Issue Price plus (b) the aggregate of the portions of the original
issue discount (the excess of the amounts considered as part of the "stated
redemption price at maturity" of such Note within the meaning of Section
1273(a)(2) of the Code, whether denominated as principal or interest, over the
Issue Price of such Note) which shall theretofore have accrued pursuant to
Section 1272 of the Code (without regard to Section 1272(a)(7) of the Code)
from the Issue Date of such Note to the date of determination, minus (c) any
amount considered as part of the "stated redemption price at maturity" of such
Note which has been paid on such Note from the Issue Date to the date of
determination. If a Note is an Original Issue Discount Security, the amount
payable in the event of acceleration of the maturity thereof shall be the
Amortized Face Amount, plus accrued but unpaid qualified stated interest as
defined in clause (iii) of the first sentence of the preceding paragraph.
If so specified in the applicable Pricing Supplement, the Notes will be
repayable by CHL in whole or in part at the option of Holders thereof on their
respective Optional Repayment Dates specified in such Pricing Supplement. If no
Optional Repayment Date is specified with respect to a Note, such Note will not
be repayable at the option of the Holder thereof prior to the Stated Maturity
Date. Any repayment in part will be in increments of $1,000 (provided that any
remaining principal amount thereof shall be at least the minimum denomination).
Unless otherwise specified in the applicable Pricing Supplement, the repayment
price for any Note to be repaid means an amount equal to the sum of (i) 100% of
the unpaid principal amount thereof or the portion to be repaid thereof plus
(ii) accrued interest to the Repayment Date. For any Note to be repaid, such
Note must be received, together with the form thereon entitled "Option to Elect
Repayment" duly completed, by the Trustee at its Corporate Trust Office (or
such other address of which CHL shall from time to time notify the Holders) not
more than 60 nor less than 30 days prior to the Repayment Date. Exercise of
such repayment option by the Holder will be irrevocable, except as otherwise
provided above under "--Reset Notes" and "--Extension of Maturity."
While the Book-Entry Notes are represented by the Global Notes held by or on
behalf of the Depositary, and registered in the name of the Depositary or the
Depositary's nominee, the option for repayment may be exercised by the
Depositary, acting on behalf of each applicable Participant who is, in turn,
acting on behalf of the beneficial owners of the Global Note or Notes
representing such Book-Entry Notes, by delivering a written notice
substantially similar to the above mentioned form to the Trustee at its
Corporate Trust Office (or such other address of which CHL shall from time to
time notify the Holders), not more than 60 nor less than 30 days prior to the
Repayment Date. Notices of elections from the Depositary must be received by
the Trustee by 5:00 P.M., New York City time, on the last day for giving such
notice. In order to ensure that a notice is received by the Trustee on a
particular day, the beneficial owner of the Global Note or Notes representing
such Book-Entry Notes must so direct the applicable Participant before such
Participant's deadline for accepting instructions for that day. Different firms
may have different deadlines for accepting instructions from their customers.
Accordingly, beneficial owners of the Global Note or Notes representing Book-
Entry Notes should consult the Participants through which they own their
interest therein for the respective deadlines for such Participants. All
instructions given to Participants from beneficial owners of Global Notes
relating to the option to elect repayment shall be irrevocable, except as
otherwise provided above under "--Reset Notes" and "--Extension of Maturity."
In addition, at the time such instructions are given, such beneficial owners
shall cause the applicable Participant to transfer such beneficial owner's
interest in the Global Note or Notes representing the related Book-Entry Notes,
on the Depositary's records, to the Trustee. See "--Book-Entry Notes" above.
CHL or CCI may purchase Notes in the open market by tender or contract. Notes
so purchased may be held, resold or surrendered to the Trustee for
cancellation.
If applicable, CHL will comply with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934, as amended, and any other securities laws or
regulations in connection with any such repayment.
S-20
<PAGE>
GUARANTEES
The Notes will be unconditionally guaranteed by CCI as to payment of
principal, premium, if any, and interest, when and as the same shall become due
and payable, whether at maturity or upon redemption or repayment or otherwise.
See "Description of Debt Securities and Guarantees" in the accompanying
Prospectus.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain of the anticipated United
States Federal income tax consequences of the purchase, ownership and
disposition of Notes.
The summary is for general information only and is based on the Code, the
Treasury Regulations promulgated or proposed thereunder, and judicial and
administrative interpretations thereof, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive effect, or to
different interpretations. Holders of Notes should be aware that on December 15,
1994, the Internal Revenue Service released proposed amendments to the Treasury
Regulations with respect to the treatment of debt instruments providing for
contingent payments. If adopted, these amendments would generally be effective
for debt instruments issued 60 days or more after the date on which such
proposed amendments are finalized.
The tax treatment of a holder of the Notes may vary depending upon the
particular situation of the holder. The summary is limited to investors who
will hold the Notes as "capital assets" within the meaning of Section 1221 of
the Code and does not deal with holders in special tax situations (including,
but not limited to, insurance companies, tax-exempt organizations, financial
institutions, dealers in securities or currencies, holders whose functional
currency is not the U.S. dollar, or holders who will hold Notes as a hedge
against currency risks or as a position in a "straddle" for tax purposes), who
may be subject to special rules not discussed below. The summary does not apply
to holders that are not United States Holders (defined below). The summary is
applicable to initial purchasers of Notes only and does not address subsequent
purchasers. The discussion below also does not address the effect of any state,
local or foreign tax law on a holder of Notes. As used herein, the term "United
States Holder" means an individual who is a citizen or resident of the United
States, a partnership, corporation or other entity organized in or under the
laws of the United States or any state thereof, or an estate or trust that is
subject to United States Federal income taxation without regard to the source
of its income.
The summary does not constitute, and should not be considered as, legal or
tax advice to prospective holders of Notes. Each prospective holder of Notes
should consult a tax advisor as to the particular tax consequences of holding
Notes to such holder, including the applicability and effect of any state,
local or foreign tax laws.
PAYMENTS OF INTEREST
Interest on a Note, other than interest on a Discount Note (defined below
under "Original Issue Discount") that is not a "qualified stated interest"
payment (also as defined under "Original Issue Discount"), will be taxable to a
holder as ordinary interest income at the time it is accrued or is received in
accordance with the holder's method of accounting for tax purposes. If interest
is paid in a Specified Currency other than U.S. dollars ("Foreign Currency"),
the amount of interest income realized by a holder will be the U.S. dollar
value of (a) in the case of a cash basis holder, the Foreign Currency received
(based on the spot rate in effect on the date of receipt), or (b) in the case
of an accrual basis holder, the Foreign Currency accrued during an interest
accrual period, or partial interest accrual period (based on (i) the average
exchange rate in effect during the accrual period, (ii) the spot rate on the
last day of the accrual period or (iii) the spot rate on the payment date, if
such date is within five business days of the last day of the accrual period),
in each case, regardless of whether the payment is in fact converted into U.S.
dollars. In the case of an accrual basis holder,
S-21
<PAGE>
at the time the interest accrued is received, the holder will realize exchange
gain or loss, taxable as ordinary income or loss, equal to the difference, if
any, between the amount of Foreign Currency received with respect to such
accrual period (translated into U.S. dollars at the spot rate in effect on the
date the interest is received) and the amount of interest on the Note included
in income. The Federal income tax consequences of the disposition of Foreign
Currency received as interest are described below under "--Exchange of Amounts
in Foreign Currency."
ORIGINAL ISSUE DISCOUNT
General. A Note will be treated as issued at an original issue discount (a
"Discount Note") if the excess of the "stated redemption price at maturity" of
the Note over its issue price (defined as the first price at which a
substantial amount of Notes of the same issue is sold to the public) equals or
exceeds a de minimis amount (generally 1/4 of 1 percent of the Note's stated
redemption price at maturity multiplied by the number of complete years from
the issue date to maturity). "Stated redemption price at maturity" is the total
of all payments provided by the Note that are not payments of "qualified stated
interest." A "qualified stated interest" payment is a payment of stated
interest that is unconditionally payable in cash or property (other than debt
instruments of CHL) at least annually during the entire term of the Note,
including short periods, with respect to a Floating Rate Note, at certain
specified types of variable rates (as discussed below) or, with respect to a
Fixed Rate Note, at a single fixed rate. Interest is payable at a single fixed
rate only if the rate appropriately takes into account the length of the
intervals between payments. Stated interest that exceeds qualified stated
interest is included in the Note's stated redemption price at maturity.
Holders of Discount Notes having a maturity of more than one year from their
date of issue will be required to include original issue discount in income as
it accrues, which can result in recognition of income before the receipt of
cash attributable to such income. The amount of original issue discount
includable in income by the holder of such a Discount Note is the sum of the
daily portions of original issue discount with respect to the Discount Note for
each day during the taxable year or portion of the taxable year in which it
holds such Discount Note ("accrued original issue discount"). The daily portion
is determined by allocating to each day in any "accrual period" a pro rata
portion of the original issue discount that accrued in such period (the excess
of (a) the product of the Discount Note's adjusted issue price at the beginning
of the accrual period and its yield to maturity, appropriately adjusted for the
length of the period, over (b) the sum of the qualified stated interest
payments, if any, payable during the accrual period). The "accrual period" for
a Discount Note may be of any length and may vary in length over the term of a
Note, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs either on the first day or
the last day of an accrual period. The "adjusted issue price" of a Discount
Note at the start of any accrual period is the sum of the issue price of the
Note plus the accrued original issue discount for each prior accrual period
minus any prior payments on the Note that were not qualified stated interest
payments. Holders of Notes with a de minimis amount of original issue discount
must include a proportionate amount of each payment of stated principal
received in respect of the Notes in income as capital gain.
Floating Rate Notes. If a Floating Rate Note that otherwise qualifies as a
"variable rate debt instrument" under the applicable Treasury Regulations
provides for stated interest at a single "qualified floating rate" or a single
"objective rate" (each as defined in the Treasury Regulations) that is
unconditionally payable in cash or property (other than debt instruments of
CHL), or that will be constructively received, at least annually, then all
payments of stated interest with respect to such Note will be "qualified stated
interest." The amount of original issue discount (if any) with which such a
Note is issued will be determined under the rules discussed above by assuming
that the Floating Rate Note pays stated interest at the appropriate fixed rate
substitute (generally, the value, as of the Issue Date, of the floating rate,
or in the case of certain Floating Rate Notes, a fixed rate that reflects the
yield that is reasonably expected for such Notes).
The Treasury Regulations provide additional rules for a Floating Rate Note
that qualifies as a variable rate debt instrument and that provides for stated
interest at more than one floating rate or at a fixed rate for a portion of its
term. In certain cases, such a Floating Rate Note that is not issued at a
discount may be
S-22
<PAGE>
deemed to bear original issue discount for Federal income tax purposes, with
the result that inclusion of original issue discount in gross income for
Federal income tax purposes may vary from the cash payments of interest
received on such Note, generally accelerating income for cash method taxpayers.
For example, under the Treasury Regulations, a Floating Rate Note may be a
Discount Note where (a) it bears interest at a floating rate followed by
another floating rate and, as of the Issue Date, the values of the two floating
rates differ, or (b) it bears interest at a fixed rate followed by a floating
rate (or vice versa) and, as of the Issue Date, the value of the floating rate
differs from the fixed rate. The tax treatment of a United States Holder of a
Floating Rate Note ultimately will depend upon the precise terms of the Notes
offered; consequently, the proper tax treatment of such Notes will be more
fully described in the applicable Pricing Supplement.
A Floating Rate Note that does not qualify as a variable rate debt instrument
under the Treasury Regulations will be treated as a contingent payment
obligation. For example, a Floating Rate Note will not qualify as a variable
rate debt instrument under the Treasury Regulations if, among other things, it
provides for either a minimum rate of interest or a maximum rate of interest
that, in either case, is not fixed throughout its term and is reasonably
expected, as of the Issue Date, to cause the yield on the Note to be
significantly more or less than the yield determined without regard to the
minimum or maximum rate of interest. The Treasury Regulations governing the
treatment of contingent payment obligations currently are only in proposed
form. The tax treatment of a Floating Rate Note that is treated as a contingent
payment obligation will be more fully described in the applicable Pricing
Supplement.
Any determination of the type described above made by CHL when a Note is
issued may be subject to subsequent changes and clarifications of applicable
law or to challenge by the Internal Revenue Service.
Optional Redemption. An unconditional option of CHL or a Holder to redeem a
Note prior to the Maturity Date will be presumed to be exercised if, by
utilizing any date on which the Note may be redeemed as its maturity date and
the amount payable on that date in accordance with the terms of the Note (the
"redemption price") as its stated redemption price at maturity, the yield on
the Note is lower than its yield to maturity in the case of an option
exercisable by CHL (or, in the case of an option exercisable by a Holder, is
greater than its yield to maturity). If such an option is not in fact exercised
when presumed to be, solely for purposes of accruing original issue discount,
the Note will be treated as if it were redeemed, and a new Note issued, on the
presumed exercise date for an amount equal to its adjusted issue price on that
date.
Short-Term Notes. A Note that matures one year or less from the date of its
issuance (a "Short-Term Note") will be treated as having been issued at an
original issue discount equal to the excess of the total principal and interest
payments on the Note over its issue price. In general, an individual or other
cash basis holder of a Short-Term Note is not required to currently include in
income accrued original issue discount for United States Federal income tax
purposes unless it elects to do so. Accrual basis holders and certain other
holders are required to include in income accrued original issue discount on
Short-Term Notes on a straight-line basis unless an irrevocable election is
made to include in income accrued original issue discount under the constant
yield method (based on daily compounding). In the case of a holder not required
and not electing to include accrued original issue discount in income
currently, any gain realized on the sale or retirement of the Short-Term Note
will be ordinary income to the extent of the original issue discount accrued on
a straight-line basis (or, at the holder's irrevocable election, under a
constant yield method, based on daily compounding) through the date of sale or
retirement. A holder who is not required and does not elect to include in
income accrued original issue discount on a Short-Term Note will be required to
defer deduction of a portion of the holder's interest expense with respect to
any indebtedness incurred or maintained to purchase or carry the Note.
Foreign Currency Denominated Discount Notes. In the case of a Discount Note
denominated in a Foreign Currency, for purposes of calculating original issue
discount, a holder should: (i) calculate the amount and accrual of original
issue discount in respect of the Note in the Foreign Currency; (ii) determine
the U.S. dollar amount of original issue discount includable in income for each
accrual period by translating the Foreign Currency amounts into U.S. dollars
based on the average exchange rate in effect during that accrual period
S-23
<PAGE>
or based on the spot rate (A) on the last day of the relevant accrual period
(or partial accrual period) or (B) on the payment date, if such date is within
five business days of the last day of the accrual period; and (iii) recognize
any Foreign Currency gain or loss when the original issue discount is received
to the extent of the difference between the amount determined pursuant to
clause (ii) above and the U.S. dollar value of such payment determined by
translating the Foreign Currency at the spot rate in effect on the date of
payment. The Federal income tax consequences of the disposition of any Foreign
Currency received are described below under "--Exchange of Amounts in Foreign
Currency." For these purposes, all receipts with respect to a Note will be
treated first as the receipt of periodic interest (determined under Section
1273 of the Code and the Treasury Regulations), second as payments of
previously accrued original issue discount (to the extent thereof, with
payments treated as made for the earliest accrual periods first), and
thereafter as the receipt of principal.
NOTES PURCHASED AT A PREMIUM
A holder that purchases a Note for an amount in excess of its principal
amount may elect to treat that excess as "amortizable bond premium," in which
case the amount required to be included in the holder's income each year with
respect to interest on the Note will be reduced by the amount of amortizable
bond premium allocable (based on the Note's yield to maturity) to that year.
Any such election would apply to all bonds (other than bonds the interest on
which is excludable from gross income) held by the holder at the beginning of
the first taxable year to which the election applies or thereafter acquired by
the holder, and is irrevocable without the consent of the Internal Revenue
Service. Amortizable bond premium on a Note denominated in a Foreign Currency
will, if a holder so elects, reduce the amount of Foreign Currency interest
income on the Note. An electing holder will recognize exchange gain or loss at
the time it offsets the portion of the premium amortized with respect to any
period against the interest income for such period, by treating such portion
as a return of principal.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
A holder may elect to treat all interest on any Note as original issue
discount and calculate the amount includible in gross income under the
constant yield method described above. For the purposes of this election,
interest includes stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis
market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium. The election is made for the year in which the
holder acquired the Note, and may not be revoked without the consent of the
Internal Revenue Service.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A holder's tax basis in a Note generally will be its cost, increased by the
amount of any original issue discount included in the holder's income with
respect to the Note and reduced by the amount of any cash payments on the Note
that are not qualified stated interest payments and by the amount of any
amortizable bond premium applied to reduce interest on the Note. In the case
of a Note denominated, and purchased, in a Foreign Currency, the holder's
initial tax basis will be the U.S. dollar value of the Foreign Currency on the
date of purchase of the Note (or, in certain circumstances, on the settlement
date of the Transaction).
A holder will recognize gain or loss on the sale or retirement of a Note
equal to the difference between the amount realized on the sale or retirement
and the holder's tax basis in the Note. The amount realized on a sale or
retirement for an amount in a Foreign Currency will be the U.S. dollar value
of that currency on the date of such sale or retirement (or, in certain
circumstances, on the settlement date of the Transaction).
As a general rule (with the exception, among other things, of amounts
attributable to accrued but unpaid interest, amounts attributable to changes
in exchange rates, and amounts received with respect to certain Short-Term
Notes), gain or loss recognized on the sale or retirement of a Note will be
capital gain or loss and will be long-term capital gain or loss if the Note
was held for more than one year. Gain or loss recognized
S-24
<PAGE>
by a holder on the sale or retirement of a Note denominated in a Foreign
Currency will be treated as ordinary income or loss to the extent such gain or
loss is attributable to changes in exchange rates. However, exchange gain or
loss is taken into account only to the extent of total gain or loss realized on
the transaction.
If Treasury Regulations proposed on March 17, 1992 are finalized in their
current form, certain United States Holders will be able to elect to apply
mark-to-market treatment to all foreign currency denominated financial
transactions they enter into, including a Note denominated in a Foreign
Currency, for purposes of determining the amount and timing of foreign currency
gain or loss to be recognized on the Notes. Under these proposed regulations,
similar non-elective rules will apply with respect to the determination of
foreign currency gain or loss on Notes denominated in certain hyperinflationary
currencies.
EXCHANGE OF AMOUNTS IN FOREIGN CURRENCY
Foreign Currency received on the sale or retirement of a Note will have a tax
basis equal to the U.S. dollar value of that currency treated as the amount
realized on the sale or retirement of the Note (See "--Purchase Sale and
Retirement of the Notes"). An accrual basis holder may realize exchange gain or
loss upon receipt of such Foreign Currency (and be required to adjust the basis
of such Foreign Currency), if the date of receipt differs from the date such
Foreign Currency is deemed received. Foreign Currency received as interest on a
Note will have a tax basis equal to its U.S. dollar value on the date such
interest was received. Foreign Currency which is purchased generally will have
a tax basis equal to the U.S. dollar cost of acquisition. Any gain or loss
recognized on a sale or other disposition of Foreign Currency (including its
use to purchase Notes or upon exchange for U.S. dollars) will be ordinary
income or loss. Accordingly, a holder that converts U.S. dollars to a Foreign
Currency and immediately uses that Foreign Currency to purchase a Note
denominated in the same currency normally will not recognize gain or loss in
connection with such conversion and purchase. However, a holder that purchases
a Note with previously owned Foreign Currency may recognize ordinary income or
loss in an amount equal to the difference between the holder's tax basis in the
Foreign Currency and the U.S. dollar value of the Note on the date of purchase.
BACKUP WITHHOLDING
A holder of a Note may be subject to backup withholding at a rate of 31% with
respect to payments of principal and any premium or interest (including
original issue discount) made on the Note or the proceeds of a sale or exchange
of the Note before maturity unless such holder (a) is a corporation or comes
within certain other exempt categories and, when required, demonstrates this
fact, or (b) provides a taxpayer identification number, certifies that the
holder is not subject to backup withholding, and otherwise complies with
applicable requirements of the backup withholding rules. A holder of a Note
that does not provide CHL, or its agent, with a correct taxpayer identification
number or an adequate basis for exemption may be subject to penalties imposed
by the Internal Revenue Service. The backup withholding tax is not an
additional tax and will be credited against a holder's United States Federal
income tax liability provided the required information is furnished to the
Internal Revenue Service.
PLAN OF DISTRIBUTION OF NOTES
Under the terms of a Selling Agency Agreement (the "Agency Agreement"), the
Notes are offered on a continuous basis by CHL through Lehman Brothers, Lehman
Brothers Inc., Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., NationsBanc
Capital Markets, Inc. and Salomon Brothers Inc (the "Agents"), each of which
has agreed to use its reasonable best efforts to solicit purchases of the
Notes. CHL will pay to each Agent a commission, in the form of a discount,
ranging from . % to . % of the principal amount of any Note (or in the case
of any Original Issue Discount Security, the price to the public), depending on
its maturity, sold through such Agent,
S-25
<PAGE>
except that the commission payable by CHL to the Agents with respect to Notes
with maturities of greater than 30 years will be negotiated at the time CHL
issues such Notes. Each Agent will have the right, in its discretion reasonably
exercised, to reject in whole or in part any offer to purchase Notes received
by such Agent.
CHL will have the sole right to accept offers to purchase Notes and may
reject any such offer in whole or in part. CHL also may sell Notes to an Agent,
acting as principal, at a discount to be agreed upon at the time of sale, for
resale to one or more investors or other purchasers at varying prices related
to prevailing market prices at the time of such resale, as determined by such
Agent or, if so specified in the applicable Pricing Supplement, for resale at a
fixed public offering price. CHL reserves the right to sell Notes from time to
time directly on its own behalf to investors or through other agents, dealers
or underwriters; if CHL grants any discount or pays any commission to such
persons, such discount or commission will be disclosed in the applicable
Pricing Supplement.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers. The Agents may sell Notes to any dealer at a discount and
such discount allowed to any dealer may be all or part of the discount to be
received by such Agent from CHL. Unless otherwise indicated in the applicable
Pricing Supplement, any Note sold to an Agent as principal will be purchased by
such Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to an agency sale of a Note of
identical maturity, and may be resold by the Agent to investors and other
purchasers from time to time in one or more transactions, including negotiated
transactions, at fixed prices or at varying prices as described above. After
the initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold on a
fixed price basis), concession and discount may be changed.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in The City of New York.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). CHL and CCI have
agreed to indemnify each Agent against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments an Agent may
be required to make in respect thereof. CHL and CCI have agreed to reimburse
the Agents for certain expenses, including fees and disbursements of counsel to
the Agents.
CHL has been advised by the Agents that they may from time to time purchase
and sell Notes in the secondary market, but that they are not obligated to do
so. No assurance can be given that there will be a secondary market for the
Notes or liquidity in the secondary market if one develops.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for CHL and CCI by Fried,
Frank, Harris, Shriver & Jacobson, a partnership including professional
corporations, New York, New York. The statements under "Certain Federal Income
Tax Considerations," to the extent they constitute statements of law, are set
forth herein in reliance upon the opinion of Fried, Frank, Harris, Shriver &
Jacobson. Edwin Heller, whose professional corporation is a member of Fried,
Frank, Harris, Shriver & Jacobson, is a director of CCI. Brown & Wood, New
York, New York will serve as counsel to the Agents. Brown & Wood also serves as
counsel for CWMBS, Inc., a wholly owned subsidiary of CCI, in connection with
offerings of mortgage pass-through certificates, and as counsel to CWM Mortgage
Holdings, Inc.
S-26
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 15, 1996
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
COUNTRYWIDE HOME LOANS, INC.
DEBT SECURITIES
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
UNCONDITIONALLY GUARANTEED BY
[LOGO OF COUNTRYWIDE CREDIT INDUSTRIES, INC.]
-----------
Countrywide Home Loans, Inc. (formerly Countrywide Funding Corporation) (the
"Company" or "CHL"), a wholly owned subsidiary of Countrywide Credit
Industries, Inc. (the "Guarantor" or "CCI"), may offer, from time to time, in
one or more series, its debt securities (the "Debt Securities"), which will be
unconditionally guaranteed (the "Guarantees") as to payment of principal,
premium, if any, and interest by CCI, in the amounts, at prices and on the
terms to be determined at the time of the offering. The Debt Securities may be
issued in one or more series or issuances and will have an aggregate initial
public offering price of up to $1,000,000,000 (or the equivalent thereof, based
on the applicable exchange rate at the time of sale, in one or more foreign
currencies, currency units or composite currencies as shall be designated by
the Company). Certain specific terms of the Debt Securities in respect of which
this Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement"), including, where applicable, the
specific title, the aggregate principal amount, aggregate offering price, the
denomination, the maturity, the premium, if any, the interest rate (which may
be fixed, floating or adjustable), if any, the time and method of calculating
payment of interest, if any, the place or places where principal of, premium,
if any, and interest, if any, on such Debt Securities will be payable, the
currency in which principal of, premium, if any, and interest, if any, on such
Debt Securities will be payable, any terms of redemption at the option of the
Company, or repayment at the option of the holder, any sinking fund provisions,
any other special terms, and the public offering price and other terms of the
offering and sale thereof. If so specified in the applicable Prospectus
Supplement, Debt Securities of a series may be issued in whole or in part in
the form of one or more temporary or permanent global securities.
Unless otherwise specified in a Prospectus Supplement, the Debt Securities
and the Guarantees, when issued, will be unsecured and unsubordinated
obligations of the Company or CCI, as the case may be, and will rank pari passu
in right of payment with all other unsecured and unsubordinated indebtedness of
the Company or CCI, as the case may be.
This Prospectus may not be used to consummate sales of Debt Securities unless
accompanied by a Prospectus Supplement.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURI-
TIES 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 Debt Securities may be sold through underwriting syndicates represented
by managing underwriters, by underwriters without a syndicate, through agents
designated from time to time, or directly to institutional purchasers. Any such
managing underwriters, underwriters or agents may include Lehman Brothers,
Lehman Brothers Inc., Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
NationsBanc Capital Markets, Inc. and Salomon Brothers Inc. The names of any
underwriters or agents of the Company involved in the sale of the Debt
Securities in respect of which this Prospectus is being delivered and any
applicable commissions or discounts are set forth in the Prospectus Supplement.
-----------
The date of this Prospectus is , 1996.
<PAGE>
AVAILABLE INFORMATION
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 and other information with the Securities and Exchange
Commission (the "Commission"). Information as of particular dates concerning
its directors and officers and any material interest of such persons in
transactions with CCI is disclosed in proxy statements distributed to
stockholders and filed with the Commission. Such reports, proxy statements and
other information can be inspected and copied at the offices of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at its regional offices located at Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661 and Suite 1300, 7 World Trade Center,
New York, New York 10048. Copies of such materials can also be obtained from
the Public Reference Section of the Commission at its principal office in
Washington, D.C. at prescribed rates. Common Stock of CCI is listed on the New
York and Pacific Stock Exchanges. Reports, proxy material and other
information concerning securities of CCI can also be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York; and
the Pacific Stock Exchange, Inc., 115 Sansome Street, San Francisco,
California.
This Prospectus constitutes a part of the Registration Statement on Form S-3
(together with all amendments, schedules and exhibits thereto, the
"Registration Statement") filed by CCI and the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus and the accompanying Prospectus Supplement omit certain of the
information contained in the Registration Statement in accordance with the
rules and regulations of the Commission. For further information with respect
to CCI, the Company and the Debt Securities, reference is made to the
Registration Statement, including the schedules and exhibits filed therewith.
Statements contained in this Prospectus as to the contents of certain
documents are not necessarily complete, and, with respect to each such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission, reference is made to the copy of the document so filed.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There is incorporated herein by reference the following documents of CCI
heretofore filed by it with the Commission: Annual Report on Form 10-K for the
year ended February 29, 1996.
All documents filed by CCI pursuant to Section 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 Debt Securities
are incorporated herein by reference and such documents shall be deemed to be
a part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus or any Prospectus Supplement to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such 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 this Prospectus or
any Prospectus Supplement is delivered, on the request of any such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(not including exhibits to the information that is incorporated by reference
unless such exhibits are specifically incorporated by reference into the
information that this Prospectus or any Prospectus Supplement incorporates).
Requests for copies of such documents 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.
2
<PAGE>
THE COMPANY AND CCI
COUNTRYWIDE HOME LOANS, INC.
Countrywide Home Loans, Inc. (formerly Countrywide Funding Corporation) (the
"Company" or "CHL"), the principal subsidiary of Countrywide Credit Industries,
Inc. (the "Guarantor" or "CCI"), is engaged primarily in the mortgage banking
business and as such originates, purchases, sells and services mortgage loans.
CHL's mortgage loans are principally prime credit quality first-lien mortgage
loans secured by single- (one to four) family residences. CHL 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 CHL are (i) loan
origination fees; (ii) gains from the sale of loans, if any; (iii) interest
earned on mortgage loans during the period that they are held by CHL pending
sale, net of interest paid on funds borrowed to finance such mortgage loans;
(iv) loan servicing fees; and (v) interest benefit derived from the custodial
balances associated with CHL's servicing portfolio.
CHL produces mortgage loans through three separate divisions. The Consumer
Markets Division originates loans using direct contact with consumers through
its nationwide network of retail branch offices and its telemarketing systems.
Through its Wholesale Division, CHL originates loans through and purchases
loans from mortgage loan brokers. Through the Correspondent Division, CHL
purchases loans primarily from other mortgage bankers, commercial banks,
savings and loan associations, credit unions and other financial
intermediaries. CHL customarily sells all loans that it originates or
purchases. Substantially all loans sold by CHL are sold without recourse,
subject, in the case of loan guaranties by the Veterans Administration ("VA"),
to the limits of such guaranties.
CHL services on a non-recourse basis substantially all of the mortgage loans
that it originates or purchases. In addition, CHL purchases bulk servicing
contracts, also on a non-recourse basis, to service single-family residential
mortgage loans originated by other lenders. Servicing mortgage loans includes
collecting and remitting loan payments, making advances when required,
accounting for principal and interest, holding custodial (impound) funds for
payment of property taxes and hazard insurance, making any physical inspections
of the property, counseling delinquent mortgagors, supervising foreclosures and
property dispositions in the event of unremedied defaults and generally
administering the loans. CHL receives fee income for servicing mortgage loans
ranging generally from 1/4% to 1/2% per annum on the declining principal
balances of the loans. CHL has sold, and may sell in the future a portion of
its portfolio of loan servicing rights to other mortgage servicers.
CHL's principal financing needs are the financing of loan funding activities
and the investment in servicing rights. To meet these needs, CHL currently
utilizes commercial paper supported by its revolving credit facility, medium-
term notes, mortgage-backed securities, repurchase agreements, subordinated
notes, unsecured notes, pre-sale funding facilities and cash flows from
operations. In the past, CHL 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 stock.
CHL 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.
CCI is a holding company which through its principal subsidiary, CHL, 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. A subsidiary of CCI trades to other broker-dealers
and
3
<PAGE>
institutional investors mortgage-backed securities and other mortgage-related
assets. In addition, 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. CCI also has a subsidiary which
acts as an agent in the sale of homeowners, fire, flood, earthquake, mortgage
life and disability insurance to CHL's mortgagors in connection with CHL'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 servicers in the capacity of an agent rather than an
underwriter. Unless the context otherwise requires, references to "CCI" herein
shall be deemed to refer to CCI and its consolidated subsidiaries.
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.
USE OF PROCEEDS
Except as may be otherwise stated in any Prospectus Supplement, the Company
intends to use the net proceeds from the sale of the Debt Securities for
general corporate purposes, which may include retirement of indebtedness of the
Company or CCI and investment in servicing rights through the current
production of loans and the bulk acquisition of contracts to service loans.
4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated financial data with respect to CCI set forth below for each
of the five fiscal years in the period ended February 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.
<TABLE>
<CAPTION>
YEARS ENDED FEBRUARY 28(29),
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF
EARNINGS DATA:
Revenues:
Loan origination fees.. $ 199,724 $ 203,426 $ 379,533 $ 241,584 $ 91,933
Gain (loss) on sale of
loans................. 92,341 (41,342) 88,212 67,537 38,847
---------- ---------- ---------- ---------- ----------
Loan production reve-
nue................... 292,065 162,084 467,745 309,121 130,780
Interest earned........ 354,226 280,917 320,217 191,389 103,014
Interest charges....... (281,573) (205,464) (219,898) (128,612) (69,760)
---------- ---------- ---------- ---------- ----------
Net interest income.... 72,653 75,453 100,319 62,777 33,254
Loan servicing income.. 575,058 428,994 307,477 177,291 94,830
Less amortization and
impairment of servic-
ing assets............ (342,811) (95,768) (242,177) (151,362) (53,768)
Add (less) servicing
hedge gain (loss)..... 200,135 (40,030) 73,400 74,075 17,000
Less write-off of ser-
vicing hedge.......... -- (25,600) -- -- --
---------- ---------- ---------- ---------- ----------
Net loan administration
income................ 432,382 267,596 138,700 100,004 58,062
Commissions, fees and
other income.......... 63,642 40,650 48,816 33,656 19,714
Gain on sale of servic-
ing................... -- 56,880 -- -- 4,302
---------- ---------- ---------- ---------- ----------
Total revenues........ 860,742 602,663 755,580 505,558 246,112
---------- ---------- ---------- ---------- ----------
Expenses:
Salaries and related
expenses.............. 229,668 199,061 227,702 140,063 72,654
Occupancy and other of-
fice expenses......... 106,298 102,193 101,691 64,762 36,645
Guarantee fees......... 121,197 85,831 57,576 29,410 13,622
Marketing expenses..... 27,115 23,217 26,030 12,974 5,015
Other operating
expenses.............. 50,264 37,016 43,481 24,894 17,849
Branch and administra-
tive office consolida-
tion costs............ -- 8,000 -- -- --
---------- ---------- ---------- ---------- ----------
Total expenses........ 534,542 455,318 456,480 272,103 145,785
---------- ---------- ---------- ---------- ----------
Earnings before income
taxes.................. 326,200 147,345 299,100 233,455 100,327
Provision for income
taxes.................. 130,480 58,938 119,640 93,382 40,131
---------- ---------- ---------- ---------- ----------
Net earnings............ $ 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...... $4,740,087 $2,898,825 $3,714,261 $2,316,297 $1,585,392
Total assets............ 8,657,653 5,710,182 5,631,061 3,369,499 2,474,625
Short-term debt......... 4,423,738 2,664,006 3,111,945 1,579,689 1,046,289
Long-term debt.......... 1,911,800 1,499,306 1,197,096 734,762 383,065
Convertible preferred
stock.................. -- -- -- 25,800 37,531
Common shareholders' eq-
uity................... 1,319,755 942,558 880,137 693,105 558,617
OPERATING DATA (DOLLAR
AMOUNTS IN MILLIONS):
Volume of loans pro-
duced.................. $ 34,584 $ 27,866 $ 52,459 $ 32,388 $ 12,156
Loan servicing portfolio
(at period end)(1)..... 136,835 113,111 84,678 54,484 27,546
Ratio of earnings to
fixed charges(2)....... 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). Since the major portion of CCI's interest
costs is incurred to finance mortgage loans which generate interest income,
and since interest income and interest expense are generated
simultaneously, management of CCI believes that a more meaningful measure
of its debt service requirements is the ratio of earnings to net fixed
charges. Under this alternative formula, net fixed charges are defined as
interest expense on debt, other than debt incurred to finance CCI's
mortgage loan inventory, plus the interest element (one-third of operating
leases). Under such alternative formula, these ratios for each of the five
fiscal years in the period ended February 28, 1996, commencing with the
fiscal year ended February 29, 1996, were 5.82, 726.84, 9.40, 7.53 and
3.75, respectively.
5
<PAGE>
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities. The extent, if
any, to which such general provisions do not apply to the Debt Securities
offered by any Prospectus Supplement will be described in such Prospectus
Supplement.
The Debt Securities are to be issued under the Indenture dated as of January
1, 1992, as amended, supplemented or modified from time to time, including by
Supplemental Indenture No. 1 thereto, dated as of June 15, 1995 (the
"Indenture"), among CHL, the Guarantor and The Bank of New York, as Trustee
(the "Trustee"), which is incorporated by reference in the Registration
Statement of which this Prospectus forms a part. Each series of Debt Securities
issued pursuant to the Indenture will be issued pursuant to an amendment or
supplement thereto in the form of a supplemental indenture or pursuant to an
Officers' Certificate, in each case delivered pursuant to resolutions of the
Board of Directors of CHL and in accordance with the provisions of Section 301
or Article Ten of the Indenture, as the case may be. The terms of the Debt
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"TIA"). The Debt Securities are subject to all such terms and the holders of
Debt Securities are referred to the Indenture and the TIA for a statement of
such terms.
The following summaries of certain provisions of each Indenture and the Debt
Securities are not complete and are qualified in their entirety by reference to
the provisions of the Indenture, including the definitions of capitalized terms
used herein without definition. Numerical references in parentheses are to
sections in the Indenture and unless otherwise indicated capitalized terms have
the meanings given them in the Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued from time to time in series. (Section 301)
The Debt Securities will constitute unsecured and unsubordinated indebtedness
of CHL and will rank pari passu in right of payment with CHL's other unsecured
and unsubordinated indebtedness. A substantial portion of the assets of CHL may
be pledged under various credit agreements among CHL and various lending
institutions. See Note D to CCI's Consolidated Financial Statements
incorporated by reference herein.
Reference is made to the Prospectus Supplement and pricing supplement, if
any, relating to the particular series of Debt Securities offered thereby for a
description of the terms of such Debt Securities in respect of which this
Prospectus is being delivered, including, where applicable: (i) the title of
such Debt Securities; (ii) any limit on the aggregate principal amount of such
Debt Securities; (iii) the date or dates, or the method or methods, if any, by
which such date or dates shall be determined or extended, on which the
principal of such Debt Securities is payable; (iv) any places other than the
issuer's office or agency in The City of New York where such Debt Securities
shall be payable or surrendered for registration of transfer or exchange; (v)
the denominations in which such Debt Securities shall be issuable; (vi) the
currency of denomination of such Debt Securities, which may be in U.S. dollars,
any foreign currency or currency unit, including European Currency Units
("ECU"), and, if applicable, certain other information relating to such foreign
currency or currency unit; (vii) the designation of the currency or currencies
in which payment of the principal of and premium, if any, and interest on such
Debt Securities will be made and whether payment of the principal of and
premium, if any, or the interest on Debt Securities designated in a foreign
currency or currency unit, at the election of a holder thereof, may instead be
payable in U.S. dollars and the terms and conditions upon which such election
may be made; (viii) the rate or rates (which may be fixed or floating), if any,
at which such Debt Securities will bear interest, or the method or methods, if
any, by which such rate or rates are to be determined or reset, the date or
dates, if any, from which such interest will accrue, or the method or
6
<PAGE>
methods, if any, by which such date or dates shall be determined or reset, the
dates on which such interest will be payable, the record date for the interest
payable on any interest payment date, and the basis upon which interest shall
be calculated if other than that of a 360-day year of twelve 30-day months;
(ix) the terms and conditions, if any, on which such Debt Securities may be
redeemed at the option of CHL or repaid at the option of the Holder (as defined
below) thereof; (x) the obligation, if any, of CHL to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provisions, and
the terms and conditions on which such Debt Securities shall be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation; (xi) if
other than the principal amount thereof, the portion of the principal amount of
such Debt Securities which will be payable upon declaration of acceleration of
the maturity thereof; (xii) provisions, if any, for the defeasance of such Debt
Securities; (xiii) the ability, if any, of the Holder of a Debt Security to
renew all or any portion of a Debt Security; (xiv) any additional Events of
Default or restrictive covenants provided for with respect to such Debt
Securities; (xv) any other terms not inconsistent with the Indenture, including
any terms which may be required by or advisable under United States laws or
regulations; (xvi) if such Debt Securities are denominated or payable in a
currency or currency unit other than U.S. dollars, the designation of the
initial Exchange Rate Agent and, if other than as set forth in the Indenture,
the definition of the "Exchange Rate"; and (xvii) the form of such Debt
Securities and, if in global form, the name of the depositary with respect
thereto and the terms upon which and the circumstances under which such Debt
Securities may be exchanged. (Section 301) "Holder" means a person in whose
name a Debt Security is registered in the related Security Register.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
Debt Securities will be issued only in fully registered form without coupons.
Debt Securities denominated in U.S. dollars will be issued in denominations of
$1,000 or any integral multiple thereof unless otherwise provided in the
Prospectus Supplement relating thereto. (Section 302) The Prospectus
Supplement relating to a series of Debt Securities denominated in a foreign
currency or currency unit will specify the denominations thereof.
The Indenture does not contain any provisions that would limit the ability of
the Company, CCI or any of their respective affiliates to incur indebtedness
(secured or unsecured) or that would afford Holders of Debt Securities
protection in the event of a highly leveraged transaction, restructuring,
change in control, merger or similar transaction involving the Company or CCI
that may adversely affect Holders of the Debt Securities.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. One or more series of Debt
Securities may be floating rate debt securities, and may be exchangeable for
fixed rate debt securities. Federal income tax consequences and special
considerations applicable to any such series will be described in the
Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
principal of, and any premium or interest on, any series of Debt Securities
will be payable, and such Debt Securities will be exchangeable and transfers
thereof will be registerable, at the Corporate Trust Office of the Trustee,
initially at 101 Barclay Street, New York, New York 10286, provided that, at
the option of CHL, payment of interest may be made by check mailed to the
address of the Person entitled thereto as it appears in the related Security
Register. (Sections 301, 305, 306, 307 and 1102)
No Debt Security shall be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose unless there appears on such Debt Security
a certificate of authentication substantially in the form provided for in the
Indenture duly executed by the Trustee by manual signature of one of its
authorized officers, and such certificate upon any Debt Security shall be
conclusive evidence, and the only evidence, that such Debt Security has been
duly authenticated and delivered under the Indenture and is entitled to the
benefits of the Indenture. (Section 203)
7
<PAGE>
EVENTS OF DEFAULT
The Indenture provides that the following shall constitute "Events of
Default" with respect to any series of Debt Securities thereunder: (i) default
in payment of principal of (or premium, if any, on) any Debt Security of such
series at Maturity; (ii) default for 30 days in payment of interest on any Debt
Security of such series when due; (iii) default in the deposit of any sinking
fund payment on any Debt Security of such series when due; (iv) default in the
performance or breach of any other covenant or warranty of CHL or the Guarantor
in the Indenture, the Debt Securities or the related Guarantees, continued for
60 days after written notice thereof by the Trustee or the Holders of at least
25% in aggregate principal amount of the Debt Securities of such series at the
time outstanding; (v) default resulting in acceleration of maturity of any
other indebtedness for borrowed money of CHL, the Guarantor or any direct or
indirect subsidiary of the Guarantor in an amount in excess of $10,000,000 and
such acceleration shall not be rescinded or annulled for a period of 10 days
after written notice thereof by the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debt Securities of such series at the time
outstanding; (vi) certain events of bankruptcy, insolvency or reorganization;
and (vii) any other Event of Default provided with respect to such series of
Debt Securities. (Section 601) No Event of Default with respect to a particular
series of Debt Securities issued under the Indenture necessarily constitutes an
Event of Default with respect to any other series of Debt Securities issued
thereunder.
The Indenture provides that if an Event of Default specified therein shall
occur and be continuing, either the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debt Securities of such series then
outstanding may declare the principal amount of the Debt Securities of such
series (or, in the case of Original Issue Discount Securities, such other
amount, if any, as provided for in the terms of such Original Issue Discount
Securities) to be due and payable immediately upon written notice thereof to
CHL. In certain cases, the Holders of a majority in aggregate principal amount
of the outstanding Debt Securities of any such series may, on behalf of the
Holders of all such Debt Securities, rescind and annul such declaration of
acceleration. (Section 602) "Original Issue Discount Security" means, except as
otherwise defined in a Debt Security, any Debt Security which is issued with
original issue discount within the meaning of Section 1273(a) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder.
The agreements governing certain of CHL's and the Guarantor's outstanding
indebtedness contain provisions to the effect that certain Events of Default
under the Indenture would constitute an event of default under such agreements
which, among other things, could cause an acceleration of the indebtedness
thereunder. See Note D to CCI's Consolidated Financial Statements incorporated
by reference herein.
The Indenture contains a provision entitling the Trustee, subject to the duty
of the Trustee during default under any series of Debt Securities to act with
the required standard of care, to be indemnified by the Holders of the Debt
Securities of such series before proceeding to exercise any right or power
under the Indenture with respect to such series at the request of such Holders.
(Sections 701 and 703) The Indenture provides that no Holders of Debt
Securities of any series issued thereunder may institute any proceedings,
judicial or otherwise, to enforce such Indenture except in the case of failure
of the Trustee thereunder, for 60 days, to act after it has received a written
request to enforce the Indenture by the Holders of at least 25% in aggregate
principal amount of the then outstanding Debt Securities of such series, and an
offer of reasonable indemnity. (Section 607) This provision will not prevent
any Holder of Debt Securities from enforcing payment of the principal thereof,
premium, if any, and interest thereon at the respective due dates thereof.
(Section 608) The Holders of a majority in aggregate principal amount of the
Debt Securities of any series issued under the Indenture then outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on it with
respect to the Debt Securities of such series. The Trustee may, however, refuse
to follow any direction that it determines may not lawfully be taken or would
be illegal or in conflict with such Indenture or involve it in personal
liability or which would be unjustly prejudicial to Holders of the Debt
Securities of such series not joining therein. (Section 612)
8
<PAGE>
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to any series of Debt Securities issued
thereunder, give to the Holders thereof notice of such default, unless such
default has been cured or waived. Except in the case of a default in the
payment of principal of, or premium, if any, or interest on any Debt Securities
or payment of any sinking fund installment, the Trustee shall be protected in
the withholding of such notice if it determines in good faith that the
withholding of such notice is in the interest of the Holders of the Debt
Securities of such series. (Section 702)
CHL and the Guarantor will be required to file with the Trustee annually an
Officers' Certificate as to the absence of certain defaults under the terms of
the Indenture. (Section 1105)
MODIFICATION AND WAIVER
Modifications of and amendments to the Indenture may be made by CHL, the
Guarantor and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
outstanding Debt Security affected thereby: (i) except as otherwise permitted
in the Indenture in connection with Debt Securities for which the Stated
Maturity is extendible, change the Stated Maturity of the principal of, or any
installment of interest on, such Debt Security; (ii) reduce the principal
amount of, or, except as otherwise permitted in the Indenture in connection
with Debt Securities for which the interest rate may be reset, interest on, or
any premium payable upon redemption or repayment of, such Debt Security; (iii)
reduce the amount of the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration of the Maturity
thereof; (iv) adversely affect the right of repayment at the option of a Holder
of such Debt Security; (v) reduce the amount of, or postpone the date fixed
for, any payment under any sinking fund or analogous provisions of such Debt
Security; (vi) change the place or currency or currency unit of payment of the
principal of, premium, if any, or interest on such Debt Security; (vii) change
or eliminate the rights of a Holder to receive payment in a designated
currency; (viii) impair the right to institute suit for the enforcement of any
required payment on or with respect to such Debt Security; (ix) reduce the
percentage of the aggregate principal amount of the outstanding Debt Securities
of any series the consent of whose Holders is required for modification or
amendment of the Indenture, for waiver of compliance with certain provisions of
the Indenture, or for waiver of certain defaults; (x) modify any of the
provisions of Section 613 (described below) except to increase such percentage
or to provide that certain other provisions of the Indenture cannot be modified
or waived without the consent of the Holder of each outstanding Debt Security
affected thereby; or (xi) modify or affect the terms and conditions of the
related Guarantees in a manner adverse to the interests of the Holders of the
Debt Securities.
The Indenture also contains provisions permitting CHL, the Guarantor and the
Trustee, without the consent of any Holders of Debt Securities under such
Indenture, to enter into supplemental indentures, in form satisfactory to the
Trustee, for any of the following purposes: (i) to evidence the succession of
another corporation to CHL or the Guarantor and the assumption by such
successor of the obligations and covenants of CHL or the Guarantor contained in
the Indenture and in the Debt Securities and the related Guarantees, as the
case may be; (ii) to add to the covenants of CHL or the Guarantor, for the
benefit of the Holders of all or any series of Debt Securities issued under the
Indenture (and if such covenants are to be for the benefit of less than all
series of Debt Securities issued under the Indenture, stating that such
covenants are expressly being included solely for the benefit of such series),
or to surrender any right or power herein conferred upon CHL or the Guarantor;
(iii) to add any additional Events of Default (and if such Events of Default
are to be applicable to less than all series of Debt Securities issued under
the Indenture, stating that such Events of Default are expressly being included
solely to be applicable to such series); (iv) to add or change any of the
provisions of the Indenture to such extent as shall be necessary to permit or
facilitate the issuance of Debt Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (v) to
change or eliminate any of the provisions of the Indenture, provided that any
such change or elimination shall become effective only when there is no Debt
Security outstanding of any series created prior to the
9
<PAGE>
execution of such supplemental indenture which is entitled to the benefit of
such provision; (vi) to establish the form or terms of Debt Securities of any
series as otherwise permitted by the Indenture; (vii) to evidence and provide
for the acceptance of appointment under the Indenture by a successor Trustee
with respect to the Debt Securities of one or more series issued under the
Indenture and to add to or change any of the provisions of the Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts thereunder by more than one Trustee, pursuant to the requirements of
the Indenture; (viii) to secure the Debt Securities issued under the
Indenture; (ix) to cure any ambiguity, to correct or supplement any provision
in such Indenture which may be defective or inconsistent with any other
provision of the Indenture, or to make any other provisions with respect to
matters or questions arising under the Indenture which shall not be
inconsistent with any provision of the Indenture, provided such other
provisions shall not adversely affect the interests of the Holders of Debt
Securities of any series issued under the Indenture in any material respect;
(x) to modify, eliminate or add to the provisions of the Indenture to such
extent as shall be necessary to effect the qualification of the Indenture
under the TIA or under any similar federal statute subsequently enacted and to
add to the Indenture such other provisions as may be expressly required under
the TIA; or (xi) to effect the assumption, by the Guarantor or a Subsidiary
thereof, of the payment obligations with respect to the Debt Securities and of
the performance of every covenant of the Indenture on the part of CHL to be
performed or observed. (Section 1001)
The Holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all Holders of Debt
Securities of that series, waive any past default under the Indenture with
respect to Debt Securities of that series except a default in the payment of
the principal of (or premium, if any), or interest on, any Debt Security of
that series and except a default in respect of a covenant or provision the
modification or amendment of which would require the consent of the Holder of
each outstanding Debt Security of the affected series. (Section 613)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such series. Global Securities may be
issued in either registered or bearer form and in either temporary or
permanent form. Unless and until it is exchanged in whole or in part for
individual certificates evidencing Debt Securities in definitive form
represented thereby, a Global Security may not be transferred except as a
whole by the Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to
such series.
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
Under the Indenture, neither CHL nor the Guarantor may consolidate with or
merge into any corporation, or transfer its assets substantially as an
entirety to any Person, unless: (i) the successor corporation or transferee
assumes CHL's or the Guarantor's obligations on the Debt Securities or the
related Guarantees, as the case may be, and under the Indenture, and in the
case of a consolidation or merger of CHL, the Guarantor delivers an
affirmation of the continuance of its obligations to the Trustee; (ii) after
giving effect to the transaction, no Event of Default and no event which,
after notice or lapse of time or both, would become an Event of Default shall
have occurred and be continuing; and (iii) certain other conditions are met.
(Sections 901 and 903)
10
<PAGE>
SATISFACTION, DISCHARGE AND DEFEASANCE
The Indenture, with respect to any series of Debt Securities (except for
certain specified surviving obligations, including (A) any rights of
registration of transfer and exchange and (B) rights to receive the principal,
premium, if any, and interest on the Debt Securities) will be discharged and
cancelled upon the satisfaction of certain conditions, including the following:
(i) all Debt Securities of such series not theretofore delivered to the Trustee
for cancellation have become due or payable, will become due and payable at
their Stated Maturity within one year, or are to be called for redemption
within one year and (ii) the deposit with such Trustee of an amount in the
Specified Currency sufficient to pay the principal, premium, if any, and
interest to the Maturity of all Debt Securities of such series. (Section 501)
If so specified in the Prospectus Supplement with respect to Debt Securities
of any series, CHL, at its option, (i) will be discharged from any and all
obligations in respect of the Debt Securities of such series (except for
certain obligations to register the transfer or exchange of Debt Securities of
such series, replace stolen, lost or mutilated Debt Securities of such series,
maintain certain offices or agencies in each Place of Payment, and hold moneys
for payment in trust), or (ii) will not be subject to provisions of the
Indenture described above under "--Consolidation, Merger and Transfer of
Assets" with respect to the Debt Securities of such series, in each case if CHL
irrevocably deposits with the Trustee, in trust, money or U.S. Government
Obligations (as defined in the Indenture) which through the payment of interest
thereon and principal thereof in accordance with their terms will provide money
in an amount sufficient (in the opinion of independent public accountants) to
pay all the principal (including any mandatory sinking fund payments) of, and
premium, if any, and interest on, the Debt Securities of such series on the
dates such payments are due in accordance with the terms of such Debt
Securities. To exercise any such option, CHL is required to deliver to the
Trustee (1) an opinion of counsel to the effect that (a) the deposit and
related defeasance would not cause the Holders of the Debt Securities of such
series to recognize income, gain or loss for Federal income tax purposes, (b)
CHL's exercise of such option will not cause any violation of the Investment
Company Act of 1940, as amended, and (c) if the Debt Securities of such series
are then listed on the New York Stock Exchange, such Debt Securities would not
be delisted as a result of the exercise of such option and (2) in the case of
the Debt Securities of such series being discharged, a ruling received from or
published by the United States Internal Revenue Service to the effect that the
deposit and related defeasance would not cause the Holders of the Debt
Securities of such series to recognize income, gain or loss for Federal income
tax purposes. (Sections 1401 and 1402)
GUARANTEES
The Debt Securities will be unconditionally guaranteed (the "Guarantees") by
the Guarantor as to payment of principal, premium, if any, and interest when
and as the same shall become due and payable, whether at their Stated Maturity
or upon redemption or repayment or otherwise. (Section 401) The Guarantees will
rank pari passu in right of payment with all other unsecured and unsubordinated
obligations of the Guarantor.
The obligations of the Guarantor under the Guarantees will be unconditional
regardless of the enforceability of the Debt Securities or the Indenture and
will not be discharged until all obligations contained in such Debt Securities
and the Indenture are satisfied. Holders of the Debt Securities may proceed
directly against the Guarantor in the event of an Event of Default with respect
to such Debt Securities without first proceeding against CHL. (Section 401)
Because the Guarantor is a holding company, the rights of its creditors,
including the Holders of the Debt Securities in the event the Guarantees are
enforced, to share in the distribution of the assets of any subsidiary upon the
subsidiary's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors, except to the extent the Guarantor may
itself be a creditor with recognized claims against the subsidiary.
11
<PAGE>
CONCERNING THE TRUSTEES
The Bank of New York is the Trustee under the Indenture. CHL and CCI maintain
banking relationships in the ordinary course of business with the Trustee.
Among other things, The Bank of New York is a lending bank under an existing
revolving credit facility of CHL. See Notes to CCI's Consolidated Financial
Statements incorporated by reference herein.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
one or more underwriters or dealers; (ii) through agents; or (iii) directly to
a limited number of purchasers or to a single purchaser. The Prospectus
Supplement with respect to each series of Debt Securities will set forth the
terms of the offering of the Debt Securities of such series, including the name
or names of any underwriters, dealers or agents, the purchase price of such
Debt Securities, the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation or agents'
commissions, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers, and any securities exchanges on which
the Debt Securities of such series may be listed.
If one or more underwriters are used in the sale, the Debt Securities will be
acquired by such underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price, or at varying prices determined at the time of
sale. The Debt Securities may be offered to the public through underwriting
syndicates represented by managing underwriters or by one or more underwriters
without a syndicate. Unless otherwise set forth in the Prospectus Supplement,
the obligations of the underwriters to purchase Debt Securities will be subject
to certain conditions precedent and the underwriters will be obligated to
purchase all the Debt Securities of a series if any are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Debt Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement or any supplement thereto. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a reasonable best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified entities
to purchase Debt Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date. Such contracts will be
subject only to those conditions set forth in the Prospectus Supplement. The
Prospectus Supplement will set forth the commissions payable for solicitations
of such contracts.
Agents and underwriters may from time to time purchase and sell Debt
Securities in the secondary market, but are not obligated to do so, and there
can be no assurance that there will be a secondary market for the Debt
Securities or that there will be liquidity in the secondary market if one
develops. From time to time, agents and underwriters may make a market in the
Debt Securities.
Agents and underwriters may be entitled under agreements entered into with
the Company and the Guarantor to indemnification by the Company and the
Guarantor, jointly and severally, against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof.
Agents and underwriters may be customers of, engage in transactions with or
perform services for, the Company or its affiliates in the ordinary course of
business.
12
<PAGE>
VALIDITY OF SECURITIES
The validity of the Debt Securities will be passed upon for the Company and
CCI by Fried, Frank, Harris, Shriver & Jacobson, a partnership including
professional corporations, New York, New York. Edwin Heller, whose professional
corporation is a member of Fried, Frank, Harris, Shriver & Jacobson, is a
director of CCI. Brown & Wood, New York, New York will serve as counsel for any
underwriters and agents. Brown & Wood also serves as counsel for CWMBS, Inc., a
wholly owned subsidiary of CCI, in connection with offerings of mortgage pass-
through certificates, and as counsel to CWM.
EXPERTS
The consolidated financial statements of CCI incorporated by reference in the
Registration Statement, of which this Prospectus forms a part, have been
audited by Grant Thornton LLP, independent certified public accountants, for
the periods and to the extent indicated in their report thereon, and have been
so incorporated in reliance upon the authority of said firm as experts in
accounting and auditing.
13
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or in-
corporated by reference in this Prospectus Supplement or the Prospectus in
connection with the offering covered by this Prospectus Supplement and the
Prospectus. If given or made, such information or representations must not be
relied upon as having been authorized by CHL, the Guarantor or any Agent. This
Prospectus Supplement and the Prospectus do not constitute an offer to sell,
or a solicitation of an offer to buy, the Notes in any jurisdiction where, or
to any person whom, it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus Supplement and the Prospectus nor any sale
made hereunder or thereunder shall, under any circumstances, create an
implication that there has not been any change in the facts set forth in this
Prospectus Supplement or the Prospectus or in the affairs of CHL or the Guar-
antor since the date hereof.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Prospectus Supplement
<S> <C>
Risk Factors............................................................... S-2
Description of Notes....................................................... S-4
Certain Federal Income Tax Considerations.................................. S-21
Plan of Distribution of Notes.............................................. S-25
Validity of Notes.......................................................... S-26
Prospectus
Available Information...................................................... 2
Incorporation of Certain Documents
by Reference.............................................................. 2
The Company and CCI........................................................ 3
Use of Proceeds............................................................ 4
Selected Consolidated Financial Data....................................... 5
Description of Debt Securities and Guarantees.............................. 6
Plan of Distribution....................................................... 12
Validity of Securities..................................................... 13
Experts.................................................................... 13
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
U. S. $1,000,000,000
COUNTRYWIDE
HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES E
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
PAYMENT OF PRINCIPAL, PREMIUM,
IF ANY, AND INTEREST
UNCONDITIONALLY GUARANTEED BY
[LOGO COUNTRYWIDE/SM/ CREDIT INDUSTRIES, INC.]
---------------
PROSPECTUS AND
PROSPECTUS SUPPLEMENT
, 1996
---------------
LEHMAN BROTHERS
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Rule 424(b)(3)
File Nos.
PRICING SUPPLEMENT NO. DATED 19
(To Prospectus Dated , 1996, as Supplemented , 199 )
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES E
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST UNCONDITIONALLY GUARANTEED BY
COUNTRYWIDE CREDIT INDUSTRIES, INC.
FIXED RATE NOTES
----------------
Trade Date: Issue Price: Original Issue Date: Stated Maturity Date: Interest
Rate:
Book-Entry: [_] Interest Payment Dates: Record
Certificated: [_] Dates:
Principal Amount:
Net Proceeds:
Minimum Denomination:
Specified Currency:
Exchange Rate Agent:
Redemption:
Check box opposite applicable paragraph.
[_] The Notes cannot be redeemed prior to maturity.
[_] The Notes may be redeemed prior to maturity.
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
Repayment:
Check box opposite applicable paragraph.
[_] The Notes cannot be repaid prior to maturity.
[_] The Notes may be repaid prior to maturity.
Optional Repayment Dates:
Additional/Other Terms:
----------------
The Notes to which this Pricing Supplement relates will constitute unsecured
and unsubordinated indebtedness of CHL and will rank pari passu in right of
payment with CHL's other unsecured and unsubordinated indebtedness. As of ,
19 , the Guarantor had $ aggregate principal amount of secured indebtedness
outstanding, and CHL had $ aggregate principal amount of secured
indebtedness outstanding. As of such date, CHL had $ aggregate principal
amount of unsecured indebtedness outstanding, which indebtedness ranked pari
passu in right of payment with CHL's other unsecured and unsubordinated
indebtedness and which indebtedness will rank pari passu in right of payment
with the Notes to which this Pricing Supplement relates.
<PAGE>
Rule 424(b)(3)
File Nos.
PRICING SUPPLEMENT NO. DATED 19
(To Prospectus Dated , 1996, as Supplemented , 199 )
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTES, SERIES E
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST UNCONDITIONALLY GUARANTEED BY
COUNTRYWIDE CREDIT INDUSTRIES, INC.
FLOATING RATE NOTES
----------------
Trade Date: Book-Entry: [_]
Issue Price: Certificated: [_]
Original Issue Date: Principal Amount:
Stated Maturity Date: Net Proceeds:
Specified Currency:
<TABLE>
<S> <C> <C> <C>
Base Rate(s): [_] Commercial Paper Rate [_] LIBOR (See Additional/ [_] Certificate of Deposit Rate
Other Terms)
[_] Treasury Rate [_] Federal Funds Rate [_] Prime Rate
[_] CMT Rate (See Additional/ [_] Eleventh District [_] Other
Other Terms) Cost of Funds Rate
</TABLE>
Exchange Rate Agent:
Minimum Denomination: Fixed Rate Commencement Date:
Initial Interest Rate: Fixed Interest Rate:
Interest Reset Dates:
Interest Payment Dates:
Index Maturity:
Maximum Interest Rate:
Minimum Interest Rate:
Interest Factor Convention: Spread (plus or minus):
Spread Multiplier:
Calculation Agent:
Redemption: Repayment:
Check box opposite applicable paragraph.Check box opposite applicable
paragraph.
[_] The Notes cannot be redeemed prior to maturity.
[_] The Notes cannot be repaid prior
to maturity.
[_] The Notes may be redeemed prior to maturity.
[_] The Notes may be repaid prior to
Initial Redemption Date: maturity.
Optional Repayment Dates:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
Additional/Other Terms:
----------------
The Notes to which this Pricing Supplement relates will constitute unsecured
and unsubordinated indebtedness of CHL and will rank pari passu in right of
payment with CHL's other unsecured and unsubordinated indebtedness. As of ,
19 , the Guarantor had $ aggregate principal amount of secured indebtedness
outstanding, and CHL had $ aggregate principal amount of secured
indebtedness outstanding. As of such date, CHL had $ aggregate principal
amount of unsecured indebtedness outstanding, which indebtedness ranked pari
passu in right of payment with CHL's other unsecured and unsubordinated
indebtedness and which indebtedness will rank pari passu in right of payment
with the Notes to which this Pricing Supplement relates.
P-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 344,828
Blue sky fees and expenses.................................... 15,000
Legal fees and expenses....................................... 75,000
Accounting fees and expenses.................................. 30,000
Printing and engraving expenses............................... 74,000
Trustee's fees and expenses................................... 12,500
Rating agency fees............................................ 600,000
Miscellaneous................................................. 23,672
----------
Total..................................................... $1,175,000
==========
</TABLE>
- --------
*Except for the SEC registration fee, all of the foregoing expenses have
been estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides, in substance,
that Delaware corporations shall have the power, under specified circumstances,
to indemnify their directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by a third party or in the
right of the corporation, by reason of the fact that they were or are such
directors, officers, employees or agents, against expenses incurred in any such
action, suit or proceeding. The Delaware General Corporation Law also provides
that Delaware corporations may purchase insurance on behalf of any such
director, officer, employee or agent. Sections 722, 723, 725 and 726 of the New
York Business Corporation Law are substantively equivalent to Section 145 of
the Delaware General Corporation Law.
Article SIXTH of the Certificate of Incorporation of CCI provides that CCI
may indemnify its directors and officers to the full extent permitted by the
laws of the State of Delaware. Article VIII of CCI's Bylaws provides that CCI
shall indemnify its directors and officers, and persons serving as directors
and officers of CHL at the request of CCI, against any threatened, pending or
completed action, suit or proceeding or investigation brought against such
directors and officers by reason of the fact that such persons were such
directors or officers, provided that such persons acted in good faith and in a
manner which they reasonably believed to be in or not opposed to the best
interests of CCI; except that in the case of actions brought by or in the right
of CCI to procure a judgment in its favor, no indemnification is permitted in
respect to any claim, issue or matter as to which any such director or officer
shall have been adjudged to be liable to CCI unless the court in which the
action was brought determines that such person is entitled to indemnification.
CCI's Bylaws further contemplate that the indemnification provisions permitted
thereunder are not exclusive of any other rights to which such directors and
officers are otherwise entitled by means of Bylaw provisions, agreements, vote
of stockholders or disinterested directors or otherwise. CCI has entered into
indemnity agreements with certain of its directors and executive officers
(including the directors and executive officers of CHL), whereby such
individuals are indemnified by CCI up to an aggregate limit of $5,000,000 for
any claims made against such individual based on any act, omission or breach of
duty committed while acting as a director or officer, except, among other
things, cases involving dishonesty or improper personal benefit. CCI also
maintains an insurance policy pursuant to which its directors and officers
(including the directors and executive officers of CHL) are insured against
certain liabilities which might arise out of their relationship with CCI as
directors and officers.
II-1
<PAGE>
Article SEVENTH of the Certificate of Incorporation provides that a director
of CCI shall have no personal liability to CCI or its stockholders for monetary
damages for breach of his fiduciary duty of care as a director to the full
extent permitted by the Delaware General Corporation Law, as it may be amended
from time to time.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
<C> <S>
1.1 --Form of Selling Agency Agreement
4.1 --Indenture, dated as of January 1, 1992, among CHL, the
Guarantor and The Bank of New York, as trustee (incorpo-
rated by reference to Exhibit 4.1 to the Registration
Statement on Form S-3 of CHL and the Guarantor (File Nos.
33-50661 and 33-50661-01) filed on October 19, 1993)
4.2 --Supplemental Indenture No. 1 dated as of June 15, 1995,
to the Indenture dated as of January 1, 1992, among CHL,
the Guarantor and The Bank of New York, as trustee (in-
corporated by reference to Exhibit 4.9 to Amendment No. 2
to the Registration Statement on Form S-3 of CHL and the
Guarantor (File Nos. 33-59559 and 33-59559-01) filed on
June 16, 1995)
4.3 --Form of Fixed Rate Medium-Term Note
4.4 --Form of Floating Rate Medium-Term Note
5.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson,
counsel to CHL and CCI, as to the legality of the securi-
ties being offered
8.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson,
counsel to CHL and CCI, as to certain tax matters
12.1 --Statement regarding computation of ratio of earnings to
fixed charges (incorporated by reference to Exhibit 12.1
to CCI's Annual Report on Form 10-K dated February 29,
1996)
12.2 --Statement regarding computation of ratio of earnings to
net fixed charges (incorporated by reference to Exhibit
12.2 to CCI's Annual Report on Form 10-K dated February
29, 1996)
23.1 --Consent of Grant Thornton LLP
23.2 --Consent of Fried, Frank, Harris, Shriver & Jacobson (in-
cluded in Exhibit 5.1)
23.3 --Consent of Fried, Frank, Harris, Shriver & Jacobson (in-
cluded in Exhibit 8.1)
24 --Powers of Attorney for CHL and CCI relating to subse-
quent amendments (included on pages II-5 and II-6 of the
Registration Statement)
25.1 --Form T-1 Statement of Eligibility Under Trust Indenture
Act of 1939 of The Bank of New York (separately bound)
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned, CHL and CCI (the "Registrants"), hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually
II-2
<PAGE>
or in the aggregate, represent a fundamental change in the information
set forth in this Registration Statement; notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act of 1933 if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs (1) (i)
and (ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrants pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each of the undersigned Registrants hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
CCI's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the provisions permitted under Item 15 above or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted against the
Registrants by such director, officer or controlling person in connection with
the securities being registered hereby, the Registrants will, unless in the
opinion of their counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Countrywide Home
Loans, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and it has duly caused this
Post-Effective Amendment No. 1 to the Registration Statement (File No. 33-
59559) and this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Pasadena, State of
California, on the 15th day of May, 1996.
COUNTRYWIDE HOME LOANS, INC.
By: /s/ Angelo R. Mozilo
-------------------------------------
Angelo R. Mozilo
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David S. Loeb, Angelo R. Mozilo, Stanford L.
Kurland and Carlos M. Garcia and each of them, his true and lawful attorneys-
in-fact and agents, with full power of substitution and resubstitution, for and
in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Post-Effective
Amendment No. 1 to the Registration Statement (File No. 33-59559) (the "Post-
Effective Amendment") and this Registration Statement, and any registration
statement related to the offering contemplated by this Post-Effective Amendment
and this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment and this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ David S. Loeb Director May 15, 1996
____________________________________
DAVID S. LOEB
/s/ Angelo R. Mozilo Chairman of the Board of May 15, 1996
____________________________________ Directors and Chief
ANGELO R. MOZILO Executive Officer (Principal
Executive Officer); Director
/s/ Stanford L. Kurland President and Chief May 15, 1996
____________________________________ Operating Officer; Director
STANFORD L. KURLAND
/s/ Thomas K. McLaughlin Executive Vice President and May 15, 1996
____________________________________ Chief Financial Officer
THOMAS K. MCLAUGHLIN (Principal Financial and
Accounting Officer)
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Countrywide
Credit Industries, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and it has duly
caused this Post-Effective Amendment No. 1 to the Registration Statement (File
No. 33-59559) and this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Pasadena, State of
California, on the 15th day of May, 1996.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: /s/ David S. Loeb
-------------------------------------
David S. Loeb
Chairman of the Board of Directors
and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David S. Loeb, Angelo R. Mozilo, Stanford L.
Kurland and Carlos M. Garcia, and each of them, his true and lawful attorneys-
in-fact and agents, with full power of substitution and resubstitution, for and
in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Post-Effective
Amendment No.1 to the Registration Statement (File No. 33-59559) (the "Post-
Effective Amendment") and this Registration Statement, and any registration
statement related to the offering contemplated by this Post-Effective Amendment
and this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment and this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ David S. Loeb Chairman of the Board of May 15, 1996
____________________________________ Directors and President
DAVID S. LOEB (Principal Executive
Officer); Director
/s/ Angelo R. Mozilo Executive Vice President and May 15, 1996
____________________________________ Vice Chairman of the Board
ANGELO R. MOZILO of Directors; Director
/s/ Carlos M. Garcia Managing Director--Finance, May 15, 1996
____________________________________ Chief Financial Officer and
CARLOS M. GARCIA Chief Accounting Officer
(Principal Financial and
Accounting Officer)
/s/ Robert J. Donato Director May 15, 1996
____________________________________
ROBERT J. DONATO
/s/ Ben M. Enis Director May 15, 1996
____________________________________
BEN M. ENIS
/s/ Edwin Heller Director May 15, 1996
____________________________________
EDWIN HELLER
/s/ Harley W. Snyder Director May 15, 1996
____________________________________
HARLEY W. SNYDER
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER DESCRIPTION NO.
------ ----------- ----
<C> <S> <C>
1.1 --Form of Selling Agency Agreement
4.1 --Indenture, dated as of January 1, 1992, among CHL, the Guaran-
tor and The Bank of
New York, as trustee (incorporated by reference to Exhibit 4.1
to the Registration Statement on Form S-3 of CHL and the Guar-
antor (File Nos. 33-50661 and 33-50661-01) filed on October 19,
1993)
4.2 --Supplemental Indenture No. 1 dated as of June 15, 1995, to the
Indenture dated as of January 1, 1992, among CHL, the Guarantor
and The Bank of New York, as trustee (incorporated by reference
to Exhibit 4.9 to Amendment No. 2 to the Registration Statement
on Form S-3 of CHL and the Guarantor (File Nos. 33-59559 and
33-59559-01) filed on June 16, 1995)
4.3 --Form of Fixed Rate Medium-Term Note
4.4 --Form of Floating Rate Medium-Term Note
5.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel
to CHL and CCI, as to the legality of the securities being of-
fered
8.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel
to CHL and CCI, as to certain tax matters
12.1 --Statement regarding computation of ratio of earnings to fixed
charges (incorporated by reference to Exhibit 12.1 to CCI's An-
nual Report on Form 10-K dated February 29, 1996)
12.2 --Statement regarding computation of ratio of earnings to net
fixed charges (incorporated by reference to Exhibit 12.2 to
CCI's Annual Report on Form 10-K dated February 29, 1996)
23.1 --Consent of Grant Thornton LLP
23.2 --Consent of Fried, Frank, Harris, Shriver & Jacobson (included
in Exhibit 5.1)
23.3 --Consent of Fried, Frank, Harris, Shriver & Jacobson (included
in Exhibit 8.1)
24 --Powers of Attorney for CHL and CCI relating to subsequent
amendments (included on pages II-5 and II-6 of the Registration
Statement)
25.1 --Form T-1 Statement of Eligibility Under Trust Indenture Act of
1939 of The Bank of
New York (separately bound)
</TABLE>
<PAGE>
EXHIBIT 1.1
Countrywide Home Loans, Inc.
U.S. $1,000,000,000
Medium-Term Notes, Series E
Due Nine Months or More
From Date of Issue
Payment of Principal, Premium, if any,
and Interest Unconditionally Guaranteed by
Countrywide Credit Industries, Inc.
SELLING AGENCY AGREEMENT
May __, 1996
Lehman Brothers
Lehman Brothers Inc.
3 World Financial Center - 12th Floor
New York, New York 10285-1200
Goldman, Sachs & Co.
85 Broad Street
New York, N.Y. 10004
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
NationsBanc Capital Markets, Inc.
100 North Tyron Street
Charlotte, NC 28255
Salomon Brothers Inc
Seven World Trade Center
New York, N.Y. 10048
Ladies and Gentlemen:
Countrywide Home Loans, Inc., a New York corporation (the "Company"),
confirms its agreement with each of you (collectively, the "Agents") with
respect to the issue and sale by the Company of up to U.S. $1,000,000,000
aggregate initial offering price of its Medium-Term Notes, Series E, Due Nine
Months or More from Date of Issue (the "Notes"). The Notes will be
unconditionally guaranteed as to payment of principal, premium, if any, and
interest (the "Guarantees") by Countrywide
<PAGE>
Credit Industries, Inc. (the "Guarantor"). The Notes and the Guarantees will be
issued under an indenture, dated as of January 1, 1992, as supplemented by
Supplemental Indenture No. 1 thereto dated as of June 15, 1995 (collectively,
the "Indenture"), among the Company, the Guarantor and The Bank of New York, as
trustee (the "Trustee"). Unless otherwise specified in the Pricing Supplement
referred to below, the Notes will be issued in minimum denominations of U.S.
$1,000 and in denominations exceeding such amount by integral multiples of
U.S. $1,000, and if denominated in a currency or currency unit other than U.S.
dollars, the equivalent in such other currency or currency unit (the "Specified
Currency") as determined in accordance with the Indenture, of U.S. $1,000
(rounded down to an integral multiple of 1,000 units of such Specified Currency)
and any larger amount that is an integral multiple of 1,000 units of such
Specified Currency, will be issued only in fully registered certificated or
book-entry form, and will be issued in the currency or currency units and will
have the maturities, annual interest rates (whether fixed or floating),
redemption provisions and other terms set forth in a pricing supplement (the
"Pricing Supplement") to the Prospectus referred to below. The Notes will be
issued, and the terms thereof established, in accordance with the Indenture and
the Medium-Term Note Administrative Procedures attached hereto as Exhibit A (the
"Procedures"). The Procedures may only be amended by written agreement of the
Company and each Agent after notice to, and in the case of amendments which
affect the rights, duties or obligations of the Trustee, with the approval of,
the Trustee.
1. Representations and Warranties. The Company and the Guarantor,
------------------------------
jointly and severally, represent and warrant to, and agree with, each Agent
that:
(a) The Company and the Guarantor meet the requirements for use of
Form S-3 under the Securities Act of 1933, as amended (the "Act") and rules
and regulations ("Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") promulgated thereunder and have filed with
the Commission Post-Effective Amendment No. 1 to the Registration Statement
on Form S-3 (File No. 33-59559) (the "Post-Effective Amendment") and the
Registration Statement on Form S-3 (File No. 333-_______) (the "New
Registration Statement"), and a related preliminary prospectus for the
registration under the Act of certain securities, including the Notes and
the Guarantees (collectively, the "Securities") and the offering thereof
from time to time in accordance with Rule 415 of the Rules and Regulations,
which Post-Effective Amendment and New Registration Statement have been
declared effective by the Commission and copies of which have heretofore
been delivered to you. Such Post-Effective Amendment and New Registration
Statement, as they may be amended or supplemented, meet the requirements
set forth in Rule 415(a)(1)(x) and (a)(2) of the Rules and Regulations and
comply in all other material respects with said Rule. In connection with
the sale of Notes, the Company and the Guarantor propose to file
2
<PAGE>
with the Commission pursuant to Rule 424 under the Act a supplement to the
form of prospectus included in such Post-Effective Amendment and New
Registration Statement relating to the Notes and the Guarantees and the
plan of distribution thereof and have previously advised the Agents of all
further information (financial and other) with respect to the Company and
the Guarantor to be set forth therein. Such Post-Effective Amendment and
New Registration Statement, in the form in which they were declared
effective, as amended through the date hereof, including all documents
incorporated or deemed to be incorporated by reference therein and the
information, if any, deemed to be a part thereof pursuant to Rule 430A(b)
of the Rules and Regulations through the date hereof, is hereinafter
referred to as the "Registration Statement". Such prospectus, as
supplemented through the date hereof, is hereinafter called the
"Prospectus", except that if any revised prospectus or prospectus
supplement shall be provided to the Agents by the Company for use in
connection with the offering of the Securities which differs from the
Prospectus (whether or not such revised prospectus or prospectus supplement
is required to be filed by the Company pursuant to Rule 424(b) of the Rules
and Regulations), the term "Prospectus" shall refer to such revised
prospectus or prospectus supplement, as the case may be, from and after the
time it is first provided to the Agents for such use. Any reference herein
to the Registration Statement or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the date of this
Agreement or the date of the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement or the Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act
after the date of this Agreement or the date of the Prospectus, as the case
may be, deemed to be incorporated therein by reference.
(b) As of the date hereof, when any amendment to the Registration
Statement becomes effective (including the filing of any document
incorporated by reference in the Registration Statement), when any
supplement to the Prospectus is filed with the Commission, as of the date
of any Terms Agreement (as defined by Section 2 hereof) and at the date of
delivery by the Company of any Notes sold hereunder (a "Settlement Date"),
(i) the Registration Statement, as amended as of any such time, and the
Prospectus, as supplemented as of any such time, and the Indenture
complies, or will comply, as the case may be, in all material respects with
the applicable requirements of the Act, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the Exchange Act and the
3
<PAGE>
respective rules and regulations thereunder and (ii) neither the
Registration Statement, as amended as of any such time, nor the Prospectus,
as supplemented as of any such time, contains, or will contain, as the case
may be, any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however, that the
-------- -------
representations or warranties in this subsection shall not apply to (a)
that part of the Registration Statement which shall constitute the
Statements of Eligibility on Form T-1 under the Trust Indenture Act of the
Trustee or (b) the information contained in or omitted from the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information
furnished in writing to the Company or the Guarantor by any of you
specifically for use in connection with the preparation of the Registration
Statement and the Prospectus or any amendment thereof or supplement
thereto.
(c) Neither the Company nor the Guarantor nor any of their respective
subsidiaries is in violation of its corporate charter or bylaws or in
default under any agreement, indenture or instrument to which the Company,
the Guarantor or any of their respective subsidiaries is a party, the
effect of which violation or default would be material to the Company or
the Guarantor and its subsidiaries considered as a whole; the execution,
delivery and performance of this Agreement and the Indenture and
consummation of the transactions contemplated hereunder and thereunder will
not conflict with, result in the creation or imposition of any lien, charge
or encumbrance upon any of the assets of the Company, the Guarantor or any
of their respective subsidiaries pursuant to the terms of, or constitute a
default under, any agreement, indenture or instrument, or result in a
violation of the charter or by-laws of the Company or the Guarantor or any
order, rule or regulation of any court or governmental agency having
jurisdiction over the Company, the Guarantor or any of their respective
subsidiaries; and except as required by the Act, the Trust Indenture Act,
the Exchange Act and applicable state securities laws, no consent,
authorization or order of, or filing or registration with, any court or
governmental agency is required for the execution, delivery and performance
of this Agreement and the Indenture.
(d) Except as described in or contemplated by the Registration
Statement and the Prospectus, there has not been any material adverse
change in, or any adverse development which materially affects, the
business, properties, financial condition or results of operations of the
Company or the Guarantor and its subsidiaries considered as a whole
4
<PAGE>
since the dates as of which information is given in the Registration
Statement and the Prospectus.
(e) Grant Thornton LLP, whose reports have been included in the
Prospectus and incorporated by reference or included in the Guarantor's
most recent Annual Report on Form 10-K, which is incorporated by reference
in the Prospectus, are independent public accountants as required by the
Act and the Rules and Regulations.
(f) (i) The Indenture has been duly authorized, executed and
delivered by the Company and the Guarantor and constitutes the legally
binding obligation of the Company and the Guarantor, respectively,
enforceable in accordance with its terms subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, fraudulent conveyance, moratorium or
other laws affecting creditors' rights generally and general principles of
equity, (ii) on any Settlement Date, the Notes will have been duly
authorized and, upon payment therefor as provided in this Agreement, will
constitute legally binding obligations of the Company enforceable in
accordance with their terms subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, fraudulent conveyance, moratorium or
other laws affecting creditors' rights generally and general principles of
equity and the holders of the Notes will be entitled to the benefits of the
Indenture, (iii) on any Settlement Date, the Guarantees will have been duly
authorized and, upon delivery of the related Notes, will constitute legally
binding obligations of the Guarantor enforceable in accordance with their
terms subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, fraudulent conveyance, moratorium or other laws affecting
creditors' rights generally and general principles of equity and the
holders of the Notes upon which the Guarantees are endorsed will be
entitled to the benefits of the Indenture, and (iv) the Indenture conforms,
and the Notes and related Guarantees will conform, in each case in all
material respects, to the descriptions thereof contained in the Prospectus.
(g) Each of the Company, the Guarantor and any Significant Subsidiary
of the Company or the Guarantor, as defined in Rule 405 of Regulation C of
the Rules and Regulations (individually, a "Subsidiary" and collectively,
the "Subsidiaries"), has been duly incorporated, is validly existing and in
good standing under the laws of the jurisdiction in which it is chartered
or organized, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership of property
or the conduct of its business requires such qualification (except where
the failure to be so qualified would not have a material adverse effect on
the
5
<PAGE>
business operations or financial condition of the Company or the Guarantor
and its subsidiaries taken as a whole), and has power and authority
necessary to own or hold its property and to conduct the business in which
it is engaged.
(h) All of the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and all outstanding shares of capital stock of the
Subsidiaries are owned by the Company or the Guarantor, directly or through
subsidiaries, free and clear of any perfected security interest, other
security interests, claims, liens or encumbrances.
(i) Except as described in the Prospectus, there is no material
litigation or governmental proceeding pending or, to the knowledge of the
Company or the Guarantor, threatened against the Company, the Guarantor or
any of their respective subsidiaries which is reasonably likely to result
in any material adverse change in the financial condition, results of
operations, business or prospects of the Company or the Guarantor and its
subsidiaries considered as a whole or which is required to be disclosed in
the Registration Statement.
(j) The financial statements filed or incorporated as part of the
Registration Statement or included or incorporated in the Prospectus
present fairly, or (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such document,
filed with the Commission after the date as of which this representation is
being made) will present fairly, at all times during the effectiveness of
this Agreement, the financial condition and results of operations of the
Guarantor, at the dates and for the periods indicated, and have been, and
(in the case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being made)
will be at all times during the effectiveness of this Agreement, prepared
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as otherwise
required pursuant to such generally accepted accounting principles; and the
summarized financial information of the Company included or incorporated by
reference in the Registration Statement and the Prospectus presents fairly
the information required to be stated therein.
(k) The documents incorporated by reference into the Prospectus have
been, and (in the case of any amendment or supplement to any such document,
or any material incorpo-
6
<PAGE>
rated by reference in any such document, filed with the Commission after
the date as of which this representation is being made) will be at all
times during the effectiveness of this Agreement, prepared in all material
respects in conformity with the applicable requirements of the Act and the
Rules and Regulations and the Exchange Act and the rules and regulations of
the Commission thereunder and such documents have been, or (in the case of
any amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the Commission
after the date as of which this representation is being made) will be at
all times during the effectiveness of this Agreement hereof, timely filed
as required thereby.
(l) There are no contracts or other documents which are required to be
filed as exhibits to the Registration Statement by the Act or by the Rules
and Regulations, or which were required to be filed as exhibits to any
document incorporated by reference in the Prospectus by the Exchange Act or
the rules and regulations of the Commission thereunder, which have not been
filed as exhibits to the Registration Statement or to such document or
incorporated therein by reference as permitted by the Rules and Regulations
or the rules and regulations of the Commission under the Exchange Act as
required.
(m) The Company, the Guarantor and each subsidiary of the Guarantor
have complied, and will comply, with the provisions of Florida H.B. 1771,
codified as Section 517.075 of the Florida Statutes, 1987, as amended, and
all regulations promulgated thereunder relating to issuers doing business
in Cuba.
2. Appointment of Agents; Solicitations by the Agents of Offers to
---------------------------------------------------------------
Purchase; Sales of Notes to a Purchaser. (a) Subject to the terms and
- ---------------------------------------
conditions set forth herein, and to the reservation by the Company of the right
to sell, solicit, and accept offers to purchase Notes directly on its own
behalf, the Company hereby authorizes each Agent to act as its agent to solicit
offers for the purchase of all or part of the Notes from the Company.
On the basis of the representations and warranties, and subject to the
terms and conditions set forth herein, each of the Agents agrees, as agent of
the Company, to use its reasonable best efforts to solicit offers to purchase
the Notes from the Company upon the terms and conditions set forth herein and in
the Prospectus as amended or supplemented and in the Procedures.
The Company reserves the right, in its sole discretion, to instruct the
Agents or any one or more of the Agents from time to time to suspend at any
time, for any period of time or perma-
7
<PAGE>
nently, the solicitation of offers to purchase the Notes. Upon receipt of
instructions from the Company, such Agents will forthwith suspend solicitation
of offers to purchase Notes from the Company until such time as the Company has
advised them that such solicitation may be resumed.
Unless otherwise agreed between the Company and such Agent, the Company
agrees to pay each Agent a commission in U.S. dollars, at the time of settlement
of each sale of Notes by the Company as a result of a solicitation made by such
Agent, in an amount equal to that percentage specified in Schedule I hereto (or,
with respect to Notes in which the stated maturity is in excess of 30 years,
such percentage as shall be agreed upon by the Company and the related Agent at
such time) of the aggregate principal amount of the Notes sold by the Company as
a result of solicitations by such Agent and such commission shall be payable as
specified in the Procedures.
Subject to the provisions of this Section and to the Procedures, offers for
the purchase of Notes may be solicited by each Agent as agent for the Company at
such time and in such amounts as such Agent deems advisable; provided, however,
-------- -------
that so long as this Agreement shall be in effect, the Company shall not solicit
offers to purchase Notes through any agents other than the Agents.
Notwithstanding anything to the contrary contained herein, the Company may
authorize any other person, partnership or corporation (an "Additional Agent")
to act as its agent to solicit offers for the purchase of all or part of the
Notes of the Company and/or accept offers to purchase Notes from any such
Additional Agent, provided that any such Additional Agent shall have entered
--------
into an agreement with the Company upon the same terms and conditions as set
forth in this Agreement.
(b) Subject to the terms and conditions stated herein, the Company agrees
that, whenever the Company determines to sell Notes directly to any Agent as
principal for resale to others, it will enter into a separate agreement relating
to such sale in accordance with the provisions of this Section 2(b). For the
purposes of this Agreement, the term "Agent" shall refer to each of you acting
solely in the capacity as agent for the Company hereunder and not as principal;
the term "Purchaser" shall refer to each of you acting solely as principal
hereunder and not as agent, and the term "you" shall refer to each of you acting
in both such capacities or in either such capacity.
Each sale of Notes to a Purchaser shall be made in accordance with the
terms of this Agreement and the Procedures and a supplemental agreement which
will provide for the sale of such Notes to, and the purchase and reoffering
thereof by, a Purchaser. Each such supplemental agreement (which may be an
8
<PAGE>
oral agreement and confirmed in writing between a Purchaser and the Company) is
herein referred to as a "Terms Agreement". Each such Terms Agreement, whether
oral (and confirmed in writing, which may be by facsimile transmission) or in
writing, shall be with respect to such information (as applicable) as is
specified in Exhibit B hereto. A Purchaser's commitment to purchase Notes shall
be deemed to have been made on the basis of the representations and warranties
of the Company and the Guarantor herein contained and shall be subject to the
terms and conditions herein set forth. Each Terms Agreement shall describe the
Notes to be purchased by the Purchaser pursuant thereto, specify the principal
amount of such Notes, the price to be paid to the Company for such Notes, the
currency or currency unit in which such Notes shall be denominated and be
payable, whether the Notes will be issued in certificated or book-entry form,
whether interest shall be payable at a fixed or floating rate, the date and time
of delivery of payment for such Notes (the "Purchase Date"), the place of
delivery of the Notes and payment therefor, the method of payment and any
requirements for the delivery of the opinions of counsel, the certificates from
the Company, the Guarantor or their officers, or the letter from Grant Thornton
LLP pursuant to Section 6(b). Such Terms Agreement shall also specify the
period of time, if applicable, referred to in Section 4(l). In connection with
the resale of any Notes purchased by a Purchaser, such Purchaser may engage the
services of any other broker or dealer in connection with such resale and may
allow all or any portion of the discount received to such brokers and dealers.
Delivery of the certificates for Notes sold to a Purchaser pursuant to any
Terms Agreement shall be made as agreed to between the Company and the Purchaser
as set forth in the respective Terms Agreement, not later than the Purchase Date
set forth in such Terms Agreement, against payment of funds to the Company in
the net amount due to the Company for such Notes by the method and in the form
set forth in the respective Terms Agreement.
3. Offering Procedure. (a) Unless otherwise agreed between the
------------------
Company and each Agent, each Agent shall communicate to the Company, orally or
in writing, each offer to purchase Notes received by such Agent (unless such
offer is rejected by such Agent in accordance herewith) on terms previously
communicated by the Company to such Agent, and unless otherwise agreed between
the Company and each Agent, the Company shall have the sole right to accept such
offers to purchase Notes and may refuse any proposed purchase of Notes in whole
or in part for any reason.
(b) Unless otherwise agreed between the Company and each Agent, each Agent
shall have the right, in its discretion reasonably exercised, to reject any
proposed purchase of Notes, as a whole or in part, and any such rejection shall
not be deemed
9
<PAGE>
a breach of its agreement contained herein. Each Agent and the Company agree to
perform the respective duties and obligations specifically provided to be
performed by them in the Procedures.
4. Agreements. The Company and the Guarantor, jointly and severally,
----------
agree with each Agent that:
(a) Prior to the termination of the offering of the Notes, the Company
and the Guarantor will not file any amendment of the Registration Statement
or supplement to the Prospectus (except for a supplement relating to an
offering of securities other than the Notes and related Guarantees) unless
the Company or the Guarantor has furnished to such Agent a copy for its
review prior to filing and will not file any such proposed amendment or
supplement to which such Agent may reasonably object. Subject to the
foregoing sentence, the Company and the Guarantor will cause each
supplement to the Prospectus to be filed (or mailed for filing) with the
Commission as required pursuant to Rule 424. The Company and the Guarantor
will promptly advise such Agent (i) when each supplement to the Prospectus
shall have been filed (or mailed for filing) with the Commission pursuant
to Rule 424, (ii) when any amendment of the Registration Statement shall
have become effective, (iii) of any request by the Commission for any
amendment of the Registration Statement or amendment of or supplement to
the Prospectus or for any additional information, (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose and (v) of the receipt by the Company or the Guarantor of
any notification with respect to the suspension of the qualification of the
Notes and related Guarantees for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose. The Company and the
Guarantor will use their best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when a prospectus relating to the Notes and
related Guarantees is required to be delivered under the Act, any event
occurs as a result of which the Registration Statement, as then amended, or
the Prospectus, as then supplemented, would include any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, any facts or events arise which, individually or in
the aggregate, would represent a fundamental change in the information set
forth in the Registration Statement or the Prospectus, or if it shall be
necessary to amend the Registration Statement or to supplement the
Prospectus to
10
<PAGE>
comply with the Act or the Exchange Act or the respective rules and
regulations thereunder, the Company and the Guarantor promptly will (i)
notify such Agent to suspend the solicitation of offers to purchase Notes
(and, if so notified, such Agent shall forthwith suspend such solicitation
and cease using the Prospectus as then amended or supplemented), (ii)
prepare and file with the Commission, subject to the first sentence of
paragraph (a) of this Section 4, an amendment or supplement which will
correct such statement or omission or an amendment or supplement which will
effect such compliance and (iii) will supply any such amended or
supplemented Prospectus to such Agent in such quantities as such Agent may
reasonably request. If such amendment or supplement, and any documents,
certificates and opinions furnished to such Agent pursuant to paragraph (f)
of this Section 4 in connection with the preparation or filing of such
amendment or supplement are reasonably satisfactory in all respects to such
Agent, such Agent will, upon the filing of such amendment or supplement
with the Commission and upon the effectiveness of an amendment to the
Registration Statement if such an amendment is required, resume such
Agent's obligation to solicit offers to purchase Notes hereunder.
(c) As soon as practicable, the Guarantor will make generally
available to the security holders of the Guarantor and to such Agent an
earnings statement which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(d) The Company and the Guarantor will furnish to such Agent and to
its counsel, without charge, copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective and, so long as delivery of a prospectus may be required by the
Act, as many copies of any preliminary prospectus and the Prospectus and
any amendments thereof and supplements thereto as such Agent may reasonably
request.
(e) The Company and the Guarantor will arrange for the qualification
of the Notes and related Guarantees for sale under the laws of such
jurisdictions as such Agent may designate, will maintain such
qualifications in effect so long as required for the distribution of the
Notes and related Guarantees, and will arrange for the determination of the
legality of the Notes and related Guarantees for purchase by institutional
investors.
(f) The Company and the Guarantor shall furnish to such Agent and
counsel for such Agent, such documents, certificates of officers and
opinions of counsel relating to their respective businesses, operations and
affairs, the
11
<PAGE>
Registration Statement, any preliminary prospectus, the Prospectus, and any
amendments or supplements thereto, the Indenture, the Notes, the
Guarantees, this Agreement, the Procedures and the performance by the
Company and the Guarantor of their respective obligations hereunder and
thereunder as such Agent may from time to time and at any time prior to the
termination of this Agreement reasonably request.
(g) The Company and the Guarantor shall, whether or not any sale of
the Notes is consummated, (i) pay all expenses incident to the performance
of their obligations under this Agreement, including the fees and
disbursements of its accountants and counsel, the cost of printing (or
otherwise producing) and delivery of the Registration Statement, the
Prospectus, all amendments thereof and supplements thereto, the Indenture,
this Agreement and all other documents relating to the offering, the cost
of preparing, printing, packaging and delivering the Notes and related
Guarantees, the fees and disbursements, including fees of counsel, incurred
in connection with the qualification of the Notes and related Guarantees
for sale and determination of eligibility for investment of the Notes and
related Guarantees under the securities or blue sky laws of each such
jurisdiction as such Agent may reasonably designate, the fees and
disbursements of the Trustee, the Calculation Agent (as such term is used
in the Prospectus, as supplemented, relating to the Notes and related
Guarantees) and the fees of any agency that rates the Notes, and (ii)
reimburse such Agent on a monthly basis for all out-of-pocket expenses
(including without limitation advertising expenses) incurred by such Agent
and approved by the Company or the Guarantor in advance, in connection with
the offering and the sale of the Notes and related Guarantees, and (iii) be
responsible for the reasonable fees and disbursements of such Agent's
counsel incurred heretofore or hereafter in connection with the offering
and sale of the Notes and related Guarantees.
(h) Each acceptance by the Company of an offer to purchase Notes will
be deemed to be a reconfirmation to you of the representations and
warranties of the Company and the Guarantor in Section 1(b).
(i) Each time that the Registration Statement or the Prospectus is
amended or supplemented (other than by an amendment or supplement (i)
relating to an offering of securities other than the Notes and related
Guarantees or (ii) providing solely for the specification of the terms of
the Notes (excluding (a) any change in the formula by which interest rates
on the Notes may be determined and (b) any information relating to
Specified Currencies other than U.S.
12
<PAGE>
dollars)) or there is filed with the Commission any document incorporated
by reference into the Prospectus, the Company and the Guarantor will each
deliver or cause to be delivered forthwith to such Agent a certificate of
its President, Managing Director or any Vice President and its principal
financial or accounting officer or the Treasurer, dated the date of the
effectiveness of such amendment or the date of filing of such supplement,
in form reasonably satisfactory to such Agent, to the effect that the
statements contained in the certificate that was last furnished to such
Agent pursuant to either Section 5(e) or this Section 4(i) are true and
correct at the time of the effectiveness of such amendment or the filing of
such supplement as though made at and as of such time (except that (i) the
last day of the fiscal quarter for which financial statements of the
Guarantor were last filed with the Commission shall be substituted for the
corresponding date in such certificate and (ii) such statements shall be
deemed to relate to the Registration Statement and the Prospectus as
amended and supplemented to the time of the effectiveness of such amendment
or the filing of such supplement) or, in lieu of such certificate, a
certificate of the same tenor as the certificate referred to in Section
5(e), but modified to relate to the last day of the fiscal quarter for
which financial statements of the Guarantor were last filed with the
Commission and to the Registration Statement and the Prospectus as amended
and supplemented to the time of the effectiveness of such amendment or the
filing of such supplement.
(j) Each time that the Registration Statement or the Prospectus is
amended or supplemented (other than by an amendment or supplement (i)
relating to an offering of securities other than the Notes and related
Guarantees, (ii) providing solely for the specification of the terms of the
Notes (excluding (a) any change in the formula by which interest rates on
the Notes may be determined and (b) any information relating to Specified
Currencies other than U.S. dollars) or (iii) setting forth or incorporating
by reference financial statements or other financial information as of and
for a fiscal quarter, unless, in the case of clause (iii) above, in such
Agent's reasonable judgment, such financial statements or other financial
information are of such a nature that an opinion of counsel should be
furnished) or there is filed with the Commission any document incorporated
by reference into the Prospectus, the Company and the Guarantor shall
furnish or cause to be furnished forthwith to such Agent the written
opinion of the General Counsel of the Company and the Guarantor, or such
other counsel satisfactory to such Agent, dated the date of the
effectiveness of such amendment or the date of filing of such supplement,
in form satisfactory to such Agent, cover-
13
<PAGE>
ing all of the matters referred to in the opinions set forth in Sections
5(b) and 5(c) but modified to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of the effectiveness of
such amendment or the filing of such supplement or, in lieu of such
opinion, counsel last furnishing such an opinion to such Agent may furnish
a letter to the effect that such Agent may rely on such last opinion to the
same extent as though it were dated the date of such letter authorizing
reliance (except that statements in such last opinion will be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of the effectiveness of such amendment or the
filing of such supplement); provided, however, that, upon a reasonable
-------- -------
request from such Agent, the Company and the Guarantor shall cause to be
furnished forthwith to such Agent the written opinion of Fried, Frank,
Harris, Shriver & Jacobson, counsel to the Company and the Guarantor, dated
the date of the effectiveness of such amendment or the date of filing of
such supplement, in form satisfactory to such Agent, of the same tenor as
the opinions referred to in Section 5(b) but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented to
the time of the effectiveness of such amendment or the filing of such
supplement.
(k) Each time that the Registration Statement or the Prospectus is
amended or supplemented to set forth amended or supplemental financial
information or such amended or supplemental information is incorporated by
reference in the Registration Statement or the Prospectus, the Company and
the Guarantor shall cause Grant Thornton LLP, their independent public
accountants, forthwith to furnish to such Agent a letter, dated the date of
the effectiveness of such amendment or the date of filing of such
supplement, in form satisfactory to such Agent, of the same tenor as the
letter referred to in Section 5(f) with such changes as may be necessary to
reflect the amended and supplemental financial information included or
incorporated by reference in the Registration Statement and the Prospectus,
as amended or supplemented to the date of such letter, provided that if the
--------
Registration Statement or the Prospectus is amended or supplemented solely
to include or incorporate by reference financial information as of and for
a fiscal quarter, Grant Thornton LLP may limit the scope of such letter,
which shall be satisfactory in form to such Agent, to the unaudited
financial statements included in such amendment or supplement, unless any
other information included or incorporated by reference therein of an
accounting, financial or statistical nature is of such a nature that, in
such Agent's reasonable judgment, such letter should cover such other
information.
14
<PAGE>
(l) During the period, if any, specified in any Terms Agreement, the
Company and the Guarantor shall not, without the prior consent of the
Purchaser, issue or announce the proposed issuance of any debt securities
of the Company or the Guarantor in a public offering or register any debt
securities of the Company or the Guarantor under the Act in connection with
any secondary distribution of such debt securities.
5. Conditions to the Obligations of the Agents. The obligations of any
-------------------------------------------
Agent to solicit offers to purchase the Notes shall be subject to the accuracy
of the representations and warranties on the part of the Company and the
Guarantor contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement (including the
filing of any document incorporated by reference therein), as of the date any
supplement to the Prospectus is filed with the Commission and as of each
Settlement Date, to the accuracy of the statements of the Company and the
Guarantor made in any certificates pursuant to the provisions hereof, to the
performance by the Company and the Guarantor of their respective obligations
hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened.
(b) The Company and the Guarantor shall have furnished to the Agents
the opinion or opinions of Fried, Frank, Harris, Shriver & Jacobson,
counsel to the Company and the Guarantor, dated the date hereof,
substantially as set forth below, with such additional qualifications and
exceptions as shall be acceptable to the Agents and their counsel:
(i) Each of the Company and the Guarantor is a corporation duly
incorporated, validly existing and in good standing under the laws of
the state of its incorporation and has the corporate power and
authority to own its properties and to conduct its business as
described in the Prospectus.
(ii) The Company and the Guarantor have the corporate power and
authority to enter into this Agreement and the Terms Agreement (if
applicable), and this Agreement and the Terms Agreement (if
applicable) have been duly and validly authorized, executed and
delivered by the Company and the Guarantor, respectively.
(iii) The form and general terms of the Notes have been duly and
validly authorized and established in conformity with the provisions
of the Indenture by
15
<PAGE>
all necessary corporate action by the Company, and when the particular
terms of the Notes have been duly established in accordance with the
provisions of the Indenture, the Procedures and the resolutions of the
Board of Directors of the Company and such Notes have been duly
executed, authenticated and delivered against payment therefor in
accordance with the provisions of the Indenture, the Procedures and
this Agreement, will constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms and the terms of the Indenture, and the
holders of the Notes will be entitled to the benefits of the
Indenture; and the Indenture has been duly authorized, executed and
delivered by each of the Company and Guarantor, has been qualified
under the Trust Indenture Act, and constitutes a legal, valid and
binding obligation enforceable against each of the Company and the
Guarantor in accordance with its terms.
(iv) The Guarantees, in the forms certified to by an authorized
officer of the Guarantor, have been duly and validly authorized by all
necessary corporate action by the Guarantor and, upon due issuance,
authentication and delivery of the related Notes and due endorsement
of the Guarantees, the Guarantees will have been duly executed, issued
and delivered and will constitute the legal, valid and binding
obligations of the Guarantor enforceable against the Guarantor in
accordance with their terms and the terms of the Indenture, and the
holders of the Notes upon which the Guarantees are endorsed will be
entitled to the benefits of the Indenture.
(v) The Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the Prospectus (other than (i) the financial statements
and other financial and statistical information contained therein and
(ii) the Statements of Eligibility on Form T-1 filed as exhibits
thereto, as to which such counsel need express no opinion), as of
their respective effective or issue dates, as the case may be, appear
on their face to be responsive as to form in all material respects
with the applicable requirements of the Act and the Rules and
Regulations
16
<PAGE>
and the Trust Indenture Act and the rules and regulations of the
Commission thereunder.
(vi) No consent, approval, authorization or order of any United
States federal or New York, California or (with respect to matters
arising under the Delaware General Corporation Law) Delaware court or
governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement or the Indenture, except
such as have been obtained under the Act and such as may be required
under the securities and blue sky laws, rules or regulations of any
jurisdiction in connection with the purchase and distribution of the
Notes and related Guarantees by the Agents and such other approvals as
have been obtained.
(vii) Neither the issue and sale of the Notes (in the forms
certified to by an authorized officer of the Company), the compliance
by the Company and the Guarantor with all the provisions of this
Agreement, the Indenture, the Notes or the Guarantees (in the form
certified to by an authorized officer of the Guarantor), the
consummation of the transactions herein or therein contemplated nor
the fulfillment of the terms hereof or thereof will conflict with,
result in a breach of, or constitute a default under the charter or
bylaws of the Company or the Guarantor or the terms of any indenture
or other agreement or instrument filed with the Commission and to
which the Company or the Guarantor or any of the Guarantor's
subsidiaries is a party or bound, or any order, decree, judgment or
regulation (other than any federal or state securities or blue sky
laws, rules or regulations) known to such counsel to be applicable to
the Company or the Guarantor or any of the Guarantor's subsidiaries of
any court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over the Company or the Guarantor or
any of the Guarantor's subsidiaries.
(viii) To the best knowledge of such counsel, no holders of
securities of the Company or the Guarantor have rights to the
registration of such securities under the Registration Statement.
(ix) Such counsel confirms (i) that the statements in the
Prospectus under the caption "Certain Federal Income Tax
Considerations", insofar as such statements constitute a summary of
the legal matters referred to therein, fairly present the information
disclosed therein in all material respects, (ii) the conformity in all
material respects of the Notes (in
17
<PAGE>
the forms certified to by an authorized officer of the Company) to the
statements relating thereto in the Prospectus, and (iii) the
conformity in all material respects of the Indenture and the
Guarantees to the statements relating thereto in the Prospectus under
the captions "Description of Notes" and "Description of Debt
Securities and Guarantees".
Such counsel shall also state that, in the course of their engagement to
represent or advise the Company and the Guarantor professionally, they have not
become aware of any pending legal proceeding before any court or administrative
agency or authority or any arbitration tribunal, nor have they devoted
substantive attention in the form of legal representation as to any current
overtly threatened litigation against or directly affecting the Company or its
subsidiaries or the Guarantor or its subsidiaries, in each case that is required
to be described in the Registration Statement or the Prospectus and is not so
described. In making the foregoing statement, they shall endeavor, to the
extent they believe necessary, to determine from lawyers currently in their firm
who have performed substantive legal services for the Company or the Guarantor,
whether such services involved substantive attention in the form of legal
representation concerning pending legal proceedings or overtly threatened
litigation of the nature referred to above. Beyond that, they need not make any
review, search or investigation of public files or records or files or records
of the Company or the Guarantor, or of their respective transactions, or any
other investigation or inquiry with respect to the foregoing statement.
Such counsel shall also state that in the course of the preparation by the
Company, the Guarantor and their counsel of the Registration Statement and
Prospectus (other than the Incorporated Documents (as defined below)), such
counsel attended conferences with certain of the officers of, and the
independent public accountants for, the Company and the Guarantor, at which the
Registration Statement and Prospectus were discussed. Given the limitations
inherent in the independent verification of factual matters and the character of
determinations involved in the registration process, such counsel need not pass
upon and need not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and
Prospectus including the Incorporated Documents, except as specifically
described in the opinion set forth in paragraph (ix) above. Subject to the
foregoing and on the basis of the information such counsel gained in the
performance of the services referred to above, including information obtained
from officers and other representatives of the Company and Guarantor, such
counsel shall state that no facts have come to such counsel's attention that
have caused it to believe that the Registration Statement, at the time it became
effective or at the time an Annual Report on Form 10-K was filed (whichever
is
18
<PAGE>
later), contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, at its date or at the
date hereof, included or includes, as the case may be, any untrue statement of
material fact or omitted or omits, as the case may be, to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that such counsel need not
express a view or belief with respect to (i) the financial statements, the
related notes and schedules thereto or other financial and statistical data
included or incorporated by reference in the Registration Statement and
Prospectus or (ii) any part of the Registration Statement which shall constitute
a Statement of Eligibility on Form T-1 under the Trust Indenture Act.
References to the Prospectus in this Section 5(b) include any amendments or
supplements thereto at the date hereof.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
California, the State of New York, the State of Delaware (but only with respect
to the Delaware General Corporation Law) or the United States, to the extent
they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Agents and (B) as to matters of fact, to the
extent they deem proper, on certificates and oral or written statements and
other information of or from public officials and officers and representatives
of the Company, the Guarantor, their respective subsidiaries and others.
In rendering the opinions set forth in paragraphs (iii) and (iv), such
counsel may state that such opinions are subject to the following: (i)
bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other laws now or hereafter in effect affecting
creditors' rights generally; and (ii) general principles of equity (including,
without limitation, standards of materiality, good faith, fair dealing and
reasonableness) whether such principles are considered in a proceeding in equity
or at law.
In rendering the opinions set forth above, such counsel need not express an
opinion as to the legality, validity, binding effect or enforceability of any
provision of the Notes, the Indenture or the Guarantees providing for payments
thereunder in a currency other than currency of the United States of America to
the extent that a court of competent jurisdiction will under applicable law
convert any judgment rendered in such other currency into currency of the United
States of America or to the extent that payment in a currency other than
currency of the United States of America is contrary to applicable law.
19
<PAGE>
In rendering the opinions set forth above, such counsel may state that it
has assumed, with the permission of the Agents, that the amount of Notes to be
issued from time to time will not violate any provision in any such agreement
referred to in paragraph (vii) which imposes limits on the amount of debt of the
Company, the Guarantor or any of the Guarantor's subsidiaries which may be
outstanding at any one time (whether directly or indirectly, through
satisfaction of financial ratios or otherwise).
(c) The Company and the Guarantor shall have furnished to the Agents
the opinion or opinions of Sandor E. Samuels, General Counsel of the
Company and the Guarantor, dated the date hereof, substantially as set
forth below, with such additional qualifications and exceptions as shall be
acceptable to the Agents and their counsel:
(i) Each Subsidiary, if any, is a corporation, duly
incorporated, validly existing and in good standing under the laws of
the state of its incorporation, with the corporate power and authority
to own its properties and to conduct its business as described in the
Prospectus.
(ii) Each of the Company, the Guarantor and the Subsidiaries is
duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or
conducts material business other than jurisdictions in which the
failure to so qualify, when considered in the aggregate and not
individually, would not have a material adverse effect on the Company
or the Guarantor and its Subsidiaries considered as one enterprise.
(iii) All the outstanding shares of capital stock of the Company
and each Subsidiary have been duly and validly authorized and issued
and are fully paid and nonassessable, and, except as otherwise set
forth in the Prospectus, all outstanding shares of capital stock of
the Company and the Subsidiaries are owned by the Guarantor either
directly or through wholly owned subsidiaries free and clear of any
perfected security interest and, to the knowledge of such counsel,
after due inquiry, any other security interests, claims, liens or
encumbrances.
(iv) The outstanding shares of common stock of the Guarantor
have been duly and validly authorized and issued and are fully paid
and nonassessable.
20
<PAGE>
(v) Neither the issue and sale of the Notes, the compliance by
the Company and the Guarantor with all the provisions of this
Agreement, the Indenture, the Notes or the Guarantees, the
consummation of any other of the transactions herein or therein
contemplated nor the fulfillment of the terms hereof or thereof will
conflict with, result in a breach of, or constitute a default under
the charter or by-laws of the Company or the Guarantor or, to the
knowledge of such counsel, the terms of any indenture or other
agreement or instrument to which the Company or the Guarantor or any
of the Guarantor's subsidiaries is a party or bound, or any order,
decree, law, judgment, rule or regulation known to such counsel to be
applicable to the Company or the Guarantor or any of the Guarantor's
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or the Guarantor or any of the Guarantor's subsidiaries.
(vi) The documents (the "Incorporated Documents") incorporated
by reference in the Registration Statement and Prospectus (except for
the financial statements and other financial or statistical data, as
to which no opinion need be expressed), as of the dates they were
filed with the Commission, complied as to form in all material
respects to the requirements of the Act and the Rules and Regulations
and the Exchange Act and the rules and regulations of the Commission
thereunder.
(vii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement or the Indenture, except
such as have been obtained under the Act and such as may be required
under the securities and blue sky laws, rules and regulations of any
jurisdiction in connection with the purchase and distribution of the
Notes and related Guarantees by the Agents and such other approvals as
have been obtained.
In rendering the opinions set forth above, such counsel may state that it
has assumed, with the permission of the Agents, that the amount of Notes to be
issued from time to time will not violate any provision in any such agreement
referred to in paragraph (v) which imposes limits on the amount of debt of the
Company, the Guarantor or any of the Guarantor's subsidiaries which may be
outstanding at any one time (whether directly or indirectly, through
satisfaction of financial ratios or otherwise).
21
<PAGE>
(d) Such Agent shall have received from Brown & Wood, counsel for the
Agents, such opinion or opinions, dated the date hereof, with respect to
the issuance and sale of the Notes and related Guarantees, this Agreement,
the Indenture, the Registration Statement, the Prospectus and other related
matters as such Agent may reasonably require, and the Company and the
Guarantor shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(e) The Company and the Guarantor shall have each furnished to such
Agent a certificate of its President, a Managing Director or a Vice
President and its Treasurer or an Assistant Treasurer, dated the date
hereof, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company or the
Guarantor, as the case may be, in this Agreement are true and correct
in all material respects on and as of the date hereof with the same
effect as if made on the date hereof, and the Company or the
Guarantor, as the case may be, has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied as a condition to the obligation of such Agent to solicit
offers to purchase the Notes;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the Company or
the Guarantor, as the case may be, threatened; and
(iii) since the date of the most recent financial statements
included or incorporated in the Prospectus, there has been no material
adverse change in the condition (financial or otherwise), earnings,
business or properties of the Company or the Guarantor and its
subsidiaries considered as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectus.
(f) On the date hereof, Grant Thornton LLP shall have furnished to
such Agent a letter or letters (which may refer to letters previously
delivered to such Agent), dated as of the date hereof, in form and
substance satisfactory to such Agent, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and the
22
<PAGE>
respective applicable published rules and regulations thereunder and
stating in effect that:
(i) in their opinion the audited consolidated financial
statements and financial statement schedules included or incorporated
in the Registration Statement and the Prospectus and reported on by
them comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
consolidated financial statements made available to them; carrying out
certain specified procedures (which shall include, without limitation,
the procedures specified by the American Institute of Certified Public
Accountants for a review of interim financial information as described
in SAS No. 71, Interim Financial Information, with respect to such
unaudited consolidated financial statements included or incorporated
by reference in the Registration Statement or the Prospectus); a
reading of the minutes of the meetings of the stockholders, directors
and standing committees thereof; and inquiries of certain officials
who have responsibility for financial and accounting matters as to
transactions and events subsequent to the date of the most recent
audited financial statements included or incorporated in the
Prospectus, nothing came to their attention which caused them to
believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do
not comply as to form in all material respects with applicable
accounting requirements of the Exchange Act as they apply to
quarterly reports on Form 10-Q or that any material modifications
should be made to said unaudited financial statements for them to
be in conformity with generally accepted accounting principles;
(2) with respect to the period subsequent to the date of the
most recent financial statements (other than any capsule
information), audited or unaudited, in or incorporated in the
Registration Statement and the Prospectus, there was any change,
at a specified date not more than three business days prior to
the date of the letter, in the capital stock or long and
intermediate term debt of the Company or the Guarantor and its
subsidiaries taken as a whole or any decreases in
23
<PAGE>
the shareholders' equity or consolidated net assets as compared
with the amounts shown on the most recent consolidated balance
sheet included or incorporated in the Registration Statement and
the Prospectus, or for the period from the date of the most
recent financial statements included or incorporated in the
Registration Statement and the Prospectus to such specified date
there were any decreases, as compared with the corresponding
period in the preceding year in consolidated revenues (net of
interest charges), earnings before income taxes or net earnings
of the Company or the Guarantor and its subsidiaries, except in
all instances for changes or decreases set forth in such letter;
or
(3) the amounts included in any unaudited "capsule"
information included or incorporated in the Registration
Statement and the Prospectus do not agree with the amounts set
forth in the unaudited financial statements for the same periods
or were not determined on a basis substantially consistent with
that of the corresponding amounts in the audited financial
statements included or incorporated in the Registration Statement
and the Prospectus;
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Registration Statement and the Prospectus and in Exhibit 12 to the
Registration Statement, the information included or incorporated in
Items 1, 2, 6, 7 and 11 of the Guarantor's Annual Report on Form 10-K
(and, if filed, the Company's Annual Report on Form 10-K),
incorporated in the Registration Statement and the Prospectus and the
information included in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included or
incorporated in the Company's or the Guarantor's Quarterly Reports on
Form 10-Q incorporated in the Registration Statement and the
Prospectus, agrees with the accounting records of the Company, the
Guarantor and their respective subsidiaries, excluding any questions
of legal interpretation; and
(iv) if pro forma financial statements are included or
incorporated in the Registration Statement and the Prospectus, on the
basis of a reading of the unaudited pro forma financial statements,
carrying out certain specified procedures, inquiries of certain
24
<PAGE>
officials of the Company or the Guarantor, as the case may be, who
have responsibility for financial and accounting matters, and proving
the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the pro forma financial
statements, nothing came to their attention which caused them to
believe that the pro forma financial statements do not comply in form
in all material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma adjustments have
not been properly applied to the historical amounts in the compilation
of such statements.
References to the Registration Statement and the Prospectus in this
paragraph (f) are to such documents as amended and supplemented at the date of
the letter.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (as amended or
supplemented, in the case of a Terms Agreement) there shall not have been
(i) any change or decrease specified in the letter or letters referred to
in paragraph (f) of this Section 5 or (ii) any change, or any development
involving a prospective change, in or affecting the business or properties
of the Company, the Guarantor and their respective subsidiaries the effect
of which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of such Agent, so material and adverse as to make it impractical
or inadvisable to proceed with the soliciting of offers to purchase the
Notes as contemplated by the Registration Statement and the Prospectus (or,
in the case of a Terms Agreement, to proceed with the offering or the
delivery of the Notes to be purchased as contemplated by the Terms
Agreement).
(h) Prior to the date hereof, the Company and the Guarantor shall have
furnished to such Agent such further information, certificates and
documents as such Agent may reasonably request.
(i) Prior to the date hereof, the Notes shall have been rated, and on
the date hereof the Notes shall be rated, at least BBB by Standard & Poor's
Ratings Group ("S&P") and Baa3 by Moody's Investors Service, Inc.
("Moody's").
If any of the conditions specified in this Section 5 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and
25
<PAGE>
substance to such Agent and its counsel, this Agreement and all obligations of
such Agent hereunder may be canceled at any time by such Agent. Notice of such
cancellation shall be given to the Company and the Guarantor in writing or by
telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 5 shall be delivered
to the office of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza,
New York, New York 10004, or such other location as shall be mutually agreed
upon, on the date hereof.
6. Conditions to the Obligations of a Purchaser. The obligations of a
--------------------------------------------
Purchaser to purchase Notes pursuant to any Terms Agreement will be subject to
the accuracy of the representations and warranties on the part of the Company
and the Guarantor herein as of the date of the respective Terms Agreement and as
of the Purchase Date thereunder, to the performance and observance by the
Company and the Guarantor of all covenants and agreements herein contained on
its part to be performed and observed and to the following additional conditions
precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) Except to the extent modified by the respective Terms Agreement,
the Purchaser shall have received, appropriately updated in a manner
consistent with Section 5 hereof, (i) certificates of the Company and the
Guarantor, dated as of the Purchase Date, to the effect set forth in
Section 5(e), (ii) the opinion or opinions of Fried, Frank, Harris, Shriver
& Jacobson, counsel to the Company and the Guarantor, dated as of the
Purchase Date, to the effect set forth in Section 5(b), (iii) the opinion
or opinions of Sandor E. Samuels, General Counsel to the Company and the
Guarantor, dated as of the Purchase Date, to the effect set forth in
Section 5(c), (iv) the opinion or opinions of Brown & Wood, counsel for the
Purchaser, dated as of the Purchase Date, to the effect set forth in
Section 5(d) and (v) letter of Grant Thornton LLP, dated as of the Purchase
Date, to the effect set forth in Section 5(f).
(c) The conditions set forth in Section 5(g) shall have been
satisfied.
(d) Prior to the Purchase Date, the Company and the Guarantor shall
have furnished to the Purchaser such further information, certificates and
documents as the Purchaser may reasonably request.
26
<PAGE>
(e) Prior to and at the Purchase Date, the Notes shall have been rated
at least BBB- by S&P and Baa3 by Moody's.
(f) Subsequent to the execution of any Terms Agreement and prior to
the Purchase Date pursuant to such Terms Agreement, the rating assigned by
S&P or Moody's to any debt securities of the Company or the Guarantor has
not been lowered and neither S&P nor Moody's has publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of any debt securities of the Company or the Guarantor.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchaser and its counsel, this Agreement and all
obligations of the Purchaser hereunder may be canceled at, or at any time prior
to, the respective Purchase Date by the Purchaser. Notice of such cancellation
shall be given to the Company or the Guarantor in writing or by telephone or
telegraph confirmed in writing.
7. Reimbursement of the Agent's Expenses. If any condition to the
-------------------------------------
obligations or any Agent set forth in Section 5 hereof is not satisfied, if any
condition to the obligations of a Purchaser set forth in Section 6 hereof is not
satisfied, if any termination pursuant to Section 9 hereof shall occur or in the
case of any refusal, inability or failure on the part of the Company or the
Guarantor to perform any agreement herein or comply with any provision hereof
other than by reason of a default by an Agent, the Company and the Guarantor
will reimburse such Agent upon demand for all expenses that shall have been
incurred by such Agent pursuant to Section 4(g) hereof in connection with this
Agreement.
8. Indemnification and Contribution. (a) The Company and the Guarantor,
--------------------------------
jointly and severally, agree to indemnify and hold harmless each Agent and each
person who controls such Agent within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which such Agent or any of them may become subject under the Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement for the registration of the Notes as originally filed or
in any amendment thereof, or in the Prospectus or any preliminary Prospectus, or
in any amendment
27
<PAGE>
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
-------- -------
that (i) the Company and the Guarantor will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company or the Guarantor by or on behalf of such
Agent specifically for use in connection with the preparation thereof, and (ii)
such indemnity with respect to any preliminary Prospectus or any Prospectus as
supplemented or amended shall not inure to the benefit of any Agent (or any
person controlling such Agent) from whom the person asserting any such loss,
claim, damage or liability purchased the Notes which are the subject thereof if
such Agent (or any person controlling such Agent) received a copy of such
Prospectus (or such Prospectus as so amended or supplemented) and such person
did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented) excluding documents incorporated therein by reference at or prior
to the confirmation of the sale of such Notes to such person in any case where
such delivery is required by the Act and the untrue statement or omission or the
alleged untrue statement or omission was corrected in the Prospectus (or the
Prospectus as amended or supplemented). This indemnity agreement will be in
addition to any liability which the Company or the Guarantor may otherwise have.
(b) Each Agent agrees to indemnify and hold harmless the Company and the
Guarantor, their respective directors, each of their officers who sign the
Registration Statement, and each person who controls the Company or the
Guarantor within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company and the Guarantor to such
Agent, but only with reference to written information relating to such Agent
furnished to the Company or the Guarantor by or on behalf of such Agent
specifically for use in the preparation of the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which such Agent may otherwise have. The Company and the Guarantor
acknowledge that the statements set forth in the last paragraph of the cover
page and under the heading "Plan of Distribution of Notes" in any preliminary
Prospectus and the Prospectus constitute the only information furnished in
writing by or on behalf of such Agent for inclusion in the documents referred to
in the foregoing indemnity, and you confirm that such statements are correct.
28
<PAGE>
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
--------
however, that if the defendants in any such action include both the indemnified
- -------
party and the indemnifying party, and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Agents in the case of paragraph
(a) of this Section 8, representing the indemnified parties under such paragraph
(a) who are parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contri-
29
<PAGE>
bute to the amount paid or payable to such indemnified party as a result of such
losses, claims, damages, or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantor on the one hand and each Agent on the other from the
offering of the Notes to which such loss, claim, damage or liability (or action
in respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Guarantor on the one hand and each Agent on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantor on the one hand and each Agent on the other shall be deemed to be in
the same proportion as the total net proceeds from such offering (before
deducting expenses) received by the Company bear to the total commissions
received by each Agent. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Guarantor on the one hand or any
Agent on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Guarantor and each Agent agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Agents were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, or liabilities (or actions in respect thereof) referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Agent shall be required to contribute any amount in excess of
the amount by which the total price at which Notes sold by it exceeds the amount
of any damages which such Agent has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Agents in
this subsection (d) to contribute are several in proportion to their respective
30
<PAGE>
underwriting obligations with respect to such Notes and not joint.
9. Termination. This Agreement will continue in effect until terminated
-----------
as provided in this Section 9.
(a) This Agreement may be terminated by either the Company or any
Agent giving written notice of such termination to the other party hereto.
This Agreement shall so terminate at the close of business on the first
business day following the receipt of such notice by the party to whom such
notice is given. This Agreement may be terminated as to one or more of the
Agents, and to the extent not terminated with respect to any Agent, this
Agreement shall remain in full force and effect as between the Company and
any such Agent. In the event of such termination, no party shall have any
liability to the other party hereto, except as provided in the fourth
paragraph of Section 2(a), Section 4(g), Section 7, Section 8 and Section
10.
(b) Each Terms Agreement shall be subject to termination in the
absolute discretion of the Purchaser, by notice given to the Company and
the Guarantor prior to delivery of and payment for Notes to be purchased
thereunder, if prior to such time (i) trading in securities generally, or
in the securities of the Guarantor, on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been
established on such exchange, (ii) a banking moratorium shall have been
declared by either federal or New York State authorities or, in the case of
Notes denominated in other than U.S. dollars, by the authorities of the
country of the currency in which such Notes are so denominated or (iii)
there shall have occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States or in the country or countries of
origin of any foreign currency or currency unit in which the Notes are
denominated, indexed or payable is such as to make it, in the judgment of
the Purchaser, impracticable to market such Notes.
10. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company, the Guarantor or any of their officers and of each Agent set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of such Agent or the
Company, the Guarantor or any of their officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Notes. The provisions of Sections 7 and 8 hereof shall survive
the termination or cancellation of this Agreement.
31
<PAGE>
11. Right of Person Who Agreed to Purchase to Refuse to Purchase. The
------------------------------------------------------------
Company and the Guarantor agree that any person who has agreed to purchase and
pay for any Note, including a Purchaser and any person who purchases pursuant to
a solicitation by any of the Agents, shall have the right to refuse to purchase
such Note if, at the Settlement Date therefor, either (a) any condition set
forth in Section 5 or 6, as applicable, shall not be satisfied or (b) subsequent
to the agreement to purchase such Note, any change, or any development involving
a prospective change, in or affecting the business or properties of the Company
or the Guarantor and its subsidiaries shall have occurred the effect of which
is, in the reasonable judgment of the Purchaser or the Agent which presented the
offer to purchase such Note, as applicable, so material and adverse as to make
it impractical or inadvisable to proceed with the delivery of such Note.
12. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to an Agent, will be mailed, delivered
or telegraphed and confirmed to such Agent, at the address specified in Schedule
1 hereto; or, if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at 155 North Lake Avenue, Pasadena, California 91101,
Attention: Chairman of the Board of Directors.
13. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York applicable to agreements made
and to be performed in said State.
32
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and the acceptance by each of you shall represent a binding agreement
among the Company, the Guarantor and each of you.
Very truly yours,
COUNTRYWIDE HOME LOANS, INC.
By: __________________________________
Name:
Title:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: __________________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof.
LEHMAN BROTHERS INC.
By:______________________________
Title:
_________________________________
Goldman, Sachs & Co.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:______________________________
Title:
J.P. MORGAN SECURITIES INC.
By:______________________________
Title:
33
<PAGE>
NATIONSBANC CAPITAL MARKETS, INC.
By:______________________________
Title:
SALOMON BROTHERS INC
By:______________________________
Title:
34
<PAGE>
SCHEDULE 1
Selling Agency Agreement dated May ___, 1996
Unless otherwise agreed between the Company and such Agent, the Company
agrees to pay any Agent a commission equal to the following percentage of the
principal amount of each Note sold by such Agent:
Term Commission Rate(a)
---- ------------------
From 9 months to less than 1 year............. 0.125%
From 1 year to less than 18 months............ 0.150%
From 18 months to less than 2 years........... 0.200%
From 2 years to less than 3 years............. 0.250%
From 3 years to less than 4 years............. 0.350%
From 4 years to less than 5 years............. 0.450%
From 5 years to less than 6 years............. 0.500%
From 6 years to less than 7 years............. 0.550%
From 7 years to less than 10 years............ 0.600%
From 10 years to less than 15 years........... 0.625%
From 15 years to less than 20 years........... 0.650%
From 20 years up to and including 30 years(b). 0.750%
_____________
(a) With respect to each Note that is an Original Issue Discount Note (as
defined in the Indenture), the commission payable to each Agent with
respect to each such Note sold as a result of a solicitation made by such
Agent shall be based on the purchase price of such Note, rather than on the
principal amount of such Note.
(b) Commissions for Notes with terms in excess of 30 years will be agreed upon
by the Company and the related Agent at the time of sale.
<PAGE>
Addresses for Notices to Agents:
Notices to Lehman Brothers Inc. shall be directed to it at 3 World
Financial Center, 12th Floor, New York, New York 10285-1200, Attention: Medium-
Term Note Department.
Notices to Goldman, Sachs & Co. shall be directed to it at 85 Broad Street,
New York, New York 10004, Attention: Patti O'Connell.
Notices to Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be
directed to it at World Financial Center, North Tower - 10th Floor, New York,
New York 10281-1310, Attention: MTN Product Management.
Notices to J.P. Morgan Securities Inc. shall be directed to it at 60 Wall
Street, 3rd Floor, New York, New York 10260, Attention: Medium-Term Note
Trading Desk.
Notices to NationsBanc Capital Markets, Inc. shall be directed to it at 100
North Tyron Street, Charlotte, NC 28255, NC1-007-07-01, Attention: Product
Management.
Notices to Salomon Brothers Inc shall be directed to it at Seven World
Trade Center, New York, New York 10048, Attention: Medium-Term Note Department.
<PAGE>
EXHIBIT A
COUNTRYWIDE HOME LOANS, INC.
MEDIUM-TERM NOTE
ADMINISTRATIVE PROCEDURES
May __, 1996
Medium-Term Notes, Series E, Due Nine Months or More From Date of Issue
(the "Notes") are to be offered on a continuing basis by Countrywide Home Loans,
Inc. (the "Company"). Lehman Brothers Inc., Goldman, Sachs & Co., Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan
Securities Inc., NationsBanc Capital Markets, Inc. and Salomon Brothers Inc
(each individually, an "Agent", and collectively, the "Agents"), have agreed to
solicit purchases of the Notes. The Agents will not be obligated to purchase
Notes as principal. The Notes are being sold pursuant to a Selling Agency
Agreement among the Company, Countrywide Credit Industries, Inc. (the
"Guarantor") and the Agents dated May __, 1996 (the "Agency Agreement"). The
Notes will be unconditionally guaranteed as to payment of principal, premium, if
any, and interest by the Guarantor (the "Guarantees"). The Notes will rank
equally with all other unsecured and unsubordinated debt of the Company and have
been registered with the Securities and Exchange Commission (the "Commission").
Capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Indenture referred to below.
Each Note and related Guarantee will be issued under an Indenture dated as
of January 1, 1992, as supplemented by Supplemental Indenture No. 1 thereto
dated as of June 15, 1995 (collectively, the "Indenture"), among the Company,
the Guarantor and The Bank of New York, as trustee (the "Trustee"). The Notes
will bear interest at either fixed rates ("Fixed Rate Notes") or floating rates
("Floating Rate Notes"). Each Note will be represented by either a certificate
delivered to the Holder thereof or a Person designated by such Holder (a
"Certificated Note") or a Global Security (as defined hereinafter) delivered to
the Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in
the book-entry system maintained by DTC (a "Book-Entry Note"). An owner of a
Book-Entry Note will not be entitled to receive a certificate representing such
Note except in the limited circumstances described in the Prospectus (as defined
in the Agency Agreement).
The procedures to be followed during, and the specific terms of, the
solicitation of offers by the Agents and the sale as a result thereof by the
Company are explained below. Certificated Notes will be issued in accordance
with the administrative
A-1
<PAGE>
procedures set forth in Part I hereof and Book-Entry Notes will be issued in
accordance with the administrative procedures set forth in Part II hereof. The
Company will advise each Agent and the Trustee in writing of those persons
handling administrative responsibilities with whom the Agents and the Trustee
are to communicate regarding offers to purchase Notes and the details of their
delivery.
Administrative procedures and specific terms of the offering are explained
below. To the extent the procedures set forth below conflict with the
provisions of the Notes, the Indenture or the Agency Agreement, the relevant
provisions of the Notes, the Indenture and the Agency Agreement shall control.
PART I: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
Maturities: Each Certificated Note will mature on a date (the
- ---------- "Stated Maturity Date") nine months or more after the
date of delivery by the Company of such Certificated
Note (the "Settlement Date"), subject to any applicable
provisions relating to redemption or repayment or the
extension of maturity.
Price to Public: Each Certificated Note will be issued at the percentage
- --------------- of principal amount specified in the Prospectus.
Currencies: The Certificated Notes will be denominated in U.S.
- ---------- dollars or in such other currency or currency unit as
is specified in the Prospectus (the "Specified
Currency").
Denominations: Except as set forth in the Certificated Note, the
- ------------- denomination of any Certificated Note will be a minimum
of U.S.$1,000 or any amount in excess thereof which is
an integral multiple of U.S.$1,000 or, if in a
Specified Currency other than U.S. dollars, of
U.S.$1,000 and any amount in excess thereof which is an
integral multiple of U.S.$1,000 or the equivalent, in
any case as determined pursuant to the provisions of
the Indenture.
Registration: Certificated Notes will be issued only in fully
- ------------ registered form.
A-2
<PAGE>
Interest Payments: Except as set forth in the Certificated Note, each
- ----------------- Certificated Note which is a Fixed Rate Note will bear
interest from the Settlement Date of such Certificated
Note at the annual rate stated on the face thereof,
payable semiannually on January 15 and July 15 of each
year (each, an "Interest Payment Date") and on the
Stated Maturity Date or date of earlier redemption or
repayment (such date is herein referred to as the
"Maturity Date" with respect to the principal repayable
on such date), and each Certificated Note which is a
Floating Rate Note will bear interest as determined in
the manner set forth on the face thereof, payable on
the dates set forth on the face thereof. Unless
otherwise specified on the face thereof, interest
(including payments for partial periods) on Fixed Rate
Notes will be calculated on the basis of a 360-day year
of twelve 30-day months. Interest on Floating Rate
Notes will be determined in the manner agreed upon by
the Company and the purchaser thereof in accordance
with the provisions of the Prospectus. Except as set
forth in the Certificated Note, the "Record Date" with
respect to any Interest Payment Date for Floating Rate
Notes shall be the date 15 calendar days immediately
preceding such Interest Payment Date, and for Fixed
Rate Notes shall be the December 31 or June 30 next
preceding such Interest Payment Date, whether or not
such date shall be a Business Day, as defined in the
Prospectus. The first payment of interest on any
Certificated Note originally issued between a Record
Date and an Interest Payment Date will be made on the
Interest Payment Date following the next Record Date to
the Holder on such next succeeding Record Date.
Notwithstanding the record date provisions above,
interest payable on the Maturity Date will be payable
to the person to whom principal shall be payable.
Interest on the Certificated Notes will be paid in the
Specified Currency by mailing a check (from an account
at a bank located outside of the
A-3
<PAGE>
United States if such check is payable in a Specified
Currency other than U.S. dollars) to the Holder at the
address of such Holder appearing on the Security
Register on the applicable Record Date; provided,
--------
however, that a Holder of U.S.$10,000,000 (or the
-------
equivalent thereof in a Specified Currency other than
U.S. dollars) or more in aggregate principal amount of
Notes (whether or not having identical terms and
provisions) shall be entitled: (i) if the Specified
Currency is U.S. dollars, to receive U.S. dollar
payments by wire transfer of immediately available
funds to an account maintained by the payee with a bank
located in the United States, but only if appropriate
wire transfer instructions have been received in
writing by the Trustee not later than the Record Date
immediately preceding the applicable Interest Payment
Date, and (ii) if the Specified Currency is other than
U.S. dollars, to receive by wire transfer of
immediately available funds to an account maintained by
the payee with a bank located in a jurisdiction in
which payment in such Specified Currency is then
lawful. Within ten days following each Record Date,
the Trustee will inform the Company of the total amount
of the interest payments to be made by the Company on
the next succeeding Interest Payment Date and the
currencies or currency units in which such interest
payments are to be made. The Trustee will provide
monthly to the Company a list of the principal and
interest to be paid on Certificated Notes maturing in
the next succeeding month.
Procedure for The Company and the Agents will discuss
- ------------- from time to time the aggregate princi-
Rate Setting pal amount of, the issuance price of, and the interest
- ------------ rates to be borne by, Certificated Notes that may be
and Posting: sold as a result of the solicitation or offers by the
- ----------- Agents. If the Company decides to establish prices of
(including the currency of issuance), and rates borne
by, any Certificated Notes to be sold (the
A-4
<PAGE>
establishment of such prices and rates to be referred
to herein as "posting") or if the Company decides to
change prices or rates previously posted by it, it will
promptly advise the Agents of the prices and rates to
be posted.
Acceptance Unless otherwise agreed between the Com-
- ---------- pany and such Agent, any Agent which receives an offer
of Offers: to purchase Certificated Notes will promptly advise the
- --------- Company of each such offer other than offers rejected
by such Agent as provided below. The Company will have
the sole right to accept any such offer to purchase
Certificated Notes. The Company may reject any such
offer in whole or in part.
Unless otherwise agreed between the Company and any
Agent, each Agent may, in its discretion reasonably
exercised, reject any offer to purchase Certificated
Notes received by it in whole or in part.
Preparation If any offer to purchase a Certificated
- ----------- Note is accepted by or on behalf of the
of Pricing Company, the Company and the Guarantor, with the
- ---------- approval of the Agents, will prepare a Pricing
Supplement: Supplement reflecting the terms of such Certificated
- ---------- Note and will arrange to have requisite copies of such
Pricing Supplement filed with the Commission, in each
case no later than the second Business Day after the
earlier of the determination of the offering price or
the date it is first used and will supply at least ten
copies thereof (or additional copies if requested) to
the Agents and one copy to the Trustee no later than
11:00 A.M., New York City time, on the Business Day
following the date of acceptance at the following
applicable address (unless otherwise specified in the
applicable trading confirmation): if to Lehman
Brothers Inc., to Lehman Brothers Inc., Prospectus
Department, 3 World Financial Center, 9th Floor, New
York, New York 10285-0900, attention of Brunnie
Vazquez, telephone no. (212)526-8400,
A-5
<PAGE>
telecopier no. (212) 528-7035; if to Goldman, Sachs &
Co., to Goldman, Sachs & Co., 85 Broad Street, New
York, NY 10004, attention of Patti O'Connell; if to
Merrill Lynch & Co., to Merrill Lynch & Co. - Tritech
Services, 4 Corporate Place - Corporate Park 287,
Piscataway, New Jersey 08854, attention of Final
Prospectus Unit/Nachman Kimmerling, telephone no. (908)
878-6525/26/27, telecopier no. (908) 878-6530, with a
copy to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, World Financial Center, North Tower, 10th
Floor, New York, New York 10281-1310, attention of MTN
Product Management, telephone no. (212) 449-3780,
telecopier no. (212) 449-2234; if to J.P. Morgan
Securities Inc. to J.P. Morgan Securities Inc., 60 Wall
Street, 3rd Floor, New York, New York 10260, attention
of Dan Benton, telephone no. (212) 648-0591, telecopier
no. (212) 648-5907; if to NationsBanc Capital Markets,
Inc. to Bank of New York, One Wall Street, 3rd Floor,
Dealers Clearance, Window B, A/C NationsBanc Capital
Markets, Inc.; if to Salomon Brothers Inc, to Salomon
Brothers Inc, 8800 Hidden River Parkway, Tampa, Florida
33637, attention of Enrique Castro, telephone no. (813)
558-7165, telecopier no. (813) 558-4123; and if to the
Trustee, to The Bank of New York, 101 Barclay Street,
New York, New York 10286, attention of Corporate Trust
Office. Such Agent will cause a Pricing Supplement to
be delivered to the purchaser of the Certificated Note.
In all respects, the Company and the Guarantor will
prepare and file each such Pricing Supplement in
accordance with Rule 424 under the Act.
In each instance that a Pricing Supplement is prepared,
each Agent will affix the Pricing Supplement to
Prospectuses prior to their use; provided, however,
that pursuant to Rule 434 ("Rule 434") under the
Securities Act of 1933, as amended, the Pricing
Supplement may be delivered separately from the
Prospectuses. Outdated Pricing
A-6
<PAGE>
Supplements, and the Prospectuses to which they are
attached or relate (other than those retained for
files), will be destroyed.
Suspension of The Company reserves the right, in its
- ------------- sole discretion, to instruct the Agents
Solicitation; to suspend at any time, for any period
- ------------- of time or permanently, the solicitation of offers to
Amendment or purchase Certificated Notes. As soon as practicable,
- ------------ but in no event later than one Business Day after
Supplement: receipt of instructions from the Company, the Agents
- ---------- will suspend solicitation of offers to purchase
Certificated Notes from the Company until such time as
the Company has advised them that such solicitation may
be resumed.
If the Company or the Guarantor decides to amend or
supplement the Registration Statement or the Prospectus
relating to the Notes (except in the case of a Pricing
Supplement to the Prospectus), the Company or the
Guarantor, as the case may be, will promptly advise the
Agents and the Trustee and will furnish the Agents and
the Trustee with the proposed amendment or supplement
in accordance with the terms of the Agency Agreement.
The Company or the Guarantor will mail or transmit to
the Commission for filing therewith any supplement to
the Prospectus relating to the Notes, provide the
Agents with copies of any supplement, and confirm to
the Agents that such supplement has been filed with the
Commission.
In the event that at the time the Company suspends
solicitation of offers to purchase Certificated Notes
there shall be any outstanding offers to purchase
Certificated Notes that have been accepted by the
Company but for which settlement has not yet occurred,
the Company will promptly advise the Agents and the
Trustee whether such sales may be settled and whether
copies of the Prospectus as supplemented to the time of
the suspension may be delivered in connection with the
settlement of
A-7
<PAGE>
such sales. The Company will have the sole
responsibility for such decision and for any
arrangements which may be made in the event that the
Company determines that such sales may not be settled
or that copies of such Prospectus may not be so
delivered.
Delivery of Each Agent shall, for each offer to
- ----------- purchase a Certificated Note that is solicited by such
Prospectus: Agent and accepted by the Company, deliver a copy of
- ---------- the Prospectus as most recently amended or supplemented
(including the applicable Pricing Supplement which,
pursuant to Rule 434, may be delivered separately from
the Prospectus) with the earlier of the delivery of the
confirmation of sale or the Certificated Note to the
purchaser thereof or such purchaser's agent.
Confirmation: For each offer to purchase a Certificated Note
- ------------ solicited by any Agent and accepted by the Company,
such Agent will issue a confirmation to the purchaser,
with a copy to the Company, setting forth the details
set forth above and delivery and payment instructions.
Settlement: The Settlement Date with respect to any offer to
- ---------- purchase Certificated Notes accepted by or on behalf of
the Company will be a date on or before the third
Business Day next succeeding the date of acceptance
unless otherwise agreed by the purchaser and the
Company and shall be specified upon acceptance of such
offer. The Company will instruct the Trustee to effect
delivery of each Certificated Note no later than 1:00
p.m., New York City time, on the Settlement Date to
such Agent for delivery to the purchaser.
Details for For each offer to purchase a Certifi-
- ----------- cated Note received by any Agent and accepted pursuant
Settlement: to the terms of the Agency Agreement, such Agent will
- ---------- provide (unless provided by the purchaser directly to
the Company) by telephone
A-8
<PAGE>
the following information (to the extent applicable) to
the Company:
1. Exact name of Holder.
2. Exact address of Holder and address for payment of
principal, premium, if any, and interest.
3. Taxpayer identification number of Holder (if
available).
4. Principal amount of the Note.
5. Specified Currency.
6. Interest rate or interest rate basis.
7. Base Rate(s), Index Maturity, Initial Interest
Rate, Maximum Interest Rate, Minimum Interest
Rate, Interest Reset Dates, Interest Payment
Dates, Calculation Dates, Interest Reset Dates and
Spread and/or Spread Multiplier (as each such term
is defined in the Prospectus).
8. Issue price of Note and proceeds to Company.
9. Settlement Date.
10. Stated Maturity Date.
11. Redemption and/or repayment provisions, if any.
12. Agent's commission to be paid in the form of a
discount upon settlement.
13. Other relevant terms, including any reset and/or
extension provisions.
Such Agent will advise the Company of the foregoing
information (unless provided by the purchaser directly
to the Company) for each offer to purchase a
Certificated Note solicited by such Agent and accepted
by the Company in time for the Trustee to prepare and
authenticate the required Certificated Note. Before
accepting any offer to purchase a Certificated Note to
be settled in less than three Business Days, the
Company shall verify that the Trustee will have
adequate time to prepare and authenticate such
Certificated Note.
After receiving from such Agent the details for each
offer to purchase a
A-9
<PAGE>
Certificated Note, the Company will, after recording
the details and any necessary calculations, provide
appropriate documentation to the Trustee, including the
information provided by such Agent necessary for the
preparation and authentication of such Certificated
Note. Prior to preparing the Certificated Note for
delivery (but in any case no later than 11:00 a.m., New
York City time, on the Business Day next preceding the
Settlement Date therefor), the Trustee will confirm the
details of such issue with such Agent by telephone.
Note Deliveries Upon receipt of appropriate documenta-
- --------------- tion and instructions, the Company will cause the
and Cash Payment: Trustee to prepare and authenticate the pre-printed 4-
- ---------------- ply Certificated Note packet containing the following
documents in forms approved by the Company, the Agents
and the Trustee:
1. Certificated Note with customer confirmation.
2. Stub 1--For the applicable Agent.
3. Stub 2--For the Company.
4. Stub 3--For the Trustee.
Each Certificated Note shall be authenticated on or
before the Settlement Date therefor. The Trustee will
authenticate each Certificated Note and deliver it to
such Agent (and deliver the stubs as indicated above),
all in accordance with written instructions (which may
be in the form of facsimile transmission) from the
Company. Delivery by the Trustee of each Certificated
Note will be made against receipt by the Company by
1:00 p.m., New York City time, on the Settlement Date
in immediately available funds of an amount equal to
the issue price of such Certificated Note or the U.S.
dollar equivalent of the issue price of such Note as
agreed between the Company and such Agent, unless
otherwise agreed between the Company and such Agent,
less such Agent's commission.
A-10
<PAGE>
Upon verification by such Agent that a Note has been
prepared and properly authenticated by the Trustee and
registered in the name of the purchaser in the proper
principal amount and that the related Guarantee has
been duly endorsed thereon, payment will be made to the
Company by such Agent the same day in immediately
available funds in the Specified Currency. Such
payment shall be made only upon prior receipt by such
Agent of immediately available funds from or on behalf
of the purchaser in the Specified Currency unless such
Agent decides, at its option, to advance its own funds
for such payment against subsequent receipt of funds
from the purchaser.
Upon delivery of a Certificated Note to such Agent,
such Agent shall promptly deliver such Certificated
Note to the purchaser.
In the event any Certificated Note is incorrectly
prepared, the Trustee shall promptly issue a
replacement Certificated Note in exchange for the
incorrectly prepared Certificated Note.
Failure to Settle: If any Agent, at its own option, has advanced its own
- ----------------- funds for payment against subsequent receipt of funds
from the purchaser, and if the purchaser shall fail to
make payment for the Certificated Note on the
Settlement Date therefor, such Agent will promptly
notify the Trustee and the Company by telephone,
promptly confirmed in writing (but no later than the
next Business Day). In such event, the Company shall
promptly provide the Trustee with appropriate
documentation and instructions consistent with these
procedures for the return of the Certificated Note to
the Trustee and such Agent will promptly return the
Certificated Note to the Trustee. Upon confirmation
(i) from the Trustee in writing (which may be given by
telex or telecopy) that the Trustee has received the
Certificated Note and (ii) from such Agent in writing
(which
A-11
<PAGE>
may be given by telex or telecopy) that such Agent has
not received payment from the purchaser (the matters
referred to in clauses (i) and (ii) are referred to
hereinafter as the "Confirmations"), the Company will
promptly pay to such Agent an amount in immediately
available funds equal to the amount previously paid by
such Agent in respect of such Certificated Note.
Assuming receipt of the Certificated Note by the
Trustee and of the Confirmations by the Company, such
payment will be made on the Settlement Date, if
reasonably practicable, and in any event not later than
the Business Day following the date of receipt of the
Certificated Note and Confirmations. If a purchaser
shall fail to make payment for the Certificated Note
for any reason other than the failure of such Agent to
provide the necessary information to the Company as
described above for settlement or to provide a
confirmation to the purchaser within a reasonable
period of time as described above or otherwise to
satisfy its obligation hereunder or in the Agency
Agreement, and if such Agent shall have otherwise
complied with its obligations hereunder and in the
Agency Agreement, the Company will reimburse such Agent
on an equitable basis for its loss of the use of funds
during the period when they were credited to the
account of the Company.
Immediately upon receipt of the Certificated Note in
respect of which the failure occurred, the Trustee will
void said Certificated Note, make appropriate entries
in its records and destroy the Certificated Note; and
upon such action, the Certificated Note will be deemed
not to have been issued, authenticated and delivered.
Trustee Not to Nothing herein shall be deemed to
- -------------- require the Trustee to risk or expend its own funds in
Risk Funds: connection with any payment to the Company, or any
- ---------- Agent or the purchaser, it being understood by all
parties that payments made by the Trustee to either the
Company or any
A-12
<PAGE>
Agent shall be made only to the extent that funds are
provided to the Trustee for such purpose.
Authenticity of The Company will cause the Trustee and
- --------------- the Guarantor to furnish each Agent from time to time
Signatures: with the specimen signatures of the officers, employees
- ---------- or agents who have been authorized to authenticate
Certificated Notes or execute the related Guarantee, as
the case may be, but each Agent will have no obligation
or liability to the Company, the Guarantor or the
Trustee in respect of the authenticity of the signature
of any officer, employee or agent of the Company, the
Guarantor or the Trustee on any Certificated Note.
Payment of Each Agent shall forward to the Company
- ---------- and the Guarantor, from time to time (but not more
Expenses: often than monthly), a statement of the out-of-pocket
- -------- expenses incurred by such Agent during the related
period which are reimbursable to it pursuant to the
terms of the Agency Agreement. The Company and the
Guarantor will promptly remit payment to such Agent.
Advertising The Company will determine with each
- ----------- Agent the amount of advertising that may be appropriate
Costs: in soliciting offers to purchase the Notes.
- ----- Advertising expenses will be paid by the Company and
the Guarantor.
A-13
<PAGE>
PART II: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of Book-Entry Notes for eligibility in
the book-entry system maintained by DTC, the Trustee will perform the custodial,
document control and administrative functions described below, in accordance
with its respective obligations under a Letter of Representations from the
Company, the Guarantor and the Trustee to The Depository Trust Company ("DTC")
of even date herewith and a Medium-Term Note Certificate Agreement between the
Trustee and DTC, dated April 14, 1989 and its obligations as a participant in
DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: On any Settlement Date (as defined under "Settlement"
- -------- below) for one or more Fixed Rate Book-Entry Notes, the
Company will issue a single global security in fully
registered form without coupons (a "Global Security")
representing up to U.S.$200,000,000 principal amount of
all of such Notes that have the same Issue Date,
Specified Currency, Interest Rate, Stated Maturity
Date, redemption and/or repayment provisions and
Interest Payment Dates. Similarly, on any Settlement
Date for one or more Floating Rate Book-Entry Notes,
the Company will issue a single Global Security
representing up to U.S.$200,000,000 principal amount of
all of such Notes that have the same Issue Date,
Specified Currency, Base Rate(s), Index Maturity,
Interest Reset Dates, Spread and/or Spread Multiplier
(if any), Initial Interest Rate, Interest Payment
Dates, Minimum Interest Rate (if any), Maximum Interest
Rate (if any), Stated Maturity Date and redemption
and/or repayment provisions. Each Global Security will
be dated and issued as of the date of its
authentication by the Trustee. Each Global Security
will bear an "Interest Accrual Date", which will be (i)
with respect to an original Global Security (or any
portion thereof), its original issuance date and (ii)
with respect to any Global Security (or portion
thereof) issued subsequently upon exchange of a Global
Security or in lieu of a destroyed, lost or stolen
Global Security, the most recent Interest Payment Date
to which interest has been
A-14
<PAGE>
paid or duly provided for on the predecessor Global
Security or Securities (or if no such payment or
provision has been made, the original issuance date of
the predecessor Global Security), regardless of the
date of authentication of such subsequently issued
Global Security. No Global Security will represent any
Certificated Note.
Price to Public: Each Book-Entry Note will be issued at the percentage
- --------------- of principal amount specified in the Prospectus.
Identification The Company will arrange, on or prior to
- -------------- commencement of a program for the offering of Book-
Numbers: Entry Notes, with the CUSIP Service Bureau of Standard
- ------- & Poor's Ratings Group (the "CUSIP Service Bureau") for
the reservation of a series of CUSIP numbers (including
tranche numbers), consisting of approximately 900 CUSIP
numbers and relating to Global Securities representing
the Book-Entry Notes. The Trustee has or will obtain
from the CUSIP Service Bureau a written list of such
series of reserved CUSIP numbers and will deliver to
the Company and DTC such written list of 900 CUSIP
numbers of such series. The Company will assign CUSIP
numbers to Global Securities as described below under
Settlement Procedure "B". DTC will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that
the Company has assigned to Global Securities. The
Trustee will notify the Company at any time when fewer
than 100 of the reserved CUSIP numbers remain
unassigned to Global Securities, and if it deems
necessary, the Company will reserve additional CUSIP
numbers for assignment to Global Securities
representing Book-Entry Notes. Upon obtaining such
additional CUSIP numbers, the Trustee shall deliver
such additional CUSIP numbers to the Company and DTC.
Registration: Each Global Security will be registered in the name of
- ------------ CEDE & CO., as nominee for DTC, on the Securities
Register
A-15
<PAGE>
maintained under the Indenture governing such Global
Security. The beneficial owner of a Book-Entry Note
(or one or more indirect participants in DTC designated
by such owner) will designate one or more participants
in DTC (with respect to such Note, the "Participants")
to act as agent or agents for such owner in connection
with the book-entry system maintained by DTC, and DTC
will record in book-entry form, in accordance with
instructions provided by such Participants, a credit
balance with respect to such Note in the account of
such Participants. The ownership interest of such
beneficial owner in such Note will be recorded through
the records of such Participants or through the
separate records of such Participants and one or more
indirect participants in DTC.
Transfers: Transfer of a Book-Entry Note will be accomplished by
- --------- book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect
participants in DTC) acting on behalf of beneficial
transferors and transferees of such Note.
Consolidation and The Trustee may deliver to DTC and the
- ----------------- CUSIP Service Bureau at any time a written notice of
Exchange: consolidation specifying (i) the CUSIP numbers of two
- -------- or more outstanding Global Securities that represent
(A) Fixed Rate Book-Entry Notes having the same Issue
Date, Specified Currency, Interest Rate, Stated
Maturity Date, redemption and/or repayment provisions
(if any) and Interest Payment Dates and with respect to
which interest has been paid to the same date or (B)
Floating Rate Book-Entry Notes having the same Issue
Date, Specified Currency, Base Rate, Index Maturity,
Interest Reset Dates, Spread and/or Spread Multiplier
(if any), Initial Interest Rate, Interest Payment
Dates, Minimum Interest Rate (if any), Maximum Interest
Rate (if any), redemption and/or repayment provisions
(if any) and Stated Maturity Date and with respect to
which interest has been
A-16
<PAGE>
paid to the same date, (ii) a date, occurring at least
thirty days after such written notice is delivered and
at least thirty days before the next Interest Payment
Date for such Book-Entry Notes, on which such Global
Securities shall be exchanged for a single replacement
Global Security and (iii) a new CUSIP number, obtained
from the Company, to be assigned to such replacement
Global Security. Upon receipt of such a notice, DTC
will send to its Participants (including the Trustee) a
written reorganization notice to the effect that such
exchange will occur on such date. Prior to the
specified exchange date, the Trustee will deliver to
the CUSIP Service Bureau a written notice setting forth
such exchange date and the new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of
the Global Securities to be exchanged will no longer be
valid. On the specified exchange date, the Trustee
will exchange such Global Securities for a single
Global Security bearing the new CUSIP number and a new
Interest Accrual Date, and the CUSIP numbers of the
exchanged Global Securities will, in accordance with
CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned. Notwithstanding the foregoing,
if the Global Securities to be exchanged exceed
U.S.$200,000,000 in aggregate principal amount, one
Global Security will be authenticated and issued to
represent each U.S.$200,000,000 of principal amount of
the exchanged Global Securities and an additional
Global Security will be authenticated and issued to
represent any remaining principal amount of such Global
Securities (see "Denominations" below).
Maturities: Each Book-Entry Note will mature on a date nine months
- ---------- or more after the Settlement Date for such Note.
Notice of Redemption The Trustee will notify DTC not more
- --------------------
A-17
<PAGE>
Dates: than 60 but not less than 30 days prior to each
- ----- redemption date, if any, with respect to a Book-Entry
Note, of the CUSIP number of such Note, the redemption
date, the redemption price and the principal amount of
such Book-Entry Note to be redeemed.
Denominations: Book-Entry Notes will be issued in principal amounts of
- ------------- U.S.$1,000 or any amount in excess thereof that is an
integral multiple of U.S.$1,000. Global Securities
will be denominated in principal amounts not in excess
of U.S.$200,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess of
U.S.$200,000,000 would, but for the preceding sentence,
be represented by a single Global Security, then one
Global Security will be issued to represent each
U.S.$200,000,000 principal amount of such Book-Entry
Note or Notes and an additional Global Security will be
issued to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry Note
or Notes shall be assigned the same CUSIP number.
Interest: General. Interest on each Book-Entry Note will accrue
- -------- -------
from the Interest Accrual Date of the Global Security
representing such Note. Except as set forth in the
underlying Global Security, each Book-Entry Note which
is a Fixed Rate Note will bear interest at the annual
rate stated in such Global Security, payable
semiannually on January 15 and July 15 of each year
(each, an "Interest Payment Date") and on the Maturity
Date, and each Book-Entry Note which is a Floating Rate
Note will bear interest as determined in the manner set
forth in such Global Security, payable on the dates set
forth on such Global Security. Except as set forth in
the underlying Global Security, interest (including
payments for partial periods) on Fixed Rate Notes will
be calculated on the basis of a 360-day
A-18
<PAGE>
year of twelve 30-day months. Except as set forth in
the underlying Global Security, interest on Book-Entry
Notes which are Floating Rate Notes will be determined
in the manner agreed upon by the Company and the
purchaser thereof in accordance with the provisions of
the Prospectus. Except as set forth in the underlying
Global Security, the "Record Date" with respect to any
Interest Payment Date for Book-Entry Notes which are
Floating Rate Notes shall be the date 15 calendar days
immediately preceding such Interest Payment Date, and
for Fixed Rate Notes shall be the December 31 or June
30 next preceding such Interest Payment Date, whether
or not such date shall be a Business Day. The first
payment of interest on any Book-Entry Note originally
issued between a Record Date and an Interest Payment
Date will be made on the Interest Payment Date
following the next succeeding Record Date to the Holder
on such next succeeding Record Date. Notwithstanding
the record date provisions above, interest payable on
the Maturity Date will be payable to the person to whom
principal shall be payable.
Standard & Poor's Ratings Group will use the
information received in the pending deposit message
described under Settlement Procedure "C" below in order
to include the amount of any interest payable and
certain other information regarding the related Global
Security in the appropriate weekly bond report
published by Standard & Poor's Ratings Group.
On the first Business Day of January, April, July and
October of each year, the Trustee will deliver to the
Company and DTC a written list of Record Dates and
Interest Payment Dates that will occur with respect to
Floating Rate Book-Entry Notes during the six-month
period beginning on such first Business Day. Promptly
after each Interest Determination Date (as defined in
the Prospectus) for Floating Rate Notes, the
A-19
<PAGE>
Company will notify the Trustee, and the Trustee in
turn will notify Standard & Poor's Ratings Group, of
the interest rates determined on such Interest
Determination Date.
Payments of Payments of Interest Only. Promptly after each Record
- ----------- -------------------------
Principal Date, the Trustee will deliver to the Company and DTC
- --------- a written notice specifying by CUSIP number the amount
and Interest: of interest to be paid on each Global Security on the
- ------------- following Interest Payment Date (other than an Interest
Payment Date coinciding with a Maturity Date) and the
total of such amounts. DTC will confirm the amount
payable on each Global Security on such Interest
Payment Date by reference to the daily bond reports
published by Standard & Poor's Corporation. The Company
will pay to the Trustee, as paying agent, the total
amount of interest due on such Interest Payment Date
(other than on the Maturity Date), and the Trustee will
pay such amount to DTC at the times and in the manner
set forth below under "Manner of Payment".
Payments at Maturity. On or about the first Business
--------------------
Day of each month, the Trustee will deliver to the
Company and DTC a written list of principal and
interest to be paid on each Global Security with a
Maturity Date in the following month. The Company, the
Trustee and DTC will confirm the amounts of such
principal and interest payments with respect to each
such Global Security on or about the fifth Business Day
preceding the Maturity Date of such Global Security.
The Company will pay to the Trustee, as the paying
agent, the principal amount of such Global Security,
together with interest due on such Maturity Date. The
Trustee will pay such amount to DTC at the time and in
the manner set forth below under "Manner of Payment".
Promptly after payment to DTC of the principal and
interest due on the Maturity Date of such Global
Security,
A-20
<PAGE>
the Trustee will cancel such Global Security and
deliver it to the Company with an appropriate debit
advice. On the first Business Day of each month, the
Trustee will prepare a written statement indicating the
total principal amount of outstanding Global Securities
for which it serves as trustee as of the immediately
preceding Business Day.
Manner of Payment. The total amount of any principal
-----------------
and interest due on Global Securities on any Interest
Payment Date or on the Maturity Date shall be paid by
the Company to the Trustee in funds available for use
by the Trustee as of 9:30 A.M. (New York City time) on
such date. The Company will make such payment on such
Global Securities by instructing the Trustee to
withdraw funds from an account maintained by the
Company at the Trustee. For maturity, redemption,
repayment or any other principal payments: prior to
10:00 A.M. (New York City time) on such date or as soon
as possible thereafter, the Trustee will make such
payments to DTC in same day funds in accordance with
DTC's Same Day Funds Settlement Paying Agent Operating
Procedures. For interest payments: the Trustee will
make such payments to DTC in accordance with existing
arrangements between DTC and the Trustee. DTC will
allocate such payments to its participants in
accordance with its existing operating procedures.
Neither the Company (either as Issuer or as Paying
Agent), the Trustee or any Agent shall have any direct
responsibility or liability for the payment by DTC to
such Participants of the principal of and interest on
the Book-Entry Notes.
Withholding Taxes. The amount of any taxes required
-----------------
under applicable law to be withheld from any interest
payment on a Book-Entry Note will be determined and
withheld by the Participant, indirect participant in
DTC or other Person responsible for forwarding payments
and materials directly to the beneficial owner of such
Note.
A-21
<PAGE>
Procedure for The Company and the Agents will discuss from time
- ------------- to time the aggregate principal amount of, the
Rate Setting issuance price of, and the interest rates to be borne
- ------------ by, Book-Entry Notes that may be sold as a result of
and Posting: the solicitation or offers by the Agents. If the
- ----------- Company decides to establish prices of (including the
currency of issuance), and rates borne by, any Book-
Entry Notes to be sold (the establishment of such
prices and rates to be referred to herein as "posting")
or if the Company decides to change prices or rates
previously posted by it, it will promptly advise the
Agents of the prices and rates to be posted.
Acceptance Unless otherwise agreed between the Company and such
- ---------- Agent, any Agent which receives an offer to purchase
of Offers: Book-Entry Notes will promptly advise the Company of
- --------- each such offer other than offers rejected by such
Agent as provided below. The Company will have the sole
right to accept any such offer to purchase Book-Entry
Notes. The Company may reject any such offer in whole
or in part.
Unless otherwise agreed between the Company and any
Agent, each Agent may, in its discretion reasonably
exercised, reject any offer to purchase Book-Entry
Notes received by it in whole or in part.
Preparation of If any offer to purchase a Book-Entry Note is accepted
- -------------- by or on behalf of the Company, the Company and the
Pricing Guarantor, with the approval of the Agents, will
- ------- prepare a Pricing Supplement reflecting the terms of
Supplement: such Book-Entry Note and will arrange to have requisite
- ---------- copies of such Pricing Supplement filed with the
Commission, in each case no later than the second
Business Day after the earlier of the determination of
the offering price or the date it is first used and
will supply at least ten copies thereof (or additional
copies if requested) to the Agents and one copy to the
Trustee no
A-22
<PAGE>
later than 11:00 A.M., New York City time, on the
Business Day following the date of acceptance at the
following applicable address (unless otherwise
specified in the applicable trading confirmation): if
to Lehman Brothers Inc., to Lehman Brothers Inc.,
Prospectus Department, 3 World Financial Center, 9th
Floor, New York, New York 10285-0900, attention of
Brunnie Vazquez, telecopier no. (212) 528-7035; if to
Goldman, Sachs & Co., to Goldman, Sachs & Co., 85 Broad
Street, 27th Floor, New York, New York 10004, attention
of Patti O'Connell; if to Merrill Lynch & Co., to
Merrill Lynch & Co. - Tritech Services, 4 Corporate
Place - Corporate Park 287, Piscataway, New Jersey
08854, attention of Nachman Kimmerling/Final Prospectus
Unit, telephone no. (908) 878-6525/26/27, telecopier
no. (908) 878-6530, with a copy to Merrill Lynch,
Pierce, Fenner & Smith Incorporated, World Financial
Center, North Tower, 10th Floor, New York, New York
10281-1310, attention of MTN Product Management,
telephone no. (212) 449-3780, telecopier no. (212) 449-
2234; if to J.P. Morgan Securities Inc. to J.P. Morgan
Securities Inc., 60 Wall Streeet, 3rd Floor, New York,
New York 10260, attention of Dan Benton, telephone no.
(212) 648-0591, telecopier no. (212) 648-5907; if to
NationsBanc Capital Markets, Inc. to NationsBanc
Capital Markets, Inc., 100 North Tyron Street,
Charlotte, NC 28255, NC1-007-07-01, attention of Jim
Trobert, MTN Trading, telecopier no. (704) 388-9212; if
to Salomon Brothers Inc, to Salomon Brothers Inc, 8800
Hidden River Parkway, Tampa, Florida 33637, attention
of Enrique Castro, telephone no. (813) 558-7165,
telecopier no. (813) 558-4123; and if to the Trustee,
to The Bank of New York, 101 Barclay Street, New York,
New York 10286, attention of Corporate Trust Office.
Such Agent will cause a Pricing Supplement to be
delivered to the purchaser of the Book-Entry Note. In
all respects, the Company and the Guarantor
A-23
<PAGE>
will prepare and file each such Pricing Supplement in
accordance with Rule 424 under the Act.
In each instance that a Pricing Supplement is prepared,
each Agent will affix the Pricing Supplement to
Prospectuses prior to their use; provided, however,
that pursuant to Rule 434, the Pricing Supplement may
be delivered separately from the Prospectuses. Outdated
Pricing Supplements, and the Prospectuses to which they
are attached or relate (other than those retained for
files), will be destroyed.
Suspension of The Company reserves the right, in its sole discretion,
- ------------- to instruct the Agents to suspend at any time, for any
Solicitation; period of time or permanently, the solicitation of
- ------------- offers to purchase Book-Entry Notes. As soon as
Amendment or practicable, but in no event later than one Business
- ------------ Day after receipt of instructions from the Company, the
Supplement: Agents will suspend solicitation of offers to purchase
- ---------- Book-Entry Notes from the Company until such time as
the Company has advised them that such solicitation may
be resumed.
If the Company or the Guarantor decides to amend or
supplement the Registration Statement or the Prospectus
relating to the Notes (except in the case of a Pricing
Supplement to the Prospectus), the Company or the
Guarantor, as the case may be, will promptly advise the
Agents and the Trustee and will furnish the Agents and
the Trustee with the proposed amendment or supplement
in accordance with the terms of the Agency Agreement.
The Company or the Guarantor will mail or transmit to
the Commission for filing therewith any supplement to
the Prospectus relating to the Notes, provide the
Agents with copies of any supplement, and confirm to
the Agents that such supplement has been filed with the
Commission.
A-24
<PAGE>
In the event that at the time the Company suspends
solicitation of offers to purchase Book-Entry Notes
there shall be any outstanding offers to purchase Book-
Entry Notes that have been accepted by the Company but
for which settlement has not yet occurred, the Company
will promptly advise the Agents and the Trustee whether
such sales may be settled and whether copies of the
Prospectus as supplemented to the time of the
suspension may be delivered in connection with the
settlement of such sales. The Company will have the
sole responsibility for such decision and for any
arrangements which may be made in the event that the
Company determines that such sales may not be settled
or that copies of such Prospectus may not be so
delivered.
Delivery of Each Agent shall, for each offer to
- ----------- purchase a Book-Entry Note that is solicited by such
Prospectus: Agent and accepted by the Company, deliver a copy of
- ---------- the Prospectus as most recently amended or supplemented
(including the applicable Pricing Supplement which,
pursuant to Rule 434, may be delivered separately from
the Prospectus) with the earlier of the delivery of the
confirmation of sale or the Book-Entry Note to the
purchaser thereof or such purchaser's agent.
Confirmation: Such Agent will confirm the purchase of such Note to
- ------------ the purchaser either by transmitting to the
Participants with respect to such Note a confirmation
order or orders through DTC's institutional delivery
system or by mailing a written confirmation to such
purchaser.
Settlement: The receipt by the Company of immediately available
- ---------- funds in payment for a Book-Entry Note and the
authentication and issuance of the Global Security
representing such Note shall constitute "settlement"
with respect to such Note. The "Settlement Date" with
respect to any offer to purchase Book-Entry Notes
accepted by or
A-25
<PAGE>
on behalf of the Company will be a date on or before
the third Business Day next succeeding the date of
acceptance unless otherwise agreed by the purchaser and
the Company and shall be specified upon acceptance of
such offer.
Settlement Settlement Procedures with regard to
- ---------- each Book-Entry Note sold by the Company through an
Procedures: Agent, as agent, shall be as follows:
- ----------
A. Such Agent will advise the Company by telephone of
the following settlement information:
1. Principal amount.
2. Specified Currency.
3. Stated Maturity Date.
4. In the case of a Fixed Rate Book-Entry Note,
the interest rate, or, in the case of a
Floating Rate Book-Entry Note, Base Rate,
Index Maturity, Initial Interest Rate,
Maximum Interest Rate, Minimum Interest
Rate, Interest Reset Dates, Interest Payment
Dates, Calculation Dates, Interest Reset
Dates and Spread and/or Spread Multiplier.
5. Settlement Date.
6. Redemption and/or repayment provisions, if
any.
7. Agent's commission, determined as provided
in the Agency Agreement between the Company
and such Agent.
8. The DTC Participant account number of such
Agent.
9. Taxpayer identification number of beneficial
owner (if available).
10. Issue price of Book-Entry Note and proceeds
to the Company.
B. The Trustee will assign a CUSIP number to the
Global Security representing such Book-Entry Note
and will then advise the Company of such CUSIP
number. The Company will then advise the Trustee
by
A-26
<PAGE>
electronic transmission (confirmed by telephone)
of the information set forth in Settlement
Procedure "A" above and the name of such Agent.
Each such communication by the Company shall
constitute a representation and warranty by the
Company to the Trustee and each Agent that (i)
such Note is then, and at the time of issuance and
sale thereof will be, duly authorized for issuance
and sale by the Company, (ii) such Note, and the
Global Security representing such Note, will
conform with the terms of the Indenture pursuant
to which such Note and Global Security are issued
and (iii) upon authentication and delivery of such
Global Security, the aggregate initial offering
price of all Notes issued under the Indenture will
not exceed $1,000,000,000 (except for Book-Entry
Notes represented by Global Securities
authenticated and delivered in exchange for or in
lieu of Global Securities pursuant to the
Indenture and except for Certificated Notes
authenticated and delivered upon registration of
transfer of, in exchange for, or in lieu of
Certificated Notes pursuant to the Indenture).
C. The Trustee will enter a pending deposit message
through DTC's Participant Terminal System,
providing the following settlement information to
DTC, such Agent, Standard & Poor's Ratings Group
and, upon request, the Trustee under the Indenture
pursuant to which such Note is to be issued:
1. The information set forth in Settlement
Procedure "A".
2. Identification as a Fixed Rate Book-Entry
Note or a Floating Rate Book-Entry Note.
3. Initial Interest Payment Date for such Note
and amount of
A-27
<PAGE>
interest payable on such Interest Payment
Date.
4. Frequency of interest payments (monthly,
semiannually, quarterly, etc.).
5. CUSIP number of Global Security representing
such Note.
6. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
D. The Trustee will complete the Global Security, the
form of which was previously approved by the
Company, the Agents and the Trustee.
E. The Trustee, as Trustee, will authenticate the
Global Security representing such Note.
F. DTC will credit such Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such Note
to such Agent's participant account and (ii) debit
such Agent's settlement account and credit the
Trustee's settlement account for an amount equal
to the price of such Note less such Agent's
commission. The entry of such a deliver order
shall constitute a representation and warranty by
the Trustee to DTC that (i) the Global Security
representing such Book-Entry Note has been issued
and authenticated and (ii) the Trustee is holding
such Global Security pursuant to the Certificate
Agreement.
H. Such Agent will enter an SDFS deliver order
through DTC's Participant Terminal System
A-28
<PAGE>
instructing DTC (i) to debit such Note to such
Agent's participant account and credit such Note
to the participant accounts of the Participants
with respect to such Note and (ii) to debit the
settlement accounts of such Participants and
credit the settlement account of such Agent for an
amount equal to the price of such Note.
I. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "G" and
"H" will be settled in accordance with SDFS
operating procedures in effect on the Settlement
Date.
J. The Trustee will credit to an account of the
Company maintained at the Trustee funds available
for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure
"G".
K. The Trustee will hold the Global Security pursuant
to the Certificate Agreement and will send a
photocopy of such Global Security to the Company
by first-class mail. Upon written request the
Trustee will deliver a photocopy of such Global
Security to such Agent. Periodically, the Trustee
will send to the Company a statement setting forth
the principal amount of Notes Outstanding as of
that date and setting forth a brief description of
any sales of which the Company has advised the
Trustee but which have not yet been settled.
L. As set forth in "Delivery of Prospectus" above,
such Agent will deliver to the purchaser a copy of
the most recent Prospectus applicable to the Book-
Entry Note with or prior to any written offer of
Book-Entry Notes and the
A-29
<PAGE>
confirmation and payment by the purchaser of such
Note.
Such Agent will confirm the purchase of such Note to
the purchaser either by transmitting to the
Participants with respect to such Note a confirmation
order or orders through DTC's institutional delivery
system or by mailing a written confirmation to such
purchaser.
Settlement For offers to purchase Book-Entry
- ---------- Notes solicited by an Agent, as agent,
Procedures and accepted by the Company for settlement on the first
- ---------- Business Day after the sale date, Settlement Procedures
Timetable: "A" through "L" set forth above shall be completed as
- --------- soon as possible but not later than the respective
times (New York City time) set forth below:
Settlement
Procedure Time
--------- ----
A-B 11:00 A.M. on the sale date
C 2:00 P.M. on the sale date
D 3:00 P.M. on day before Settlement Date
E 9:00 A.M. on Settlement Date
F 10:00 A.M. on Settlement Date
G-H 2:00 P.M. on Settlement Date
I 4:45 P.M. on Settlement Date
J-L 5:00 P.M. on Settlement Date
If a sale is to be settled more than one Business Day
after the sale date, Settlement Procedures "A", "B" and
"C" shall be completed as soon as practicable but no
later than 11:00 A.M. and 2:00 P.M., as the case may
be, on the first Business Day after the sale date. If
the initial interest rate for a Floating Rate Book-
Entry Note has not
A-30
<PAGE>
been determined at the time that Settlement Procedure
"A" is completed, Settlement Procedures "B" and "C"
shall be completed as soon as such rate has been
determined but no later than 11:00 A.M. and 12:00 Noon,
respectively, on the second Business Day before the
Settlement Date. Settlement Procedure "I" is subject to
extension in accordance with any extension of Fedwire
closing deadlines and in the other events specified in
the SDFS operating procedures in effect on the
Settlement Date.
Failure to Settle: If the Trustee fails to enter an SDFS deliver order
- ----------------- with respect to a Book-Entry Note pursuant to
Settlement Procedure "G", the Trustee may deliver to
DTC, through DTC's Participant Terminal System, as soon
as practicable a withdrawal message instructing DTC to
debit such Note to the Trustee's participant account.
DTC will process the withdrawal message, provided that
the Trustee's participant account contains a principal
amount of the Global Security representing such Note
that is at least equal to the principal amount to be
debited. If a withdrawal message is processed with
respect to all the Book-Entry Notes represented by a
Global Security, the Trustee will mark such Global
Security "canceled", make appropriate entries in the
Trustee's records and send such canceled Global
Security to the Company. The CUSIP number assigned to
such Global Security shall, in accordance with CUSIP
Service Bureau procedures, be canceled and not
immediately reassigned. If a withdrawal message is
processed with respect to one or more, but not all, of
the Book-Entry Notes represented by a Global Security,
the Trustee will exchange such Global Security for two
Global Securities, one of which shall represent such
Book-Entry Note or Notes and shall be canceled
immediately after issuance and other Book-Entry Notes
previously represented by the surrendered Global
Security and
A-31
<PAGE>
shall bear the CUSIP number of the surrendered Global
Security.
If the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such
Note by the beneficial purchaser thereof (or a Person,
including an indirect participant in DTC, acting on
behalf of such purchaser), such Participants and, in
turn, the Agent for such Note may enter SDFS deliver
orders through DTC's Participant Terminal System
reversing the orders entered pursuant to Settlement
Procedures "H" and "G", respectively. Thereafter, the
Trustee will deliver the withdrawal message and take
the related actions described in the preceding
paragraph.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
any actions in accordance with its SDFS operating
procedures then in effect. In the event of a failure to
settle with respect to one or more, but not all, of the
Book-Entry Notes to have been represented by a Global
Security, the Trustee will provide, in accordance with
Settlement Procedures "D" and "E", for the
authentication and issuance of a Global Security
representing the other Book-Entry Notes to have been
represented by such Global Security and will make
appropriate entries in its records.
Trustee Not to Nothing herein shall be deemed to
- -------------- require the Trustee to risk or expend its own funds in
Risk Funds: connection with any payment to the Company, or any
- ---------- Agent or the purchaser, it being understood by all
parties that payments made by the Trustee to either the
Company or any Agent shall be made only to the extent
that funds are provided to the Trustee for such
purpose.
Authenticity of The Company will cause the Trustee and
- --------------- the Guarantor to furnish each Agent from time to time
Signatures: with the specimen
- ----------
A-32
<PAGE>
signatures of the officers, employees or agents who
have been authorized to authenticate Notes or execute
the related Guarantee, but each Agent will have no
obligation or liability to the Company, the Guarantor
or the Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the
Company, the Guarantor or the Trustee on any Note.
Payment of Each Agent shall forward to the Company
- ---------- and the Guarantor, from time to time (but not more
Expenses: often than monthly), a statement of the out-of-pocket
- -------- expenses incurred by such Agent during the related
period which are reimbursable to it pursuant to the
terms of the Agency Agreement. The Company and the
Guarantor will promptly remit payment to such Agent.
Advertising The Company will determine with each
- ----------- Agent the amount of advertising that may be appropriate
Costs: in soliciting offers to purchase the Notes. Advertising
- ----- expenses will be paid by the Company and the
Guarantor.
A-33
<PAGE>
EXHIBIT B
Countrywide Home Loans, Inc.
Medium-Term Notes, Series E
Due Nine Months or More From Date of Issue
TERMS AGREEMENT
_________________, 19__
Countrywide Home Loans, Inc.
155 North Lake Avenue
Pasadena, California 91101
Attention: Corporate Counsel
Subject in all respects to the terms and conditions of the Selling Agency
Agreement dated May __, 1996 among Lehman Brothers, Lehman Brothers Inc.,
Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan Securities Inc., NationsBanc Capital Markets, Inc. and
Salomon Brothers Inc, and you (the "Agreement"), the undersigned agrees to
purchase the following Medium-Term Notes, Series E (the "Notes"), of Countrywide
Home Loans, Inc.:
Aggregate Principal Amount:
Currency or Currency Unit:
Interest Rate or Base Rate(s):
Spread:
Spread Multiplier:
Stated Maturity Date:
Interest Payment Dates:
Record Dates:
Purchase Price: % of Principal Amount [plus accrued interest, if any,
from _______________, 19 __]
Purchase Date and Time:
Certificated or Book-Entry Form:
B-1
<PAGE>
Place for Delivery of Notes
and Payment Therefor:
Method of Payment:
Modification, if any, in
the requirements to
deliver the documents
specified in Section 6(b)
of the Agreement:
Period during which additional
Notes may not be sold pursuant to
Section 4(l) of the Agreement:
Default provisions, if any:
Other terms:
[LEHMAN BROTHERS INC.
By: _______________________________]
[__________________________________
Goldman, Sachs & Co.]
[MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _______________________________]
[J.P. MORGAN SECURITIES INC.
By: _______________________________]
[NATIONSBANC CAPITAL MARKETS, INC.
By: _______________________________]
[SALOMON BROTHERS INC
By: _______________________________]
B-2
<PAGE>
Accepted:
COUNTRYWIDE HOME LOANS, INC.
By: ______________________________
Title:
B-3
<PAGE>
EXHIBIT 4.3
COUNTRYWIDE HOME LOANS, INC.
CUSIP
REGISTERED PRINCIPAL AMOUNT
NO. FX- $
MEDIUM-TERM NOTE, SERIES E
(FIXED RATE)
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
PAYMENT OF THE PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST ON THIS NOTE IS UNCONDITIONALLY
GUARANTEED BY COUNTRYWIDE CREDIT INDUSTRIES, INC.
IF THE HOLDER OF THIS NOTE IS THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY, THIS
NOTE IS A GLOBAL NOTE AND THE FOLLOWING LEGEND APPLIES:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND SUCH NOTE IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
ISSUE PRICE: INTEREST RATE:
ORIGINAL ISSUE DATE: STATED MATURITY DATE:
PRINCIPAL AMOUNT: INTEREST PAYMENT DATES (IF OTHER THAN JANUARY
15 AND JULY 15):
SPECIFIED CURRENCY: RECORD DATES (IF OTHER THAN DECEMBER 30 AND
JUNE 30):
MINIMUM DENOMINATION:
EXCHANGE RATE AGENT: OTHER/ADDITIONAL TERMS:
OPTION TO RECEIVE PAYMENT
IN U.S. DOLLARS:
[ ] NO
[ ] YES
REDEMPTION:
[ ] NO
[ ] YES
INITIAL REDEMPTION
DATE:
INITIAL REDEMPTION
PERCENTAGE:
ANNUAL REDEMPTION
PERCENTAGE REDUCTION:
REPAYMENT:
[ ] NO
[ ] YES
OPTIONAL REPAYMENT
DATE(S):
<PAGE>
COUNTRYWIDE HOME LOANS, INC., a New York corporation (the "Company"),
for value received, hereby promises to pay to
__________________________________________, or registered assignees, the
principal sum of _________________________________ (________) on the Stated
Maturity Date specified above (except to the extent redeemed or repaid prior to
the Stated Maturity Date) at the office or agency of the Company in the Borough
of Manhattan, The City of New York, State of New York, and such other place or
places as may be provided for pursuant to the Indenture referred to below, and
to pay interest semi-annually in arrears on January 15 and July 15 of each year
or such other Interest Payment Dates specified above (each, an "Interest Payment
Date"), commencing on the Interest Payment Date next succeeding the Original
Issue Date specified above and on the Stated Maturity Date or, if applicable,
any date of earlier redemption (the "Redemption Date") or repayment (the
"Repayment Date") (the earliest of the Stated Maturity Date, the Redemption Date
and the Repayment Date is hereinafter referred to as the "Maturity Date" with
respect to the principal repayable on such date) on said principal sum at the
Interest Rate specified above from and including the most recent Interest
Payment Date to which interest has been paid or duly provided for, or, if no
interest has been paid or duly provided for, from and including the Original
Issue Date, until the principal hereof becomes due and payable;
provided, however, that any payment of principal, premium, if
- -------- -------
any, and/or interest to be made on an Interest Payment Date or on the Maturity
Date which is not a Business Day shall be made on the next Business Day with the
same force and effect as if made on such Interest Payment Date or the Maturity
Date, as the case may be, and no interest on such payment shall accrue to the
next Business Day. For purposes of this Note, "Business Day" means any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions are authorized or required by law, regulation or
executive order to close in (i) New York, New York or Los Angeles, California or
(ii) if the Specified Currency specified above is other than U.S. dollars, the
Principal Financial Center (as defined below) of the country issuing the
Specified Currency. "Principal Financial Center" means the capital city of the
country issuing such Specified Currency, except that with respect to Australian
dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and European
Currency Units ("ECU"), the "Principal Financial Center" shall be Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be to the person (the "Holder") in whose name
this Note (or one or more predecessor Notes) is registered at the close of
business on the December 31 or June 30 or such other Record Dates specified
above (whether or not a Business Day) (each, a "Record Date") immediately
preceding such Interest Payment Date; provided, however, that interest payable
-------- -------
on the Maturity Date will be payable to the person to whom principal is payable.
Unless otherwise specified above, if this Note is originally
3
<PAGE>
issued between a Record Date and an Interest Payment Date, the first payment of
interest on this Note will be made on the Interest Payment Date following the
next Record Date to the Holder hereof on such next Record Date.
Unless otherwise specified above, payment of the principal of, and
premium, if any, and interest on, this Note due on the Maturity Date will be
made in immediately available funds in the Specified Currency, upon presentation
and surrender of this Note at the Corporate Trust Office of the Trustee. If the
Specified Currency is other than U.S. dollars, this Note must be presented and
surrendered to the Trustee referred to below in time for the Trustee to make
such payment in accordance with its normal procedures.
Unless otherwise specified above, payment of interest on this Note due
on any Interest Payment Date other than the Maturity Date will be made by
mailing a check in the Specified Currency (from an account at a bank located
outside the United States if such check is payable in a Specified Currency other
than U.S. dollars) to the address of the Holder hereof as such address shall
appear in the Security Register (as defined in the Indenture) on the applicable
Record Date. Notwithstanding the foregoing, on any Interest Payment Date other
than the Maturity Date, each Holder of U.S. $10,000,000 (or the equivalent
thereof in a Specified Currency other than U.S. dollars) or more in aggregate
principal amount of Notes (whether or not having identical terms and provisions)
shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive
such payment by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the United States, but only if
appropriate wire transfer instructions have been received in writing by the
Trustee not later than the Record Date immediately preceding such Interest
Payment Date and (ii) if the Specified Currency is other than U.S. dollars, to
receive such payment by wire transfer of immediately available funds to an
account maintained by the payee with a bank located in a jurisdiction in which
payment in such Specified Currency is then lawful. The Company shall pay any
administrative costs imposed by banks in connection with making payments by wire
transfer; provided, however, that any tax, assessment or other governmental
-------- -------
charge imposed upon payments shall be borne by the Holder hereof in respect of
which payments are made.
All payments of principal, premium, if any, and interest in respect of
this Note will be made by the Company in the Specified Currency; provided,
--------
however, that if the Specified Currency specified above is other than U.S.
- -------
dollars, the Holder hereof may, if indicated above under "Option to Receive
Payment in U.S. Dollars," elect to receive all payments of principal, premium,
if any, and/or interest in respect of this Note in U.S. dollars by delivering a
written request to the Trustee not later than the close of business on the
Record Date immediately preceding the Interest Payment Date or the fifteenth day
immediately preceding the Maturity Date, as the case may be. Upon such election
by the Holder hereof, the Company shall tender payment in U.S. dollars at the
Exchange Rate
4
<PAGE>
(as defined below), and any costs associated with the conversion of the
Specified Currency into U.S. dollars shall be borne by the Holder hereof through
deductions from such payments. The Holder's election to receive payments in U.S.
dollars will remain in effect until revoked by written notice from the Holder to
the Trustee, provided that any such revocation must be received by the Trustee
not later than the close of business on the Record Date immediately preceding
the Interest Payment Date or the fifteenth day immediately preceding the
Maturity Date, as the case may be.
Unless otherwise specified above or elsewhere herein, "Exchange Rate"
means, with respect to a Specified Currency other than ECU, the noon Dollar
buying rate for such Specified Currency for cable transfers quoted by the
Exchange Rate Agent specified above in The City of New York on the Record Date
or Special Record Date (as defined below) or the fifteenth day immediately
preceding the Maturity Date or such other date provided herein or in the
Indenture, as the case may be, as certified for customs purposes by the Federal
Reserve Bank of New York. With respect to ECU, "Exchange Rate" means the
exchange rate between dollars and ECU reported by the Council of the European
Communities on the applicable Record Date or Special Record Date with respect to
an Interest Payment Date or the fifteenth day immediately preceding the Maturity
Date or such other date provided herein or in the Indenture, as the case may be.
If any payment of principal, premium, if any, or interest on this Note
is to be made in a Specified Currency other than U.S. dollars and such Specified
Currency is not available to the Company for making such payment due to the
imposition of exchange controls or other circumstances beyond the control of the
Company, the Company will be entitled to satisfy its obligations to the Holder
hereof by making such payment in U.S. dollars on the basis of the Exchange Rate
referred to below two Business Days prior to the Interest Payment Date or the
Maturity Date, as the case may be (or, if no rate is quoted for such Specified
Currency on such date, the last date such Exchange Rate is quoted). Any payment
made under such circumstances in U.S. dollars where the required payment is in a
Specified Currency other than U.S. dollars will not constitute an Event of
Default under the Indenture. For purposes of this paragraph and the immediately
succeeding paragraph, the "Exchange Rate" for a foreign currency or ECU will be
the noon Dollar selling rate for that currency or ECU for cable transfers quoted
by the Exchange Rate Agent in The City of New York, as certified for customs
purposes by the Federal Reserve Bank of New York.
If payment on this Note is required to be made in ECU and ECU is
unavailable due to the imposition of exchange controls or other circumstances
beyond the control of the Company, or is no longer used in the European Monetary
System, all payments due on that Interest Payment Date or Maturity Date with
respect to this Note shall be made in U.S. dollars. The amount so payable on
any date in ECU shall be converted into U.S. dollars, at a rate determined by
the Exchange Rate Agent as of the
5
<PAGE>
second Business Day prior to the date on which such payment is due on the
following basis. The component currencies of the ECU for this purpose (the
"Components") shall be the currency amounts which were components of the ECU as
of the last date on which the ECU was used in the European Monetary System. The
equivalent of the ECU in U.S. dollars shall be calculated by aggregating the
U.S. dollar equivalents of the Components. The U.S dollar equivalent of each of
the Components shall be determined by the Exchange Rate Agent on the basis of
the most recently available Exchange Rate.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into
two or more currencies, the amount of that currency as a Component shall be
replaced by amounts of such two or more currencies (in appropriate proportions)
the sum of which shall be equal to the amount of the former component currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion (except to the extent expressly provided that
any determination is subject to approval) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder of this Note and
the Exchange Rate Agent shall have no liability therefor.
Any interest not punctually paid or duly provided for with respect to
this Note ("Defaulted Interest") will forthwith cease to be payable to the
Holder of this Note on the applicable Record Date and may either be paid to the
person in whose name this Note is registered at the close of business on a
special record date (the "Special Record Date") for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
the Holder of this Note not less than ten days prior to such Special Record
Date, or may be paid at any time in any other lawful manner, all as more
completely described in the Indenture.
Unless otherwise specified above, interest will be computed on the
basis of a 360-day year of twelve 30-day months.
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (collectively, the "Debt
Securities"), of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture, dated as of January 1, 1992, as amended,
supplemented or modified from time to time, including Supplemental Indenture No.
1 thereto dated as of June 15, 1995
6
<PAGE>
(collectively, the "Indenture"), among the Company, the Guarantor (as defined
below), and The Bank of New York, as trustee (the "Trustee," which term includes
any successor trustee under the Indenture), to which Indenture reference is
hereby made for a description of the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company, the
Guarantor and the Holders of the Notes. The Debt Securities may be issued in one
or more series, which different series (and which Debt Securities issued within
each series) may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates or formulas, may
be subject to different redemption or repayment provisions, if any, may be
subject to different sinking, purchase or analogous funds, if any, and may
otherwise vary as provided in the Indenture. This Note is one of a series
designated as "Medium-Term Notes, Series E, Due Nine Months or More From Date of
Issue" of the Company (collectively, the "Notes"), limited in aggregate offering
price to U.S. $1,000,000,000, or the equivalent thereof in one or more Specified
Currencies other than U.S. dollars.
If an Event of Default, as defined in the Indenture, with respect to
the Notes shall have occurred and be continuing, the principal hereof (or, if
this Note is an Original Issue Discount Security (as defined below), the
Amortized Face Amount (as defined below)) and accrued interest (or, if this Note
is an Original Issue Discount Security, any accrued interest the payment of
which would constitute qualified stated interest within the meaning of Treasury
Regulation Section 1.1273-1(c) under the Internal Revenue Code of 1986, as
amended (the "Code"), as in effect on _______, 1996) hereon, may be declared,
and upon such declaration shall become, due and payable in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company, the
Guarantor and the Trustee, with the consent of the Holders of a majority in
aggregate principal amount of the Debt Securities at the time outstanding of
each series to be affected, evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or modifying in any manner
the rights of the Holders of the Debt Securities; provided, however, that no
-------- -------
such supplemental indenture shall, without the consent of the Holder of each
outstanding Debt Security affected thereby: (i) except as otherwise permitted
in the Indenture in connection with Debt Securities for which the Stated
Maturity is extendible, change the Maturity of the principal of, or any
installment of interest on, any Debt Security; (ii) reduce the principal amount
of any such Debt Security or, except as otherwise permitted in the Indenture in
connection with Debt Securities for which the interest rate may be reset, the
interest thereon or any premium payable upon the redemption or repayment
thereof; (iii) reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of acceleration of the
Maturity thereof; (iv) adversely affect any right of payment at the option of
the
7
<PAGE>
Holder of any such Debt Security; (v) reduce the amount of, or postpone the date
fixed for, any payment under any sinking fund or analogous provisions for any
Debt Security; (vi) change any Place of Payment, or the currency or currency
unit of the payment of the principal of, premium, if any, or interest on any
Debt Security; (vii) change or eliminate certain rights of Holders to receive
payment in a designated currency; (viii) impair the right to institute suit for
the enforcement of any required payment on or with respect to any Debt Security;
(ix) reduce the percentage in aggregate principal amount of the Outstanding Debt
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences) provided for in the Indenture; (x)
modify certain other provisions of the Indenture; or (xi) modify or affect in
any manner adverse to the Holders the terms and conditions of the obligations of
the Guarantor in respect of the due and punctual payment of principal of, or
premium, if any, or interest on, the Debt Securities. It is also provided in the
Indenture that, with respect to certain defaults or Events of Default regarding
the Debt Securities of any series, the Holders of a majority in aggregate
principal amount of the Debt Securities of such series at the time outstanding
may on behalf of the Holders of all of the Debt Securities of such series waive
any past default or Event of Default and its consequences, except a default in
the payment of the principal of, or premium, if any, or interest on, any Debt
Security of such series or in respect of certain other covenants or provisions
of the Indenture. Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not any notation of such consent or waiver
is made upon this Note or such other Notes. The Guarantor, or a Subsidiary
thereof, may directly assume, by a supplemental indenture, the due and punctual
payment of the principal of, and premium, if any, and interest on, all the Debt
Securities, in which case the Company shall be released from its liability as
obligor on the Debt Securities.
No reference herein to the Indenture and no reference to any provision
of this Note shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and premium, if any, and
interest on, this Note at the places, at the respective times, at the rate and
in the currency herein prescribed.
The Notes are issuable in registered form without coupons in the
minimum denomination of U.S. $1,000, or the equivalent thereof in the Specified
Currency (if other than U.S. dollars), and in integral multiples of U.S. $1,000
in excess thereof, or the equivalent thereof in such Specified Currency, or such
other minimum denomination as specified on the face hereof. Notes may be
exchanged by the Holder hereof, without charge except for any tax, assessment or
other governmental charge imposed in
8
<PAGE>
connection therewith, for a like aggregate principal amount of Notes of other
authorized denominations in the manner and subject to the limitations provided
in the Indenture at the Corporate Trust Office of the Trustee.
If this Note is subject to Optional Redemption as specified above, the
Company may at its option redeem this Note in whole or, from time to time, in
part in increments of U.S. $1,000 (provided that any remaining principal amount
hereof shall not be less than the minimum denomination, as described above) on
or after the Initial Redemption Date at the sum of (i) 100% of the unpaid
principal amount hereof or the portion thereof redeemed (or, if this Note is an
Original Issue Discount Security, the Amortized Face Amount determined as of the
Redemption Date as provided below), plus (ii) the Initial Redemption Percentage
specified above (as adjusted for the Annual Redemption Percentage Reduction, if
applicable) multiplied by the unpaid principal amount or the portion thereof
redeemed (or, if this Note is an Original Issue Discount Security, the Issue
Price specified above, net of any portion of such Issue Price which has been
deemed paid prior to redemption (by reason of any payments, other than a payment
of qualified stated interest, in excess of original issue discount accrued to
the date of such payment), or the portion of such Issue Price (or such net
amount) proportionate to the portion of the unpaid principal amount of the Note
redeemed), plus (iii) accrued interest to the Redemption Date (or, if this Note
is an Original Issue Discount Security, any accrued interest to the Redemption
Date the payment of which would constitute qualified stated interest payments
within the meaning of Treasury Regulation Section 1.1273-1(c) under the Code).
Such Initial Redemption Percentage shall decline at each anniversary of the
Initial Redemption Date by an amount equal to the Annual Redemption Percentage
Reduction, if any, specified above, until the Initial Redemption Percentage
equals zero percent. The Company may exercise such option by causing the
Trustee to mail a notice of such redemption to the Holder hereof not less than
30 but not more than 60 days prior to the Redemption Date. In the event of
redemption of this Note in part only, a new Note or Notes for the unredeemed
portion hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof. If less than all of the Notes with like tenor and terms to
this Note are to be redeemed, the Notes to be redeemed shall be selected by the
Trustee by such method as the Trustee shall deem fair and appropriate.
An "Original Issue Discount Security" means any Note that has been
issued at an Issue Price lower, by an amount that equals or exceeds a de minimis
-- -------
amount (as determined under United States Federal income tax rules applicable to
original issue discount instruments), than the principal amount thereof. If
this Note is an Original Issue Discount Note, the "Amortized Face Amount" of
this Note shall be the amount equal to the sum of (a) the Issue Price plus (b)
the aggregate of the portions of the original issue discount (the excess of the
amounts considered as part of the "stated redemption price at maturity" of this
Note within the meaning of Section 1273(a)(2) of the Code, whether denominated
as principal or interest, over the Issue Price of this Note) which shall
9
<PAGE>
theretofore have accrued pursuant to Section 1272 of the Code (without regard to
Section 1272(a)(7) of the Code) from the Original Issue Date of this Note to the
date of determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of such Note which has been paid on this Note from
the Original Issue Date to the date of determination.
If this Note is subject to Optional Repayment as specified above, the
Holder hereof may at its option require the Company to repay this Note in whole
or from time to time in part in increments of U.S. $1,000 or the minimum
denomination specified above (provided that any remaining principal amount
hereof shall not be less than the minimum denomination, as described above) on
any Optional Repayment Date specified above at the sum of (i) 100% of the unpaid
principal amount hereof or the portion to be repaid thereof, plus (ii) accrued
interest to the Repayment Date. In order for this Note to be repaid, this Note
must be received, together with the form entitled "Option to Elect Repayment"
duly completed, by the Trustee at its Corporate Trust Office (or such other
address of which the Company shall from time to time notify the Holders of the
Notes) not more than 60 nor less than 30 days prior to the Repayment Date.
Exercise of such repayment option by the Holder hereof shall be irrevocable,
except as otherwise provided above.
Prior to due presentment of this Note for registration of transfer,
the Company, the Guarantor, the Trustee and any agent of the Company, the
Guarantor, or the Trustee may treat the Holder hereof as the owner of this Note
for the purpose of receiving payment of the principal hereof and premium, if
any, and interest hereon and for all other purposes whatsoever, whether or not
such Note be overdue, and neither the Company, the Guarantor, the Trustee nor
any such agent of the Company, the Guarantor or the Trustee shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of, or
premium, if any, or interest on, this Note, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture against
any incorporator, stockholder, officer, director or employee, as such, past,
present or future, of the Company or the Guarantor or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
All terms used but not defined in this Note shall have the meanings
assigned to them in the Indenture.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
10
<PAGE>
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by or on behalf of the Trustee under the Indenture.
IN WITNESS WHEREOF, Countrywide Home Loans, Inc. has caused this
instrument to be signed in its name by the facsimile signatures of its duly
authorized officers, and has caused a facsimile of its corporate seal to be
affixed hereunto or imprinted hereon.
Date: COUNTRYWIDE HOME LOANS, INC.
[SEAL]
By:____________________________________
President
Attest:__________________________________
Secretary
11
<PAGE>
GUARANTEE
OF
COUNTRYWIDE CREDIT INDUSTRIES, INC.
For value received, Countrywide Credit Industries, Inc., a corporation
duly organized and existing under the laws of Delaware (the "Guarantor"), hereby
unconditionally guarantees to the Holder of the Note upon which this Guarantee
is endorsed the due and punctual payment of the principal of, and premium, if
any, and interest on, and sinking fund payments, if any, required with respect
to said Note, when and as the same shall become due and payable, whether on the
Stated Maturity Date, by acceleration, redemption or repayment or otherwise,
according to the terms thereof and of the Indenture referred to therein. In
case of the failure of Countrywide Home Loans, Inc. (the "Company") punctually
to pay any such principal, premium, interest, or sinking fund payment, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether on the Stated Maturity Date,
by acceleration, redemption or repayment or otherwise, and as if such payment
were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of said Note or said Indenture, any failure to
enforce the provisions of said Note or said Indenture, or any waiver,
modification, consent or indulgence granted to the Company with respect thereto,
by the Holder of said Note or the Trustee under said Indenture, the recovery of
any judgment against the Company or any action to enforce the same, or any other
circumstances which may otherwise constitute a legal or equitable discharge of a
surety or guarantor. The Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of merger, insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest or notice with respect to said Note or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that this Guarantee
will not be discharged except by payment in full of the principal of, and
premium, if any, and interest on, or any sinking fund payment required with
respect to, said Note and the complete performance of all other obligations
contained in said Note.
The Guarantor shall be subrogated to all rights of the Holder of said
Note against the Company in respect of any amounts paid to such Holder by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
-------- -------
the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation until the principal of,
and premium, if any, and interest on, and any
12
<PAGE>
sinking fund payments required with respect to, all Notes of this series issued
under said Indenture shall have been paid in full and its other obligations
under said Indenture completed.
The Guarantor hereby certifies and warrants that all acts, conditions
and things required to be done and performed and to have happened precedent to
the creation and issuance of this Guarantee and to constitute the valid
obligation of the Guarantor have been done and performed and have happened in
due compliance with all applicable laws.
This Guarantee as endorsed on said Note shall not be entitled to any
benefit under said Indenture or become valid or obligatory for any purpose until
the certificate of authentication on said Note shall have been signed manually
by or on behalf of the Trustee under said Indenture.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York.
13
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed
in facsimile by its duly authorized officer under its corporate seal.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:________________________________________________
Vice Chairman and Executive
Vice President
Attest:______________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
Date: By:
______________________________________________
Authorized Officer
14
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company
to repay this Note (or portion hereof specified below) in accordance with the
terms of this Note at a price equal to the principal amount hereof (or portion
hereof to be repaid), together with interest to the Repayment Date, by payment
to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address, including zip code, of the
undersigned).
In order for this Note to be repaid, the Trustee must receive at its
Corporate Trust Office at 101 Barclay Street, New York, New York 10286, or at
such other place or places of which the Company shall from time to time notify
the Holders of the Notes, not more than 60 nor less than 30 days prior to the
Repayment Date, this Note with this Option to Elect Repayment form duly
completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be in increments of U.S. $1,000 or other
increments specified above) to be repaid: ______________.
If less than the entire principal amount of this Note is to be repaid,
specify the denomination(s) of the Note(s) to be issued for the unpaid amount
(which shall be U.S. $1,000 or increments of U.S. $1,000 in excess thereof, or
such other minimum denomination specified above):______________.
Date:
______________________________________
Note: The signature on this Option to
Elect Repayment must correspond with
the name as written upon the face of
the within instrument in every
particular, without alteration or
enlargement, or any change whatsoever.
15
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please Print or Typewrite Name and Address Including Zip Code of Assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- --------------------------------------------------------------------------------
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: _____________ Signature: ________________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement, or any change whatsoever.
16
<PAGE>
EXHIBIT 4.4
COUNTRYWIDE HOME LOANS, INC.
CUSIP
REGISTERED PRINCIPAL AMOUNT
NO. FL- MEDIUM-TERM NOTE, SERIES E $
(FLOATING RATE)
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
PAYMENT OF THE PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST ON THIS NOTE IS UNCONDITIONALLY GUARANTEED
BY COUNTRYWIDE CREDIT INDUSTRIES, INC.
IF THE HOLDER OF THIS NOTE IS THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) (THE "DEPOSITARY") OR A NOMINEE OF THE
DEPOSITARY, THIS NOTE IS A GLOBAL NOTE AND THE FOLLOWING LEGEND APPLIES:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH NOTE IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE>
<TABLE>
<S> <C>
ISSUE PRICE: REDEMPTION:
[ ] NO
ORIGINAL ISSUE DATE:
[ ] YES
PRINCIPAL AMOUNT: INITIAL REDEMPTION DATE:
SPECIFIED CURRENCY: INITIAL REDEMPTION PERCENTAGE:
MINIMUM DENOMINATION: ANNUAL REDEMPTION PERCENTAGE REDUCTION:
EXCHANGE RATE AGENT: REPAYMENT:
[ ] NO
BASE RATE(S):
[ ] YES
IF CMT RATE, OPTIONAL REPAYMENT DATE(S):
DESIGNATED CMT TELERATE PAGE:
STATED MATURITY DATE:
DESIGNATED CMT MATURITY INDEX:
INITIAL INTEREST RATE:
INDEX MATURITY:
INTEREST RESET DATES:
INTEREST FACTOR CONVENTION:
INTEREST PAYMENT DATES:
SPREAD (plus or minus):
FIXED RATE COMMENCEMENT DATE:
SPREAD MULTIPLIER:
FIXED INTEREST RATE:
MAXIMUM INTEREST RATE:
CALCULATION AGENT:
MINIMUM INTEREST RATE:
OTHER/ADDITIONAL TERMS:
OPTION TO RECEIVE PAYMENT IN U.S.
DOLLARS:
[ ] NO
[ ] YES
</TABLE>
-2-
<PAGE>
COUNTRYWIDE HOME LOANS, INC., a New York corporation (the "Company"),
for value received, hereby promises to pay to _________________________________
or registered assignees, the principal sum of _______________________________
(_____________) on the Stated Maturity Date specified above (except to the
extent redeemed or repaid prior to the Stated Maturity Date) at the office or
agency of the Company in the Borough of Manhattan, The City of New York, State
of New York, and such other place or places as may be provided for pursuant to
the Indenture referred to below, and to pay interest in arrears at a rate per
annum equal to the Initial Interest Rate specified above from the Original Issue
Date specified above until the first Interest Reset Date specified above
following the Original Issue Date and thereafter, except as specified herein, at
a rate determined in accordance with the provisions below under the heading
"Determination of Commercial Paper Rate," "Determination of LIBOR,"
"Determination of Certificate of Deposit Rate," "Determination of Federal Funds
Rate," "Determination of Prime Rate," "Determination of Treasury Rate,"
"Determination of CMT Rate" or "Determination of 11th District Cost of Funds
Rate" depending upon whether an applicable Base Rate specified above is the
Commercial Paper Rate, LIBOR, the Certificate of Deposit Rate, the Federal Funds
Rate, the Prime Rate, the Treasury Rate, the CMT Rate or the 11th District Cost
of Funds Rate, respectively, until the principal hereof becomes due and payable.
The Company will pay interest on the Interest Payment Dates specified above
(each, an "Interest Payment Date"), commencing with the Interest Payment Date
next succeeding the Original Issue Date, and on the Stated Maturity Date or, if
applicable, any date of earlier redemption (the "Redemption Date") or repayment
(the "Repayment Date") (the earliest of the Stated Maturity Date, the Redemption
Date and the Repayment Date is hereinafter referred to as the "Maturity Date"
with respect to the principal repayable on such date); provided, however, that
-------- -------
if an Interest Payment Date other than the Maturity Date would fall on a day
that is not a Business Day (as defined below), such Interest Payment Date shall
be postponed to the next Business Day, except that if interest hereon is
determined by reference to LIBOR and such next Business Day falls in the next
calendar month, such Interest Payment Date shall be the immediately preceding
Business Day; provided, further, that if the Maturity Date falls on a day that
-------- -------
is not a Business Day, payment of principal, premium, if any, and/or interest to
be made on the Maturity Date shall be made on the next Business Day with the
same force and effect as if made on the Maturity Date, and no interest on such
payment shall accrue to the next Business Day. "Business Day" means any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions are authorized or required by law, regulation or
executive order to close in (i) New York, New York or Los Angeles, California or
(ii) if the Specified Currency specified above is other than U.S. dollars, the
Principal Financial Center (as defined below) of the country issuing such
Specified Currency, and if interest hereon is determined by reference to LIBOR,
such day is also a London Banking Day (as defined below). "Principal Financial
Center" means the capital city of the country issuing
-3-
<PAGE>
the related Specified Currency, except that with respect to Australian dollars,
Deutsche marks, Dutch guilders, Italian lire, Swiss francs, and European
Currency Units ("ECU"), the "Principal Financial Center" shall be Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. "London
Banking Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be paid to the person (the "Holder") in whose
name this Note (or one or more predecessor Notes) is registered at the close of
business on the fifteenth day (whether or not a Business Day) immediately
preceding such Interest Payment Date (each, a "Record Date"); provided, however,
-------- -------
that interest payable on the Maturity Date will be payable to the person to whom
principal is payable. Unless otherwise specified above, if this Note is
originally issued between a Record Date and an Interest Payment Date the first
payment of interest on this Note will be made on the Interest Payment Date
following the next Record Date to the Holder hereof on such next Record Date.
Unless otherwise specified above, payment of the principal of,
premium, if any, and interest on, this Note due on the Maturity Date will be
made in immediately available funds in the Specified Currency, upon presentation
and surrender of this Note at the Corporate Trust Office of the Trustee. If the
Specified Currency is other than U.S. dollars, this Note must be presented and
surrendered to the Trustee referred to below in time for the Trustee to make
such payment in accordance with its normal procedures.
Unless otherwise specified above, payment of interest on this Note due
on any Interest Payment Date other than the Maturity Date will be made by
mailing a check in the Specified Currency (from an account at a bank located
outside the United States if such check is payable in a Specified Currency other
than U.S. dollars) to the address of the Holder hereof as such address shall
appear in the Security Register (as defined in the Indenture) on the applicable
Record Date. Notwithstanding the foregoing, on any Interest Payment Date other
than the Maturity Date, each Holder of U.S.$10,000,000 (or the equivalent
thereof in a Specified Currency other than U.S. dollars) or more in aggregate
principal amount of Notes (whether or not having identical terms and provisions)
shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive
such payment by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the United States, but only if
appropriate wire transfer instructions have been received in writing by the
Trustee not later than the Record Date immediately preceding such Interest
Payment Date and (ii) if the Specified Currency is other than U.S. dollars, to
receive such payment by wire transfer of immediately available funds to an
account maintained by the payee with a bank located in a jurisdiction in which
payment in such Specified Currency is then lawful. The Company shall pay any
administrative costs imposed by banks in connection with making payments by wire
transfer; provided,
--------
-4-
<PAGE>
however, that any tax, assessment or other governmental charge imposed upon
- -------
payments shall be borne by the Holder hereby in respect of which payments are
made.
All payments of principal, premium, if any, and interest, in respect
of this Note will be made by the Company in the Specified Currency; provided,
--------
however, that if the Specified Currency specified above is other than U.S.
- -------
dollars, the Holder hereof may, if indicated above under "Option to Receive
Payment in U.S. Dollars," elect to receive all payments of principal, premium,
if any, and/or interest in respect of this Note in U.S. dollars by delivering a
written request to the Trustee not later than the close of business on the
Record Date immediately preceding the Interest Payment Date or the fifteenth day
immediately preceding the Maturity Date, as the case may be. Upon such election
by the Holder hereof, the Company shall tender payment in U.S. dollars at the
Exchange Rate (as defined below), and any costs associated with the conversion
of the Specified Currency into U.S. dollars shall be borne by the Holder hereof
through deductions from such payments. The Holder's election to receive
payments in U.S. dollars will remain in effect until revoked by written notice
from the Holder to the Trustee, provided that any such revocation must be
received by the Trustee not later than the close of business on the Record Date
immediately preceding the Interest Payment Date or the fifteenth day immediately
preceding the Maturity Date, as the case may be.
Unless otherwise specified above or elsewhere herein, "Exchange Rate"
means, with respect to a Specified Currency other than ECU, the noon Dollar
buying rate for such Specified Currency for cable transfers quoted by the
Exchange Rate Agent specified above in The City of New York on the Record Date
or Special Record Date (as defined below) or the fifteenth day immediately
preceding the Maturity Date or such other date provided herein or in the
Indenture, as the case may be, as certified for customs purposes by the Federal
Reserve Bank of New York. With respect to ECU, "Exchange Rate" means the
exchange rate between U.S. dollars and ECU reported by the Council of the
European Communities on the applicable Record Date or Special Record Date with
respect to an Interest Payment Date or the fifteenth day immediately preceding
the Maturity Date or such other date as provided herein or in the Indenture, as
the case may be.
If any payment of principal, premium, if any, or interest on this Note
is to be made in a Specified Currency other than U.S. dollars and such Specified
Currency is not available to the Company for making such payment due to the
imposition of exchange controls or other circumstances beyond the control of the
Company, the Company will be entitled to satisfy its obligations to the Holder
hereof by making such payment in U.S. dollars on the basis of the Exchange Rate
referred to below two Business Days prior to the Interest Payment Date or the
Maturity Date, as the case may be (or, if no rate is quoted for such Specified
Currency on such date, the last date such Exchange Rate is quoted). Any payment
made under such circumstances in U.S. dollars where the required
-5-
<PAGE>
payment is in a Specified Currency other than U.S. dollars will not constitute
an Event of Default under the Indenture. For purposes of this paragraph and the
immediately succeeding paragraph, the "Exchange Rate" for a foreign currency or
ECU will be the noon Dollar selling rate for that foreign currency or ECU for
cable transfers quoted by the Exchange Rate Agent in The City of New York, as
certified for customs purposes by the Federal Reserve Bank of New York.
If payment on this Note is required to be made in ECU and ECU is
unavailable due to the imposition of exchange controls or other circumstances
beyond the control of the Company, or is no longer used in the European Monetary
System, all payments due on that due date with respect to this Note shall be
made in U.S. dollars. The amount so payable on any date in ECU shall be
converted into U.S. dollars, at a rate determined by the Exchange Rate Agent as
of the second Business Day prior to the date on which such payment is due on the
following basis. The component currencies of the ECU for this purpose (the
"Components") shall be the currency amounts which were components of the ECU as
of the last date on which the ECU was used in the European Monetary System. The
equivalent of the ECU in U.S. dollars shall be calculated by aggregating the
U.S. dollar equivalents of the Components. The U.S dollar equivalent of each of
the Components shall be determined by the Exchange Rate Agent on the basis of
the most recently available Exchange Rate.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into
two or more currencies, the amount of that currency as a Component shall be
replaced by amounts of such two or more currencies (in appropriate proportions)
the sum of which shall be equal to the amount of the former component currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion (except to the extent expressly provided that
any determination is subject to approval) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder of this Note and
the Exchange Rate Agent shall have no liability therefor.
Any interest not punctually paid or duly provided for with respect to
this Note ("Defaulted Interest") will forthwith cease to be payable to the
Holder of this Note on the applicable Record Date and may either be paid to the
person in whose name this Note is registered at the close of business on a
special record date (the "Special Record
-6-
<PAGE>
Date") for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to the Holder of this Note not less than ten days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner, all as more completely provided in the Indenture.
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (collectively, the "Debt
Securities"), of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture, dated as of January 1, 1992, as amended,
supplemented or modified from time to time, including Supplemental Indenture No.
1 thereto, dated as of June 15, below), and The Bank of New York, as trustee
(the "Trustee," which term includes any successor trustee under the Indenture),
to which Indenture reference is hereby made for a description of the respective
rights, limitation of rights, obligations, duties and immunities thereunder of
the Trustee, the Company, the Guarantor and the Holders of the Notes. The Debt
Securities may be issued in one or more series, which different series (and
which Debt Securities issued within each series) may be issued in various
aggregate principal amounts, may mature at different times, may bear interest,
if any, at different rates or formulas, may be subject to different redemption
or repayment provisions, if any, may be subject to different sinking, purchase
or analogous funds, if any, and may otherwise vary as provided in the Indenture.
This Note is one of a series designated as "Medium-Term Notes, Series E, Due
Nine Months or More From Date of Issue" of the Company (collectively, the
"Notes"), limited in aggregate issue amount to U.S.$1,000,000,000 or the
equivalent thereof in one or more Specified Currencies other than U.S. dollars.
The interest payable hereon on each Interest Payment Date will include
interest accrued from and including the most recent Interest Payment Date to
which interest has been paid or duly provided for, or, if no interest has been
paid or duly provided for, from and including the Original Issue Date, as the
case may be, to, but excluding, the applicable Interest Payment Date or the
Maturity Date, as the case may be (each, an "Interest Period"). Accrued
interest will be calculated by multiplying the principal amount hereof by an
accrued interest factor. Such accrued interest factor shall be computed by
adding the interest factor calculated for each day in the Interest Period for
which accrued interest is being calculated. The interest factor for each such
day shall be computed by dividing the interest rate applicable to such day by
360 if an applicable Base Rate is the Commercial Paper Rate, LIBOR, Certificate
of Deposit Rate, Federal Funds Rate, Prime Rate or 11th District Cost of Funds
Rate or by the actual number of days in the year if an applicable Base Rate is
the Treasury Rate or CMT Rate. If more than one Base Rate is applicable to this
Note, the interest factor will be calculated in the same manner as if only the
Base Rate specified above under "Interest Factor Convention" applied.
-7-
<PAGE>
This Note will bear interest at the rate determined in accordance with
the provisions set forth below by reference to the applicable Base Rate, or the
lowest, highest or average of two or more Base Rates, as specified above, based
on the Index Maturity, if any, specified above (i) plus or minus the Spread, if
any, and/or (ii) multiplied by the Spread Multiplier, if any, in each case
specified above. Commencing with the first Interest Reset Date specified above,
the rate at which interest on this Note is payable shall be reset as of each
Interest Reset Date; provided, however, that (i) the interest rate in effect for
-------- -------
the period, if any, from the Original Issue Date to the first Interest Reset
Date will be the Initial Interest Rate and (ii) if a Fixed Rate Commencement
Date is specified above, the interest rate in effect for the period commencing
on the Fixed Rate Commencement Date to the Maturity Date shall be the Fixed
Interest Rate specified above or, if no Fixed Interest Rate is specified above,
the interest rate in effect on the day immediately preceding the Fixed Rate
Commencement Date.
Except as set forth in the immediately preceding paragraph, the
interest rate in effect on each day shall be (i) if such day is an Interest
Reset Date, the interest rate determined as of the Interest Determination Date
(as defined below) immediately preceding such Interest Reset Date or (ii) if
such day is not an Interest Reset Date, the interest rate determined as of the
Interest Determination Date immediately preceding the most recent Interest Reset
Date. If any Interest Reset Date would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be postponed to the next Business
Day, except that if interest hereon is determined by reference to LIBOR and such
next Business Day falls in the next calendar month, such Interest Reset Date
shall be the immediately preceding Business Day.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified above. In addition, the interest rate hereon
shall in no event be higher than the maximum rate permitted by New York law as
the same may be modified by United States law of general application.
Subject to applicable provisions of law and except as specified
herein, on each applicable Interest Reset Date the rate of interest will be
calculated by the Calculation Agent specified below in accordance with the
provisions of the applicable heading below.
Determination of Commercial Paper Rate. If an applicable Base Rate is
--------------------------------------
the Commercial Paper Rate, the "Commercial Paper Rate" for each applicable
Interest Reset Date will be determined by the Calculation Agent as of the second
Business Day prior to such Interest Reset Date (a "Commercial Paper Rate
Determination Date") and shall be the Money Market Yield (as defined below) on
such date of the rate for commercial paper having the Index Maturity specified
above as published by the Board of Governors of the
-8-
<PAGE>
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication ("H.15(519)"), under the heading
"Commercial Paper." In the event that such rate is not published prior to 3:00
P.M., New York City time, on the relevant Calculation Date (as defined below),
then the Commercial Paper Rate shall be the Money Market Yield on such
Commercial Paper Rate Determination Date of the rate for commercial paper of the
specified Index Maturity as published by the Federal Reserve Bank of New York in
its daily statistical release "Composite 3:30 P.M. Quotations for U.S.
Government Securities" ("Composite Quotations") under the heading "Commercial
Paper." If by 3:00 P.M., New York City time, on such Calculation Date such rate
is not yet published in either H.15(519) or Composite Quotations, then the
Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of
the offered rates as of 11:00 A.M., New York City time, on such Commercial Paper
Rate Determination Date of three leading dealers of commercial paper in The City
of New York selected by the Calculation Agent for commercial paper of the
specified Index Maturity, placed for an industrial issuer whose bond rating is
"AA", or the equivalent, from a nationally recognized rating agency; provided,
--------
however, that if the dealers selected as aforesaid by the Calculation Agent
- -------
are not quoting offered rates as mentioned in this sentence, the Commercial
Paper Rate for such Interest Reset Date will be the Commercial Paper Rate in
effect on such Commercial Paper Rate Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
-----------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the Interest Period for which interest is being
calculated corresponding to the Index Maturity specified above.
Determination of LIBOR. If an applicable Base Rate is LIBOR, "LIBOR"
----------------------
for each applicable Interest Reset Date will be determined by the Calculation
Agent as follows:
(i) If "LIBOR Reuters" is specified above, on the second London
Banking Day prior to the applicable Interest Reset Date (a "LIBOR Determination
Date"), the Calculation Agent will determine LIBOR as the arithmetic mean of the
offered rates for deposits in U.S. dollars for the period of the Index Maturity
specified above which appear on the "Reuters Screen LIBO Page" at approximately
11:00 A.M., London time, on such LIBOR Determination Date. "Reuters Screen LIBO
Page" means the display designated as page "LIBO" on the Reuter Monitor Money
Rates Service (or such other page as may
-9-
<PAGE>
replace the LIBO Page on that service for the purpose of displaying London
interbank offered rates of major banks).
If "LIBOR Telerate" is specified above or if no other method for
determining LIBOR is provided for, on the LIBOR Determination Date, the
Calculation Agent will determine LIBOR as the rate for deposits in U.S. dollars
for the period of the Index Maturity specified above which appears on "Telerate
Page 3750" at approximately 11:00 A.M., London time, on such LIBOR Determination
Date. "Telerate Page 3750" means the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace such page on that
service for the purpose of displaying London interbank offered rates of major
banks).
(ii) If LIBOR Reuters is specified on the face hereof and if fewer
than two offered rates for the applicable Index Maturity appear on the Reuters
Screen LIBO Page or if LIBOR Telerate is applicable for determining LIBOR and no
rate appears on Telerate Page 3750, the Calculation Agent will request the
principal London offices of each of four major banks in the London interbank
market, as selected by the Calculation Agent, to provide the Calculation Agent
with its offered quotation for deposits in U.S. dollars for the period of the
Index Maturity specified above commencing on the second London Banking Day
following such LIBOR Determination Date to prime banks in the London interbank
market at approximately 11:00 A.M., London time, on such LIBOR Determination
Date and in a principal amount equal to an amount of not less than
U.S.$1,000,000 that is representative of a single transaction in such market at
such time. If at least two such quotations are provided, LIBOR will be the
arithmetic mean of such quotations. If fewer than two quotations are provided,
LIBOR in respect of that LIBOR Determination Date will be the arithmetic mean of
rates quoted by three major banks in The City of New York selected by the
Calculation Agent (after consultation with the Company) at approximately 11:00
A.M., New York City time, on such LIBOR Determination Date for loans in U.S.
dollars to leading European banks, for the period of the Index Maturity
specified above commencing on the second London Banking Day following such LIBOR
Determination Date and in the principal amount equal to an amount of not less
than U.S.$1,000,000 that is representative for a single transaction in such
market at such time; provided, however, that if fewer than three banks selected
-------- -------
as aforesaid by the Calculation Agent are quoting rates as mentioned in this
sentence, LIBOR in effect for such Interest Reset Date will be LIBOR in effect
on such LIBOR Determination Date.
Determination of Certificate of Deposit Rate. If an applicable Base
--------------------------------------------
Rate is the Certificate of Deposit Rate, the "Certificate of Deposit Rate" for
each applicable Interest Reset Date shall be determined by the Calculation Agent
as of the second Business Day prior to such Interest Reset Date (a "CD Rate
Determination Date") and will be the rate for negotiable certificates of deposit
having the Index Maturity specified
-10-
<PAGE>
above, as published in H.15(519) under the heading "CDs (Secondary Market)." In
the event that such rate is not published prior to 3:00 P.M., New York City
time, on the Calculation Date pertaining to such CD Rate Determination Date,
then the Certificate of Deposit Rate will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
specified above as published in Composite Quotations under the heading
"Certificates of Deposit." If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the Certificate of Deposit Rate will be calculated by the
Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD Rate
Determination Date of three leading non-bank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United States money center
banks (in the market for negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity specified above in a denomination of
U.S.$5,000,000; provided, however, that if the dealers selected as aforesaid by
-------- -------
such Calculation Agent are not quoting offered rates as mentioned in this
sentence, the Certificate of Deposit Rate for such Interest Reset Date will be
the Certificate of Deposit Rate in effect on such CD Rate Determination Date.
Determination of Federal Funds Rate. If an applicable Base Rate is
-----------------------------------
the Federal Funds Rate, the "Federal Funds Rate" for each applicable Interest
Reset Date will be determined by the Calculation Agent as of the second Business
Day prior to such Interest Reset Date (a "Federal Funds Rate Determination
Date") and shall be the rate on such Federal Funds Rate Determination Date for
Federal Funds as published in H.15(519) under the heading "Federal Funds
(Effective)." In the event that such rate is not published prior to 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Federal Funds
Rate Determination Date, the Federal Funds Rate shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the Federal Funds Rate will be
calculated by the Calculation Agent and will be the arithmetic mean of the rates
for transactions in overnight Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by the Calculation
Agent as of 9:00 A.M., New York City time, on such Federal Funds Rate
Determination Date; provided, however, that if the three brokers selected as
-------- -------
aforesaid by the Calculation Agent are not quoting rates as mentioned in this
sentence, the Federal Funds Rate for such Interest Reset Date will be the
Federal Funds Rate in effect on such Federal Funds Rate Determination Date.
Determination of Prime Rate. If an applicable Base Rate is the Prime
---------------------------
Rate, the "Prime Rate" for each applicable Interest Reset Date will be
determined by the Calculation Agent as of the second Business Day prior to such
Interest Reset Date (a
-11-
<PAGE>
"Prime Rate Determination Date") and shall be the rate on such date as such rate
is published in H.15(519) under the heading "Bank Prime Loan." If such rate is
not published prior to 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Prime Rate Determination Date, then the Calculation Agent
shall determine the Prime Rate as the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the "Reuters Screen USPRIME1
Page" as such bank's prime rate or base lending rate as in effect for such Prime
Rate Determination Date. "Reuters Screen USPRIME1 Page" means the display
designated as page "USPRIME1" on the Reuter Monitor Money Rates Service (or such
other page as may replace the USPRIME1 Page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks). If
fewer than four such rates but more than one such rate appear on the Reuters
Screen USPRIME1 Page for such Prime Rate Determination Date, the Calculation
Agent shall determine the Prime Rate as the arithmetic mean of the prime rates
quoted on the basis of the actual number of days in the year divided by a 360-
day year as of the close of business in The City of New York on such Prime Rate
Determination Date by three major money center banks in The City of New York
selected by the Calculation Agent. If fewer than two such rates appear on the
Reuters Screen USPRIME1 Page, the Calculation Agent will determine the Prime
Rate as the arithmetic mean on the basis of the prime rates quoted as of the
close of business in The City of New York on such Prime Rate Determination Date
by three substitute banks or trust companies that are organized and doing
business under the laws of the United States or any state thereof, have total
equity capital of at least U.S.$1,000,000 and are subject to supervision or
examination by Federal or state authorities; provided, however, that if fewer
-------- -------
than three such substitute banks or trust companies are quoting prime rates as
mentioned in this sentence, the Prime Rate for such Interest Reset Date will be
the Prime Rate in effect on such Prime Rate Determination Date.
Determination of Treasury Rate. If an applicable Base Rate is the
------------------------------
Treasury Rate, the "Treasury Rate" with respect to any Treasury Rate
Determination Date (as defined below) will be the rate for the auction held on
such Treasury Rate Determination Date of direct obligations of the United States
("Treasury bills") having the Index Maturity specified above as published in
H.15(519) under the heading "Treasury bills--auction average (investment)" or,
if not so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury bills having the Index Maturity specified above are not published or
reported as provided above by 3:00 P.M., New York City time, on such Calculation
Date or if no such auction is held on the Treasury Rate Determination Date, then
the Treasury Rate shall be calculated by the Calculation Agent and shall be a
yield to maturity (expressed as a bond
-12-
<PAGE>
equivalent, on the basis of a year of 365 or 366 days, as applicable and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates as of
approximately 3:30 P.M., New York City time, on such Treasury Rate Determination
Date, of three leading primary United States government securities dealers
selected by the Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the Index Maturity specified above, provided,
---------
however, that if the dealers selected as aforesaid by the Calculation Agent are
- -------
not quoting bid rates as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the Treasury Rate in effect on such Treasury Rate
Determination Date.
The "Treasury Rate Determination Date" shall be the day of the week in
which the applicable Interest Reset Date falls on which Treasury bills would
normally be auctioned. Treasury bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday; provided, however, that if such auction
-------- -------
is held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Date occurring in the next
week; and, provided further, that if an auction falls on an Interest Reset Date,
-------- -------
then such Interest Reset Date will be the first Business Day following such
auction.
Determination of CMT Rate. If an applicable Base Rate is the CMT
-------------------------
Rate, the "CMT Rate" for each applicable Interest Reset Date will be determined
by the Calculation Agent as of the second Business Day prior to such Interest
Reset Date (the "CMT Rate Determination Date") and will be the rate displayed on
the Designated CMT Telerate Page (as defined below) under the caption
"...Treasury Constant Maturities ... Federal Reserve Board Release H.15 ...
Mondays Approximately 3:45 P.M.," under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is
7055, the rate on such CMT Rate Determination Date and (ii) if the Designated
CMT Telerate Page is 7052, the week or the month, as applicable, ended
immediately preceding the week in which the applicable CMT Rate Determination
Date occurs. If such rate is no longer displayed on the relevant page, or if
not displayed by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such CMT Rate Determination Date, then the CMT Rate for such CMT
Rate Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published in the relevant H.15(519), or if not published by
3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT
Rate Determination Date, then the CMT Rate for such CMT Rate Determination Date
will be such treasury constant maturity rate for the Designated CMT Maturity
Index (or other United States Treasury rate for the Designated CMT Maturity
Index) for the CMT Rate Determination Date with respect to such Interest Reset
Date as may then be published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury that the
-13-
<PAGE>
Calculation Agent determines to be comparable to the rate formerly displayed on
the Designated CMT Telerate Page and published in the relevant H.15(519). If
such information is not provided by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CMT Rate Determination Date, then the CMT
Rate for such CMT Rate Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean of the
secondary market closing offer side prices as of approximately 3:30 P.M., New
York City time, on such CMT Rate Determination Date reported, according to their
written records, by three leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of New York selected by the
Calculation Agent (from five such Reference Dealers selected by the Calculation
Agent and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the CMT
Rate for such CMT Rate Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 P.M., New York City
time, on such CMT Rate Determination Date of three Reference Dealers in The City
of New York (from five such Reference Dealers selected by the Calculation Agent
and eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least U.S.$1,000. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
-------- -------
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate for such Interest Reset Date will be the CMT Rate
in effect on such CMT Rate Determination Date. If two Treasury Notes with an
original maturity as described in the second preceding sentence have remaining
terms to maturity equally close to the Designated CMT Maturity Index, the quotes
for the Treasury Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page specified above (or any other page as may replace
such page on that service for the purpose of displaying Treasury Constant
Maturities as published in H.15(519)), for the purpose of displaying Treasury
Constant Maturities as published in
-14-
<PAGE>
H.15(519). If no such page is specified above, the Designated CMT Telerate Page
shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity
of the Treasury Notes (either one, two, three, five, seven, ten, twenty or
thirty years) specified above with respect to which the CMT Rate will be
calculated. If no such maturity is specified above, the Designated CMT Maturity
Index shall be two years.
Determination of 11th District Cost of Funds Rate. If an applicable
-------------------------------------------------
Base Rate is the 11th District Cost of Funds Rate, the "11th District Cost of
Funds Rate" for each applicable Interest Reset Date will be determined by the
Calculation Agent as of the last Business Day of the month prior to such
Interest Reset Date (the "11th District Rate Determination Date") and will be
the rate equal to the monthly weighted average cost of funds for the calendar
month preceding such 11th District Rate Determination Date as set forth under
the caption "11th District" on Telerate Page 7058 as of 11:00 A.M., San
Francisco time, on such 11th District Rate Determination Date. If such rate
does not appear on Telerate Page 7058 on any related 11th District Rate
Determination Date, the 11th District Cost of Funds Rate for such 11th District
Rate Determination Date shall be the monthly weighted average cost of funds paid
by member institutions of the Eleventh Federal Home Loan Bank District that was
most recently announced by the Federal Home Loan Bank ("FHLB") of San Francisco
as such cost of funds for the calendar month preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for the
calendar month immediately preceding such 11th District Rate Determination Date,
then the 11th District Cost of Funds Rate for such Interest Reset Date will be
the 11th District Cost of Funds Rate in effect on such 11th District Rate
Determination Date.
The "Interest Determination Date" means the Commercial Paper Rate
Determination Date, the LIBOR Determination Date, the CD Rate Determination
Date, the Federal Funds Rate Determination Date, the Prime Rate Determination
Date, the Treasury Rate Determination Date, the CMT Rate Determination Date or
the 11th District Rate Determination Date, as the case may be. If interest
hereon is determined by reference to two or more Base Rates, the "Interest
Determination Date" means the most recent Business Day which is at least two
Business Days prior to the applicable Interest Reset Date on which each Base
Rate shall be determinable. Each Base Rate shall be determined and compared as
of such date, and the applicable interest rate shall take effect on the related
Interest Reset Date.
The Bank of New York shall be the Calculation Agent, unless a
different Calculation Agent is specified above. At the request of the Holder
hereof, the Calculation Agent will provide the interest rate then in effect and,
if determined, the interest rate which will become effective on the next
Interest Reset Date.
-15-
<PAGE>
The "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be earlier of (i) the 10th calendar day after such
Interest Determination Date or, if such day is not a Business Day, the next
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or the Maturity Date, as the case may be.
If an Event of Default, as defined in the Indenture, with respect to
the Notes shall have occurred and be continuing, the principal hereof (or, if
this Note is an Original Issue Discount Security (as defined below), the
Amortized Face Amount (as defined below)) and accrued interest (or, if this Note
is an Original Issue Discount Security, any accrued interest the payment of
which would constitute qualified stated interest payments within the meaning of
Treasury Regulation Section 1.1273-1(c) under the Internal Revenue Code of 1986,
as amended (the "Code"), as in effect on _____ __, 1996), may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company, the
Guarantor and the Trustee, with the consent of the Holders of a majority in
aggregate principal amount of the Debt Securities at the time outstanding of
each series to be affected, evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or modifying in any manner
the rights of the Holders of the Debt Securities; provided, however, that no
-------- -------
such supplemental indenture shall, without the consent of the Holder of each
outstanding Debt Security affected thereby: (i) except as otherwise permitted in
the Indenture in connection with Debt Securities for which the Stated Maturity
is extendible, change the Stated Maturity of the principal of, or any
installment of interest on, any such Debt Security; (ii) reduce the principal
amount of any such Debt Security or, except as otherwise permitted in the
Indenture in connection with Debt Securities for which the interest rate may be
reset, the interest thereon or any premium payable upon the redemption or
repayment thereof; (iii) reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof; (iv) adversely affect any right of
repayment at the option of the Holder of any such Debt Security; (v) reduce the
amount of, or postpone the date fixed for, any payment under any sinking fund or
analogous provisions for any Debt Security; (vi) change any Place of Payment, or
the currency or currency unit of the payment of the principal of, premium, if
any, or interest on any Debt Security; (vii) change or eliminate certain rights
of Holders to receive payment in a designated currency; (viii) impair the right
to institute suit for the enforcement of any required payment on or with respect
to any Debt Security; (ix) reduce the percentage in aggregate principal amount
of the Outstanding Debt Securities of any series, the consent of whose Holders
is required for any such supplemental indenture, or the consent of whose Holders
is required for any waiver (of compliance with certain provisions of the
-16-
<PAGE>
Indenture or certain defaults thereunder and their consequences) provided for in
the Indenture; (x) modify certain other provisions of the Indenture; or (xi)
modify or affect in any manner adverse to the Holders the terms and the
conditions of the obligations of the Guarantor in respect of the due and
punctual payment of principal, or premium, if any, or interest on, the Debt
Securities. It is also provided in the Indenture that, with respect to certain
defaults or Events of Default regarding the Debt Securities of any series, the
Holders of a majority in aggregate principal amount of the Debt Securities of
such series at the time outstanding may on behalf of the Holders of all of the
Debt Securities of such series waive any past default or Event of Default and
its consequences, except a default in the payment of the principal of, or
premium, if any, or interest on, any Debt Security of such series or in respect
of certain other covenants or provisions of the Indenture. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not any notation of such consent or waiver is made upon this Note or
such other Notes.
The Guarantor, or a Subsidiary thereof, may directly assume, by a
supplemental indenture, the due and punctual payment of the principal of, and
premium, if any, and interest on, all the Debt Securities, in which case the
Company shall be released from its liability as obligor on the Debt Securities.
No reference herein to the Indenture and no reference to any provision
of this Note shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and premium, if any, and
interest on, this Note at the places, at the respective times, at the rate and
in the currency herein prescribed.
The Notes are issuable in registered form without coupons in the
minimum denomination of U.S.$1,000, or the equivalent thereof in the Specified
Currency (if other than U.S. dollars), and in integral multiples of U.S.$1,000
in excess thereof, or the equivalent thereof in such Specified Currency, or such
other Minimum Denomination as specified on the face hereof. Notes may be
exchanged by the Holder hereof, without charge except for any tax, assessment or
other governmental charge imposed in connection therewith, for a like aggregate
principal amount of Notes of other authorized denominations in the manner and
subject to the limitations provided in the Indenture at the Corporate Trust
Office of the Trustee.
If this Note is subject to Optional Redemption as specified above, the
Company may at its option, redeem this Note in whole or, from time to time, in
part in increments of U.S.$1,000 (provided that any remaining principal amount
hereof shall not be less than the minimum denomination, as described above) on
or after the Initial Redemption Date specified above at the sum of (i) 100% of
the unpaid principal amount hereof or the portion thereof redeemed (or, if this
Note is an Original Issue Discount
-17-
<PAGE>
Security, the Amortized Face Amount determined as of the Redemption Date as
provided below), plus (ii) the Initial Redemption Percentage specified above (as
adjusted for the Annual Redemption Percentage Reduction, if applicable)
multiplied by the unpaid principal amount or the portion thereof redeemed (or,
if this Note is an Original Issue Discount Security, the Issue Price specified
above, net of any portion of such Issue Price which has been deemed paid prior
to redemption (by reason of any payments, other than a payment of qualified
stated interest, in excess of the original issue discount accrued to the date of
such payment), or the portion of such Issue Price (or such net amount)
proportionate to the portion of the unpaid principal amount of the Note
redeemed), plus (iii) accrued interest to the Redemption Date (or, if this Note
is an Original Issue Discount Security, any accrued interest to the Redemption
Date the payment of which would constitute qualified stated interest payments
within the meaning of Treasury Regulation Section 1.1273-1(c) under the Code).
Such Initial Redemption Percentage shall decline at each anniversary of the
Initial Redemption Date by an amount equal to the Annual Redemption Percentage
Reduction, if any, specified above, until the Initial Redemption Percentage
equals zero percent. The Company may exercise such option by causing the Trustee
to mail a notice of such redemption to the Holder hereof not less than 30 but
not more than 60 days prior to the Redemption Date. In the event of redemption
of this Note in part only, a new Note or Notes for the unredeemed portion hereof
shall be issued in the name of the Holder hereof upon the cancellation hereof.
If less than all of the Notes with like tenor and terms to this Note are to be
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate.
An "Original Issue Discount Security" means any Note that has been
issued at an Issue Price lower, by an amount that equals or exceeds a de minimis
-- -------
amount (as determined under United States Federal income tax rules applicable to
original issue discount instruments), than the principal amount thereof. If
this Note is an Original Issue Discount Note, the "Amortized Face Amount" of
this Note shall be the amount equal to the sum of (a) the Issue Price plus (b)
the aggregate of the portions of the original issue discount (the excess of the
amounts considered as part of the "stated redemption price at maturity" of this
Note within the meaning of Section 1273(a)(2) of the Code, whether denominated
as principal or interest, over the Issue Price of this Note) which shall
theretofore have accrued pursuant to Section 1272 of the Code (without regard to
Section 1272(a)(7) of the Code) from the Original Issue Date of this Note to the
date of determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of this Note which has been paid on this Note from
the Original Issue Date to the date of determination.
If this Note is subject to Optional Repayment as specified above, the
Holder hereof may at its option require the Company to repay this Note in whole
or from time to time in part in increments of U.S.$1,000 or the minimum
denomination specified above (provided that any remaining principal amount
hereof shall not be less than the minimum
-18-
<PAGE>
denomination, as described above) on any Optional Repayment Date specified above
at the sum of (i) 100% of the unpaid principal amount hereof or the portion to
be repaid thereof, plus (ii) accrued interest to the Repayment Date. In order
for this Note to be repaid, this Note must be received, together with the form
entitled "Option to Elect Repayment" duly completed, by the Trustee at its
Corporate Trust Office (or such other address of which the Company shall from
time to time notify the Holders of the Notes) not more than 60 nor less than 30
days prior to the Repayment Date. Exercise of such repayment option by the
Holder hereof shall be irrevocable, except as otherwise provided above.
Prior to due presentment of this Note for registration of transfer,
the Company, the Guarantor, the Trustee and any agent of the Company, the
Guarantor, or the Trustee may treat the Holder hereof as the owner of this Note,
for the purpose of receiving payment of the principal hereof and premium, if
any, and interest hereon and for all other purposes whatsoever, whether or not
such Note be overdue, and neither the Company, the Guarantor, the Trustee nor
any such agent of the Company, the Guarantor, or the Trustee shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of, or
premium, if any, or interest on, this Note, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any incorporator, stockholder, officer, director or employee, as such, past,
present, or future, of the Company or the Guarantor or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
All terms used but not defined in this Note shall have the meanings
assigned to them in the Indenture.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by or on behalf of the Trustee under the Indenture.
-19-
<PAGE>
IN WITNESS WHEREOF, Countrywide Home Loans, Inc. has caused this instrument to
be signed in its name by the facsimile signatures of its duly authorized
officers, and has caused a facsimile of its corporate seal to be affixed
hereunto or imprinted hereon.
Date: COUNTRYWIDE HOME LOANS, INC.
[SEAL]
By:________________________________
President
Attest:__________________________
Secretary
-20-
<PAGE>
GUARANTEE
OF
COUNTRYWIDE CREDIT INDUSTRIES, INC.
For value received, Countrywide Credit Industries, Inc., a corporation
duly organized and existing under the laws of Delaware (the "Guarantor"), hereby
unconditionally guarantees to the Holder of the Note upon which this Guarantee
is endorsed the due and punctual payment of the principal of, and premium, if
any, and interest on, and sinking fund payments, if any, required with respect
to said Note, when and as the same shall become due and payable, whether on the
Stated Maturity Date, by acceleration, redemption or repayment or otherwise,
according to the terms thereof and of the Indenture referred to therein. In
case of the failure of Countrywide Home Loans, Inc. (the "Company") punctually
to pay any such principal, premium, interest, or sinking fund payment, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether on the Stated Maturity Date,
by acceleration, redemption or repayment, or otherwise, and as if such payment
were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of said Note or said Indenture, any failure to
enforce the provisions of said Note or said Indenture, or any waiver,
modification, consent or indulgence granted to the Company with respect thereto,
by the Holder of said Note or the Trustee under said Indenture, the recovery of
any judgment against the Company or any action to enforce the same, or any other
circumstances which may otherwise constitute a legal or equitable discharge of a
surety or guarantor. The Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of merger, insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest or notice with respect to said Note or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that this Guarantee
will not be discharged except by payment in full of the principal of, and
premium, if any, and interest on, or any sinking fund payment required with
respect to, said Note and the complete performance of all other obligations
contained in said Note.
The Guarantor shall be subrogated to all rights of the Holder of said
Note against the Company in respect of any amounts paid to such Holder by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
-------- -------
the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such
-21-
<PAGE>
right of subrogation until the principal of, and premium, if any, and interest
on, and any sinking fund payments required with respect to, all Notes of this
series issued under said Indenture shall have been paid in full and its other
obligations under said Indenture completed.
The Guarantor hereby certifies and warrants that all acts, conditions
and things required to be done and performed and to have happened precedent to
the creation and issuance of this Guarantee and to constitute the valid
obligation of the Guarantor have been done and performed and have happened in
due compliance with all applicable laws.
This Guarantee as endorsed on said Note shall not be entitled to any
benefit under said Indenture or become valid or obligatory for any purpose until
the certificate of authentication on said Note shall have been signed manually
by or on behalf of the Trustee under said Indenture.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York.
-22-
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed in facsimile by its duly authorized officer under its corporate seal.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:__________________________________
Vice Chairman and Executive
Vice President
Attest:_____________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
Date: By:_________________________________
Authorized Officer
-23-
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company
to repay this Note (or portion hereof specified below) in accordance with the
terms of this Note at a price equal to the principal amount hereof (or portion
hereof to be repaid), together with interest to the Repayment Date, by payment
to the undersigned at
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address, including zip code, of
the undersigned).
In order for this Note to be repaid, the Trustee must receive at its
Corporate Trust Office at 101 Barclay Street, New York, New York 10286, or at
such other place or places of which the Company shall from time to time notify
the Holders of the Notes, not more than 60 nor less than 30 days prior to the
Repayment Date, this Note with this Option to Elect Repayment form duly
completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be in increments of U.S.$1,000 or other
increments specified above) to be repaid: ______________.
If less than the entire principal amount of this Note is to be repaid,
specify the denomination(s) of the Note(s) to be issued for the unpaid amount
(which shall be U.S.$1,000 or increments of U.S.$1,000 in excess thereof, or
such other minimum denomination specified above):______________.
Date:
_______________________________________________
Note: The signature on this Option to Elect
Repayment must correspond with the name as
written upon the face of the within instrument
in every particular, without alteration or
enlargement, or any change whatsoever.
-24-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
- ------------------------------
- --------------------------------------------------------------------------------
Please Print or Typewrite Name and Address Including Zip Code of Assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- --------------------------------------------------------------------------------
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: ____________________ Signature:________________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement, or any change whatsoever.
-25-
<PAGE>
EXHIBIT 5.1
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004-1980
212-859-8000
FAX 212-859-4000
WRITER'S DIRECT LINE
May 15, 1996 212-859-8280
(FAX: 212-859-8586)
Countrywide Credit Industries, Inc.
Countrywide Homes Loans, Inc.
155 North Lake Avenue
Pasadena, California 91101
Ladies and Gentlemen:
We are acting as special counsel to Countrywide Credit Industries,
Inc., a Delaware corporation (the "Guarantor"), and its wholly-owned subsidiary,
Countrywide Home Loans, Inc., a New York corporation (the "Company"), in
connection with Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (File No. 33-59559) of the Company and the Guarantor and the
Registration Statement on Form S-3 (File No. 333-______) of the Company and the
Guarantor (collectively, the "Registration Statement"), in each case, under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
contemplated issuance by the Company from time to time of up to U.S.
$1,000,000,000 aggregate public offering price or the equivalent thereof in one
or more foreign currencies, currency units or composite currencies of debt
securities (the "Debt Securities"), which shall be guaranteed as to payment of
principal, premium, if any, and interest by the Guarantor (the "Guarantees"),
and which shall be issued pursuant to the Indenture, dated as of January 1,
1992, as supplemented by Supplemental Indenture No. 1 thereto, dated as of June
15, 1995, in each case among the Company, the Guarantor and The Bank of New
York, as trustee (as so supplemented, the "Indenture"). Capitalized terms used
herein have the meanings set forth in the Registration Statement, unless
otherwise defined herein.
We have examined the originals, or certified, conformed or
reproduction copies, of all such records, agreements, instruments and documents
as we have deemed relevant or necessary as the basis for the opinions
hereinafter expressed. In all such examinations, we have assumed the
genuineness of all
<PAGE>
Countrywide Credit Industries, Inc. -2- May 15, 1996
Countrywide Home Loans, Inc.
signatures, the authenticity of all original or certified copies and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduction copies. We also have assumed, with respect to all
parties to agreements or instruments relevant hereto other than the Company and
the Guarantor, that such parties had the requisite power and authority
(corporate or otherwise) to execute, deliver and perform such agreements or
instruments, that such agreements or instruments have been duly authorized by
all requisite action (corporate or otherwise), executed and delivered by such
parties and that such agreements or instruments are the valid, binding and
enforceable obligations of such parties. As to various questions of fact
relevant to such opinions, we have relied upon, and have assumed the accuracy
of, certificates and oral or written statements and other information of or from
public officials, officers or representatives of the Company and the Guarantor,
and others.
Based upon the foregoing and subject to the limitations set forth
herein, we are of the opinion that when the terms of the Debt Securities and
their issue and sale and the related Guarantees have been duly established in
conformity with the Indenture so as not to violate any applicable law or
agreement or instrument then binding on the Company or the Guarantor, the
Guarantees have been endorsed on the Debt Securities and executed in accordance
with the terms of the Indenture and the Debt Securities have been duly executed
and authenticated in accordance with the terms of the Indenture and issued and
sold as contemplated in the Registration Statement, the Debt Securities will
constitute legal, valid and binding obligations of the Company and the
Guarantees will constitute legal, valid and binding obligations of the
Guarantor, subject in each case to (i) bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other laws now or hereafter in effect
affecting creditors' rights generally and (ii) general principles of equity
(including, without limitation, standards of materiality, good faith, fair
dealing and reasonableness), whether considered in a proceeding in equity or at
law.
We express no opinion as to the legality, validity, binding effect or
enforceability of any provision of the Debt Securities, the Indenture or the
Guarantees providing for payments thereunder in a currency other than currency
of the United States of America to the extent that a court of competent
jurisdiction will under applicable law convert any judgment rendered in such
other currency into currency of the United States of America or to the extent
that payment in a currency other than currency of the United States of America
is contrary to applicable law. In this connection, we note that, as of the date
of this opinion, in
<PAGE>
Countrywide Credit Industries, Inc. -3- May 15, 1996
Countrywide Home Loans, Inc.
the case of a Debt Security denominated in a foreign currency, a state court in
the State of New York rendering a judgment on such Debt Security would be
required under Section 27 of the New York Judiciary Law to render such judgment
in the foreign currency in which the Debt Security is denominated, and such
judgment would be converted into United States dollars at the exchange rate
prevailing on the date of entry of the judgment.
This opinion is expressly limited to the laws of the State of New York
and, to the extent required by the foregoing opinion, the General Corporation
Law of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the captions
"Validity of Securities" in the Prospectus and "Validity of Securities" in any
Prospectus Supplement forming a part of the Registration Statement. In giving
these consents, we do not hereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act.
The opinions expressed herein are solely for the benefit of the
Company, the Guarantor and The Bank of New York, as trustee under the Indenture
(who may rely on this letter as though it were an addressee) and may not be
relied upon in any manner or for any purpose by any other person and may not be
quoted in whole or in part without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Kenneth R. Blackman
----------------------------------------
Kenneth R. Blackman
<PAGE>
EXHIBIT 8.1
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004-1980
212-859-8000
FAX 212-859-4000
WRITER'S DIRECT LINE
May 15, 1996 212-859-8171
(FAX: 212-859-8588)
Countrywide Home Loans, Inc.
Countrywide Credit Industries, Inc.
155 North Lake Avenue
Pasadena, California 91101
Ladies and Gentlemen:
We have acted as your special counsel in connection with the
Prospectus and Prospectus Supplement dated , 1996 (the "Prospectus
Supplement") pertaining to Post-Effective Amendment No. 1 to your Registration
Statement on Form S-3 (File No. 33-59559) and your Registration Statement on
Form S-3 (File No. 333 - _________) (collectively, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), being filed
today with the Securities and Exchange Commission, with respect to the public
offering of Medium Term Notes, Series E, of Countrywide Home Loans, Inc. (the
"Notes").
We hereby confirm, based on the assumptions and subject to the
qualifications and limitations set forth therein, that the statements in the
section of the Prospectus Supplement captioned "Certain Federal Income Tax
Considerations," to the extent that such statements constitute statements of
law, reflect our opinion regarding the material federal income tax consequences
of the purchase, ownership, and disposition of the Notes. No opinion is
expressed on matters other than those specifically referred to herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
<PAGE>
Countrywide Home Loans, Inc. 2 May 15, 1996
The opinion expressed herein is solely for your benefit and may not be
relied upon in any manner or for any purpose by any other person and may not be
quoted in whole or in part without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Lee S. Parker
-----------------------------------------------
Lee S. Parker
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
We have issued our report dated 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 Post-Effective
Amendment No. 1 to the Registration Statement (File No. 33-59559) and
Registration Statement (File No. 333-__________________) (collectively, the
"Registration Statement"). We consent to the incorporation by reference in this
Registration Statement and 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
May 15, 1996
<PAGE>
GENERAL
ITEM 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.
Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. 10006,
New York 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. 20549
New York Clearing House Association New York, N.Y.
(b) Whether it is authorized to exercise corporate trust powers:
Yes.
ITEM 2. Affiliations with Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 2.)
_____________________________
ITEM 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. (See 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. (See Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. - The consent of the Trustee required by Section 321(b) of the Act.
(See Exhibit 6 to Form T-1, Registration Statement No. 33-44051.)
7. - See Exhibit 7 Attached hereto.
1
<PAGE>
NOTE
----
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base 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.
___________________________
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 8th day of May, 1996.
The Bank of New York
By: /s/ Vivian Georges
_____________________
Vivian Georges
Assistant Vice President
2
<PAGE>
---------------
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 December 31, 1995, 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 depository institutions:
Noninterest-bearing balances and currency and coin......... $ 4,500,312
Interest-bearing balances................................... 643,938
Securities:
Held-to-maturity securities................................. 806,221
Available-for-sale securities............................... 2,036,768
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank:
Federal funds sold.......................................... 4,166,720
Securities purchased under agreements to resell............. 50,413
Loans and lease financing receivables:
Loans and leases, net of unearned income...27,068,535
LESS: Allowance for loan and lease losses.....520,024
LESS: Allocated transfer risk reserve...........1,000
Loans and leases, net of unearned income and
allowance, and reserve.................................... 26,547,511
Assets held in trading accounts............................... 758,462
Premises and fixed assets (including capitalized leases)...... 615,330
Other real estate owned....................................... 63,769
Investments in unconsolidated subsidiaries and associated
companies................................................... 223,174
Customers' liability to this bank on acceptances
outstanding................................................. 900,795
Intangible assets............................................. 212,220
Other assets.................................................. 1,186,274
-----------
Total assets.................................................. $42,711,907
===========
<CAPTION>
LIABILITIES
<S> <C>
DEPOSITS:
In domestic offices......................................... $21,248,127
Noninterest-bearing.........................9,172,079
Interest-bearing...........................12,076,048
In foreign offices, Edge and Agreement subsidiaries,
and IBFs.................................................... 9,535,088
Noninterest-bearing............................64,417
Interest-bearing............................9,470,671
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
Federal funds purchased..................................... 2,095,668
Securities sold under agreements to repurchase.............. 69,212
Demand notes issued to the U.S. Treasury...................... 107,340
Trading liabilities........................................... 615,718
Other borrowed money:
With original maturity of one year or less.................. 1,638,744
With original maturity of more than one year................ 120,863
Bank's liability on acceptances executed and outstanding...... 909,527
Subordinated notes and debentures............................. 1,047,860
Other liabilities............................................. 1,836,573
-----------
Total liabilities............................................. 39,224,720
-----------
EQUITY CAPITAL
Common Stock.................................................. 942,284
Surplus....................................................... 525,666
Undivided profits and capital reserves........................ 1,995,316
Net unrealized holding gains (losses) on
available-for-sale securities............................... 29,668
Cumulative foreign currency translation adjustments........... (5,747)
-----------
Total equity capital.......................................... 3,487,187
-----------
Total liabilities and equity capital.......................... $42,711,907
===========
</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 pre-
pared 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. Renyl } Directors
Alan R. Griffith }
---------------
Reprinted from American Banker February 22, 1996
