As filed with the Securities and Exchange Commission on October 2, 1997
--
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
Countrywide Capital III
(Exact name of registrant as specified in its charter)
c/o Countrywide Credit Industries, Inc.
4500 Park Granada
Calabasas, CA 91302
(818) 225-3000
Delaware (Address, including Applied for
(State or other zip code, and (I.R.S. Employer
jurisdiction of telephone number, Identification
incorporation or including area code, of Number)
organization) registrant's principal
executive offices)
Countrywide Home Loans, Inc.
(Exact name of registrant as specified in its charter)
4500 Park Granada
Calabasas, CA 91302
(818) 225-3000
New York (Address, including 13-2631719
(State or other zip code, and (I.R.S. Employer
jurisdiction of telephone number, Identification
incorporation or including area code, of Number)
organization) registrant's principal
executive offices)
Countrywide Credit Industries, Inc.
(Exact name of registrant as specified in its charter)
4500 Park Granada
Calabasas, CA 91302
(818) 225-3000
Delaware (Address, including 13-2641992
(State or other zip code, and (I.R.S. Employer
jurisdiction of telephone number, Identification
incorporation or including area code, of Number)
organization) registrant's principal
executive offices)
---------------
Davis S. Loeb
Director
Countrywide Home Loans, Inc.
and
President and Chairman of the Board
Countrywide Credit Industries, Inc.
4500 Park Granada
Calabasas, CA 91302
(818) 225-3000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
---------------
Copies to:
Kenneth R. Blackman, Esq. Sandor E. Samuels, Esq.
Fried, Frank, Harris, Shriver & Managing Director, Legal,
Jacobson General Counsel and Secretary
One New York Plaza Countrywide Credit
New York, NY 10004-1980 Industries, Inc.
(212) 859-8000 4500 Park Granada
Calabasas, CA 91302
(818) 225-3000
---------------
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 this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said section 8(a), may determine.
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(continued from previous page)
Approximate date of commencement of the proposed exchange offer: As soon
as practicable after the effective date of this Registration Statement.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is a
compliance with General Instruction G, check the following box. [ ]
------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================
Proposed Proposed Amount of
Title of Each Class Maximum Maximum Maximum Registration
of Securities to be Amount Offering Aggregate Fee
Registered to be Price Offering
Registered Per Unit Price
(1) (1)(2) (1)(2)
<S> <C> <C> <C> <C>
Subordinated Capital
Income Securities
("Capital Securities") of
Countrywide Capital III
Junior Subordinated
Debentures
("Debentures") of
Countrywide Home
Loans, Inc. (3)
Guarantees of Capital
Securities of
Countrywide Capital
III by Countrywide
Credit Industries,
Inc. and certain
back-up undertakings
("Capital Securities
Guarantees") (4)(5)
Guarantees of
Debentures of
Countrywide Home
Loans, Inc. by
Countrywide Credit
Industries, Inc.
("Debt Guarantees")
(5)
200,000
Capital
Total Securities 100% $200,000,000 $60,607
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(1) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457(f)(2).
(2) Exclusive of accrued interest and distributions, if any.
(3) The Debentures will be issued and sold to Countrywide Capital
III. Such Debentures may later be distributed to the holders
of Capital Securities upon a dissolution of Countrywide
Capital III and the distribution of the assets thereof.
(4) Includes the rights of holders of the Capital Securities
under the Capital Securities Guarantees and certain back-up
undertakings comprised of obligations of Countrywide Home
Loans, Inc. ("CHL"), guaranteed by Countrywide Credit
Industries, Inc. (the "Company"), to provide certain
indemnities in respect of, and pay and be responsible for
certain costs, expenses, debts and liabilities of,
Countrywide Capital III (other than with respect to the
Capital Securities) and certain obligations of the Company as
set forth in the Indenture and the Declaration of Countrywide
Capital III, in each case as further described in the
Registration Statement. The Company's obligations under the
Capital Securities Guarantees, the Debt Guarantees, the
Indenture and the Declaration, taken together with CHL's
obligations under the Debentures and the Indenture, including
CHL's obligations to pay all costs, expenses and liabilities
of Countrywide Capital III (other than with respect to the
Capital Securities), will provide a full and unconditional
guarantee by the Company of all of Countrywide Capital III's
obligations under the Capital Securities.
(5) No separate consideration will be received for any Capital
Securities Guarantees or Debt Guarantees or back-up
undertakings.
===========================================================================
</TABLE>
SUBJECT TO COMPLETION, DATED OCTOBER 2, 1997
--
PROSPECTUS
Countrywide Capital III
Offer to Exchange its
8.05% Subordinated Capital Income Securities, Series B
(SKISSM*)
(Liquidation Amount $1,000 per Capital Security)
which have been registered under the Securities Act of 1933,
as amended,
and are
fully and unconditionally guaranteed as to distributions
and other payments by, as set forth herein, by
Countrywide Credit Industries, Inc.
for any and all of its outstanding
8.05% Subordinated Capital Income Securities, Series A (SKISSM*)
(Liquidation Amount $1,000 per Capital Security)
which are
fully and unconditionally guaranteed as to distributions and
other payments, as set forth herein, by
Countrywide Credit Industries, Inc.
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997 UNLESS EXTENDED.
------------------
Countrywide Capital III, a Delaware statutory business trust
(the "Trust"), hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus (as the same may be
amended or supplemented from time to time, the "Prospectus") and
in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange up to $200,000,000
aggregate liquidation amount of its 8.05% Capital Income
Securities, Series B (the "New Capital Securities"), which have
been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to the Registration Statement (as
defined herein) of which this Prospectus constitutes a part, for
a like liquidation amount of its outstanding 8.05% Capital Income
Securities, Series A (the "Old Capital Securities"), of which
$200,000,000 aggregate liquidation amount is outstanding. As
soon as practicable after the Exchange Offer: (i) Countrywide
Credit Industries, Inc., a Delaware corporation (the "Company"),
will exchange its full and unconditional guarantee with respect
to the payment of Distributions (as defined herein) and payments
on liquidation of the Trust or redemption of the Old Capital
Securities (the "Old Trust Guarantee") for a like guarantee of
the New Capital Securities (the "New Trust Guarantee," and
together with the Old Trust Guarantee, the "Trust Guarantee");
(ii) all of the 8.05% Junior Subordinated Debentures due June 15,
2027, Series A (the "Old Debentures"), of Countrywide Home Loans,
Inc., a New York corporation and a wholly-owned subsidiary of the
Company ("CHL"), of which $206,200,000 aggregate principal amount
is outstanding, will be exchanged for a like aggregate principal
amount of CHL's 8.05% Junior Subordinated Debentures due June 15,
2027, Series B (the "New Debentures"); and (iii) the Company will
exchange its full and unconditional guarantee with respect to the
payment of principal of, premium, if any, and interest on the Old
Debentures (the "Old Debt Guarantee") for a like guarantee of the
New Debentures (the "New Debt Guarantee"). The New Trust
Guarantee, the New Debentures and the New Debt Guarantee also
have been registered under the Securities Act. The New Trust
Guarantee, together with the New Debt Guarantee, are collectively
referred to as the "New Guarantees," and the New Guarantees,
together with the Old Trust Guarantee, to the extent it shall
remain in effect because not all the Old Capital Securities are
exchanged for New Capital Securities, are collectively referred
to as the "Guarantees." The Exchange Offer is being made
pursuant to the terms of a Registration Rights Agreement, dated
June 4, 1997 (the "Registration Rights Agreement"), among the
Company, CHL, the Trust and Lehman Brothers Inc., Countrywide
Securities Corporation, Goldman, Sachs & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Salomon Brothers Inc (the
"Initial Purchasers") pursuant to the terms of a Purchase
Agreement, dated May 30, 1997, among the Company, CHL, the Trust
and the Initial Purchasers. See "The Exchange Offer - Purpose
and Effect of the Exchange Offer." The Old Capital Securities,
the Old Trust Guarantee, the Old Debentures and the Old Debt
Guarantee are collectively referred to herein as the "Old
Securities" and the New Capital Securities, the New Trust
Guarantee, the New Debentures and the New Debt Guarantee are
collectively referred to herein as the "New Securities."
The terms of the New Securities are identical in all
material respects to the terms of the Old Securities, except that
the New Securities have been registered under the Securities Act
and therefore will not be subject to certain restrictions on
transfer applicable to the Old Securities.
The New Capital Securities and the Old Capital Securities
(together, the "Capital Securities") represent undivided
beneficial ownership interests in the assets of the Trust and
rank on a parity with each other. The Company is the owner of
all of the beneficial ownership interests represented by common
securities of the Trust (the "Common Securities," and together
with the Capital Securities, the "Trust Securities"). The Trust
was formed for the exclusive purposes of (i) issuing and selling
the Trust Securities, (ii) investing the gross proceeds thereof
in the Old Debentures and the Old Debt Guarantee, which will be
exchanged for the New Debentures and the New Debt Guarantee,
respectively, and (iii) engaging in only those other activities
necessary or incidental thereto, including engaging in the
Exchange Offer.
(cover continued on next page)
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See "Risk Factors" beginning on page 15 for a discussion of
certain factors which investors should consider in connection
with the Exchange Offer and an investment in the New Capital
Securities.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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* SKIS is a servicemark of Lehman Brothers Inc.
------------------
The date of this Prospectus is , 1997.
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 the registration or
qualification under the securities laws of any such state.
(continued from previous page)
The New Debentures will mature on June 15, 2027, or earlier in
certain circumstances following the occurrence of a Tax Event (as
defined herein). See "Description of Capital Securities - Special
Event Redemption or Distribution of New Debentures; Shortening of
Stated Maturity." The Capital Securities will have a preference
under certain circumstances with respect to cash distributions
and amounts payable on liquidation, redemption or otherwise over
the Common Securities. See "Description of Capital Securities -
Subordination of Common Securities."
Holders of Capital Securities will be entitled to receive
cumulative cash distributions ("Distributions"), accumulating
from June 4, 1997, the date of original issuance of the Old
Capital Securities, at a rate per annum equal to 8.05% of the
liquidation amount of $1,000 per Capital Security. Distributions
will be payable semi-annually in arrears on June 15 and December
15 of each year, commencing on December 15, 1997, and at
maturity. At all times, the distribution rate in effect on the
Capital Securities, the distribution payment dates and other
payment dates for the Capital Securities will correspond to the
interest rate, interest payment dates and other payment dates for
the New Debentures, which, together with the New Debt Guarantee,
will be the exclusive assets of the Trust. See "Description of
Capital Securities - Distributions."
The Company will guarantee the payment of Distributions and
payments on liquidation of the Trust or redemption of the Capital
Securities, but only, in each case, to the extent of funds held
by the Trust, which funds will not be available except to the
extent CHL has made payments of interest or principal or other
payments on the New Debentures or the Company has made such
payments pursuant to the New Debt Guarantee. See "Description of
Trust Guarantee" and "Description of New Debentures and New Debt
Guarantee." If CHL does not make payments on the New Debentures
held by the Trust, and the Company does not make such payments,
to the extent required, under the New Debt Guarantee, the Trust
will have insufficient funds to make payments on the Capital
Securities, and the Trust Guarantee will not apply to such
payments until the Trust has sufficient funds available therefor.
The Company's obligations under the Guarantees, the Indenture
(as defined herein) and the Declaration (as defined herein),
taken together with CHL's obligations under the New Debentures
and the Indenture, including CHL's obligation to pay all costs,
expenses and liabilities of the Trust (other than with respect to
the Trust Securities), constitute a full and unconditional
guarantee by the Company of all of the Trust's obligations under
the Capital Securities. See "Relationship Among the Capital
Securities, the New Debentures and the Guarantees." CHL's
obligations under the New Debentures and the Indenture and the
Company's obligations under the Guarantees and the Indenture will
be subordinate and junior in right of payment to all existing and
future Senior Indebtedness (as defined herein) of CHL and the
Company, respectively, and will rank pari passu with the 8%
Junior Subordinated Deferrable Interest Debentures due 2026 of
CHL (the "1996 Debentures") and the related guarantee by the
Company, respectively. See "Capitalization." In addition, at all
times such obligations will be structurally subordinated to all
existing and future liabilities and obligations of CHL's and the
Company's subsidiaries, as the case may be. At May 31, 1997,
after giving pro forma effect to the Offering (as defined
herein), including the application of the proceeds therefrom, and
the Exchange Offer (the Offering, the use of proceeds therefrom
and the Exchange Offer are, collectively, the "Offerings"), CHL
would have had approximately $6.5 billion aggregate principal
amount of Senior Indebtedness outstanding and the Company would
have had no indebtedness outstanding (excluding indebtedness of
subsidiaries guaranteed by the Company). In addition, at such
date, subsidiaries of the Company (other than CHL) had
outstanding indebtedness of approximately $43 million. The terms
of the Capital Securities, the New Debentures and the Guarantees
place no limitation on the amount of Senior Indebtedness that may
be incurred by the Company or CHL or on the amount of liabilities
and obligations of the Company's or CHL's subsidiaries. See
"Description of Trust Guarantee - Status of the Trust Guarantee"
and "Description of New Debentures and New Debt Guarantee -
Ranking."
CHL has the right to defer payment of interest on the New
Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each
deferral period (each, an "Extension Period"), provided that no
Extension Period may extend beyond the Stated Maturity (as
defined herein) of the New Debentures. Upon the termination of
any such Extension Period and the payment of all amounts then due
on any Interest Payment Date (as defined herein), CHL may elect
to begin a new Extension Period, subject to the requirements set
forth herein. Accordingly, there could be multiple Extension
Periods of varying lengths throughout the term of the New
Debentures. If interest payments on the New Debentures are so
deferred, Distributions on the Capital Securities will also be
deferred and (a) the Company and CHL shall not declare or pay
dividends on, or make a distribution with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect
to, any of its capital stock (other than (i) purchases or
acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by
the Company or CHL, respectively, of its obligations under any
employee benefit plans, (ii) as a result of a reclassification of
the Company's or CHL's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or
series of the Company's or CHL's capital stock or rights to
acquire such capital stock for another class or series of the
Company's or CHL's capital stock or rights to acquire such
capital stock, (iii) the purchase of fractional interests in
shares of the Company's or CHL's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the
security being converted or exchanged or (iv) dividends and
distributions made on the Company's or CHL's capital stock or
rights to acquire such capital stock with the Company's or CHL's
capital stock or rights to acquire such capital stock) or make
any guarantee payments with respect to any of the foregoing and
(b) the Company and CHL shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem
any debt securities (including any guarantees, other than the
Guarantees) issued by the Company or CHL that rank pari passu
with or junior to the New Debentures. During an Extension
Period, interest on the New Debentures will continue to accrue
(and the amount of Distributions to which holders of the Capital
Securities are entitled will accumulate) at 8.05% per annum,
compounded semi-annually, and holders of the Capital Securities
will be required to accrue income, in the form of original issue
discount ("OID"), for United States federal income tax purposes
prior to receipt of cash related to such interest income. See
"Description of New Debentures and New Debt Guarantee - Option to
Extend Interest Payment Period" and "Certain United States
Federal Income Tax Consequences - Interest Income and Original
Issue Discount."
The Trust Securities are subject to mandatory redemption, in
whole but not in part, upon repayment of the New Debentures held
by the Trust at maturity or their earlier redemption, in an
aggregate liquidation amount equal to the aggregate principal
amount of related New Debentures maturing or being redeemed and
at a redemption price equal to the redemption price of such New
Debentures, in each case, plus accumulated and unpaid
Distributions thereon to the date of redemption.
The New Debentures are not redeemable at the option of CHL,
other than in certain circumstances following a Special Event (as
defined herein). Upon the occurrence and continuation of a
Special Event, CHL will have the right, if certain conditions are
met, (i) in the case of a Tax Event, to shorten the Stated
Maturity of the New Debentures to a date not earlier than
December 15, 2011 or (ii) to redeem the New Debentures in whole
(but not in part) within 90 days following the occurrence of such
Special Event, at a redemption price equal to 100% of the
aggregate principal amount of such New Debentures, plus accrued
and unpaid interest to the date of redemption. See "Description
of New Debentures and New Debt Guarantee - Redemption."
The Company has the right at any time to dissolve the Trust,
and cause the New Debentures to be distributed to the holders of
the Trust Securities in exchange therefor upon liquidation of the
Trust. In the event of the liquidation of the Trust, after
satisfaction of the claims of creditors of the Trust, if any, as
provided by applicable law, the holders of the Trust Securities
will be entitled to receive a liquidation amount of $1,000 per
Capital Security, plus accumulated and unpaid Distributions
thereon to the date of payment, unless, in connection with such
liquidation, New Debentures are distributed to the holders of
Trust Securities. If such liquidation amount can be paid only in
part because the Trust has insufficient assets available to pay
in full the aggregate liquidation amount, then the amounts
payable directly by the Trust on the Trust Securities will be
paid on a pro rata basis. The holders of the Common Securities
will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities,
except that if an Indenture Event of Default (as defined herein)
has occurred and is continuing, the Capital Securities will have
a priority over the Common Securities. See "Description of
Capital Securities - Liquidation Distribution Upon Dissolution."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE
URGED TO READ THIS PROSPECTUS AND THE RELATED LETTER OF
TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
The Trust will accept for exchange any and all validly
tendered Old Capital Securities on or prior to 5:00 p.m., New
York City time, on , 1997, unless extended by the Trust
(as so extended, the "Expiration Date"). Tenders of Old Capital
Securities may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. The Exchange Offer is
not conditioned upon any minimum liquidation amount of Old
Capital Securities being tendered for exchange. However, the
Exchange Offer is subject to certain conditions, which may be
waived by the Trust, and to the terms and provisions of the
Registration Rights Agreement. Old Capital Securities may be
tendered only in blocks having a minimum aggregate liquidation
amount of $100,000 (100 Old Capital Securities) and in integral
multiples of $1,000 in excess thereof. CHL has agreed to pay all
the expenses of the Exchange Offer. See "The Exchange Offer."
Any waiver, extension or termination of the Exchange Offer
will be publicly announced by the Trust through a release to the
Dow Jones News Service and as otherwise required by applicable
law or regulations.
The New Capital Securities will be obligations of the Trust
entitled to the benefits of the Declaration. The form and terms
of the New Capital Securities will be identical in all material
respects to the form and terms of the Old Capital Securities
except that (i) the New Capital Securities will have been
registered under the Securities Act and therefore will not
contain terms with respect to transfer restrictions, (ii) the
Distribution Rate (as defined herein) on the New Capital
Securities will not be subject to increase in certain
circumstances relating to the timing of the Exchange Offer and
(iii) the holders of New Capital Securities will not be entitled
to certain rights under the Registration Rights Agreement, which
rights will terminate when the Exchange Offer is consummated. Any
Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and, except as described herein,
will be entitled to all the rights and preferences, and will be
subject to the limitations applicable thereto, under the
Declaration. Following consummation of the Exchange Offer, the
holders of the Old Capital Securities will not be entitled to any
increase in the Distribution Rate thereon and will continue to be
subject to any existing restrictions upon transfer thereof, and
none of the Company, CHL and the Trust will have any further
obligation to such holders (other than under certain limited
circumstances) to provide for the registration under the
Securities Act of the Old Capital Securities held by them. See
"The Exchange Offer."
The Company, CHL and the Trust are making the Exchange Offer
in reliance on the position of the staff of the Division of
Corporation Finance of the Securities and Exchange Commission
(the "Commission") as set forth in certain interpretive letters
addressed to third parties in other transactions. However, none
of the Company, CHL and the Trust has sought its own interpretive
letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it
has in such interpretive letters to third parties. Based on
these interpretations by the staff of the Division of Corporation
Finance, and subject to the two immediately following sentences,
the Company, CHL and the Trust believe that New Capital
Securities issued pursuant to the Exchange Offer in exchange for
Old Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder
who is a broker-dealer or who is an "affiliate" of the Company,
CHL or the Trust within the meaning of Rule 405 of the Securities
Act) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided
that (i) such New Capital Securities are acquired in the ordinary
course of such holder's business and (ii) such holder is not
participating, does not intend to participate and has no
arrangement or understanding with any person to participate, in a
distribution (within the meaning of the Securities Act) of such
New Capital Securities. However, any holder of Old Capital
Securities who is an "affiliate" of the Company, CHL or the Trust
or who intends to participate in the Exchange Offer for the
purpose of distributing New Capital Securities, or, as to unsold
allotments, any broker-dealer who purchased Old Capital
Securities from the Trust to resell pursuant to Rule 144A under
the Securities Act ("Rule 144A") or any other available exemption
under the Securities Act, (a) will not be able to rely on the
interpretations of the staff of the Division of Corporation
Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and
(c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
of such Old Capital Securities, with such resale covered by an
effective registration statement containing the selling security
holder information required by Item 507 of Regulation S-K under
the Securities Act, unless such sale is made pursuant to an
exemption from such requirements. In addition, as described
below, if any broker-dealer holds Old Capital Securities acquired
for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for New
Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange
Old Capital Securities for New Capital Securities in the Exchange
Offer will be required to represent that (i) it is not an
"affiliate" of the Company, CHL or the Trust, (ii) any New
Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such New Capital
Securities and (iv) if such holder is not a broker-dealer, or is
a broker-dealer but will not receive New Capital Securities for
its own account in exchange for Old Capital Securities, such
holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such
New Capital Securities. In addition, the Company, CHL and the
Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to
the Company, CHL and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) on behalf of whom such holder
holds the Old Capital Securities to be exchanged in the Exchange
Offer. Each broker-dealer that receives New Capital Securities
for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Old Capital Securities for its
own account as a result of market-making activities or other
trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the
interpretive letters referred to above, the Company, CHL and the
Trust believe that broker-dealers who acquired Old Capital
Securities for their own accounts, as a result of market-making
or other trading activities ("Participating Broker-Dealers") may
fulfill their prospectus delivery requirements with respect to
the New Capital Securities received upon exchange of such Old
Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of
the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan
of distribution with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection
with resales of New Capital Securities received in exchange for
Old Capital Securities where such Old Capital Securities were
acquired by such Participating Broker-Dealer for its own account
as a result of market-making or other trading activities.
Subject to certain provisions set forth in the Registration
Rights Agreement, the Company, CHL and the Trust have agreed that
this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Capital Securities for a
period ending 90 days after the Registration Statement of which
this Prospectus constitutes a part is declared effective.
However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of New Capital
Securities received in exchange for Old Capital Securities
pursuant to the Exchange Offer must notify the Company, CHL and
the Trust, or cause the Company, CHL and the Trust to be
notified, on or prior to the Expiration Date, that it is a
Participating Broker-Dealer. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or
may be delivered to the Exchange Agent (as defined herein) at one
of the addresses set forth herein under "The Exchange Offer -
Exchange Agent." Any Participating Broker-Dealer who is an
"affiliate" of the Company, CHL or the Trust may not rely on such
interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any resale transaction. See "The Exchange Offer
- - Resales of New Capital Securities."
In that regard, each Participating Broker-Dealer who
surrenders Old Capital Securities pursuant to the Exchange Offer
will be deemed to have agreed, by execution of the Letter of
Transmittal, that, upon receipt of notice from the Company, CHL
or the Trust of the occurrence of any event or the discovery of
any fact which makes any statement contained in this Prospectus
untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the
statements contained herein, in light of the circumstances under
which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale
of New Capital Securities pursuant to this Prospectus until the
Company, CHL and the Trust have amended or supplemented this
Prospectus to correct such misstatement or omission and have
furnished copies of the amended or supplemented Prospectus to
such Participating Broker-Dealer or the Company, CHL or the Trust
has given notice that the sale of the New Capital Securities may
be resumed, as the case may be.
The New Capital Securities will be a new issue of securities
for which there currently is no established trading market. The
Trust has been advised by the Initial Purchasers that following
completion of the Exchange Offer, they currently intend to make a
market in the New Capital Securities; however, they are not
obligated to do so and any market-making activities with respect
to the New Capital Securities may be discontinued at any time.
There can be no assurance that an active trading market for the
New Capital Securities will develop. See "Risk Factors - Absence
of Public Market for the New Capital Securities." The Trust and
the Company do not currently intend to apply for listing of the
New Capital Securities on the New York Stock Exchange (the
"NYSE"). To the extent that Old Capital Securities are tendered
and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected.
See "Risk Factors - Consequences of a Failure to Exchange Old
Capital Securities."
None of the Company, CHL and the Trust will receive any
proceeds from the Exchange Offer. No dealer-manager is being
used in connection with the Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION CONCERNING THE COMPANY, CHL, THE TRUST, THE NEW
CAPITAL SECURITIES OR THE EXCHANGE OFFER NOT CONTAINED IN THIS
PROSPECTUS, THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR THE LETTER OF TRANSMITTAL AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, CHL OR THE
TRUST. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE OFFERING,
SALE OR DELIVERY OF ANY NEW CAPITAL SECURITY SHALL CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AT
ANY TIME AFTER THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE
IN THE BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS OR
PROSPECTS OF THE COMPANY, CHL OR THE TRUST SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE"), NO ENTITY WHOSE UNDERLYING ASSETS
INCLUDE "PLAN ASSETS" OF ANY SUCH PLAN BY REASON OF SUCH PLAN'S
INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN, MAY ACQUIRE OR HOLD THE NEW CAPITAL SECURITIES OR ANY
INTEREST THEREIN, UNLESS SUCH EXCHANGING PERSON OR HOLDER IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER AN APPLICABLE
U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
("PTE"), INCLUDING BUT NOT LIMITED TO PTE 96-23, 95-60, 91-38, 90-
1 OR 84-14 WITH RESPECT TO SUCH ACQUISITION OR HOLDING. ANY
PERSON EXCHANGING OLD CAPITAL SECURITIES FOR NEW CAPITAL
SECURITIES OR HOLDER OF THE NEW CAPITAL SECURITIES OR ANY
INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED AND
COVENANTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER
(I) THE EXCHANGING PERSON OR HOLDER IS NOT A PLAN OR ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY
PLAN'S INVESTMENT IN THE ENTITY AND IS NOT ACQUIRING SUCH NEW
CAPITAL SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN
OR (II) THE EXCHANGE AND HOLDING OF THE NEW CAPITAL SECURITIES IS
COVERED BY ONE OF THE PROHIBITED TRANSACTION CLASS EXEMPTIONS
UNDER ERISA AND THE CODE DESCRIBED ABOVE.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION..................................... 1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......... 2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS......... 2
PROSPECTUS SUMMARY........................................ 4
RISK FACTORS.............................................. 15
USE OF PROCEEDS........................................... 20
RATIO OF EARNINGS TO FIXED CHARGES........................ 20
ACCOUNTING TREATMENT...................................... 20
CAPITALIZATION............................................ 21
THE COMPANY............................................... 22
CHL....................................................... 22
THE TRUST................................................. 23
THE EXCHANGE OFFER........................................ 24
DESCRIPTION OF CAPITAL SECURITIES......................... 35
DESCRIPTION OF NEW DEBENTURES AND NEW DEBT GUARANTEE...... 45
DESCRIPTION OF TRUST GUARANTEE............................ 52
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE NEW
DEBENTURES AND THE GUARANTEES............................ 54
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.... 56
BOOK-ENTRY ISSUANCE....................................... 59
ERISA CONSIDERATIONS...................................... 61
PLAN OF DISTRIBUTION...................................... 62
LEGAL MATTERS............................................. 63
INDEPENDENT AUDITORS...................................... 63
INDEX OF CERTAIN TERMS.................................... 64
------------------
AVAILABLE INFORMATION
The Company, CHL and the Trust have filed with the
Commission a Registration Statement on Form S-4 (together with
all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement") under the Securities Act with respect
to the New Capital Securities offered hereby. This Prospectus,
which forms a part of the Registration Statement, does not
contain all the information set forth in the Registration
Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further
information with respect to the Company, CHL, the Trust and the
New Capital Securities, reference is made to the Registration
Statement and the exhibits and schedules relating thereto. Any
statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission or incorporated by reference
herein are not necessarily complete, and, in each instance,
reference is made to the copy of such document so filed for a
more complete description of the matter involved. Each such
statement is qualified in its entirety by such reference. The
Registration Statement (and the exhibits and schedules thereto)
can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549; and at the Commission's regional
offices at Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661-2511, and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can
also be obtained from the Commission at prescribed rates through
its Public Reference Section at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549.
The Company is subject to the informational requirements of
the Exchange Act, and in accordance therewith files reports,
proxy statements and other information with the Commission. Such
reports, proxy statements and other information filed by the
Company with the Commission pursuant to the informational
requirements of the Exchange Act can be inspected and copied at
the public reference facilities maintained by the Commission at
its offices and the Commission's regional offices at the
locations listed above. Copies of such material can also be
obtained from the Public Reference Section of the Commission in
the manner described above. Such reports and other information
can also be inspected at the offices of the following exchanges
on which certain of the Company's securities are listed: The New
York Stock Exchange, 20 Broad Street, New York, New York 10005
and the Pacific Stock Exchange, 115 Sansome Street, San
Francisco, California 94104. The Commission also maintains a
Web site (http://www.sec.gov) that makes available reports, proxy
statements and other information regarding the Company.
No separate financial statements of the Trust have been
included or incorporated by reference herein. The Company and CHL
believe such financial statements would not be material to
holders of the New Capital Securities because (i) all of the
voting securities of the Trust are owned by the Company, a
reporting company under the Exchange Act, (ii) the Trust has no
independent operations but exists for the exclusive purposes of
issuing the Trust Securities, representing undivided beneficial
ownership interests in its assets, and investing the gross
proceeds thereof in the Old Debentures and the Old Debt
Guarantee, which Old Debentures and Old Debt Guarantee will be
exchanged for the New Debentures and the New Debt Guarantee,
respectively, pursuant to the Exchange Offer and (iii) the
Company's obligations under the Guarantees, the Indenture and the
Declaration, taken together with CHL's obligations under the New
Debentures and the Indenture, including CHL's obligation to pay
all costs, expenses and liabilities of the Trust (other than with
respect to the Trust Securities), constitute a full and
unconditional guarantee by the Company of all of the Trust's
obligations under the Capital Securities. See "Relationship
Among the Capital Securities, the New Debentures and the
Guarantees."
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1997 and Quarterly Report on Form 10-Q for the
fiscal quarter ended May 31, 1997, previously filed by the
Company with the Commission, are incorporated by reference in
this Prospectus and shall be deemed to be a part hereof.
Each document filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the
termination of any offering of securities made by this Prospectus
shall be deemed to be incorporated herein by reference and to be
a part hereof from the date of filing such document. Any
statement contained herein, or in a document all or a portion of
which is incorporated or deemed to be incorporated by reference
herein, shall be deemed to be modified or superseded for purposes
of this Prospectus 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.
The Company will provide without charge to any person to
whom a copy of this Prospectus is delivered, upon written or oral
request, a copy of any and all of the documents that have been or
may be incorporated by reference herein (other than exhibits to
such documents which are not specifically incorporated by
reference into such documents). Request for such documents should
be submitted in writing to the Company at 4500 Park Granada,
Calabasas, California 91302, Attention: Investor Relations.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995
provides a "safe harbor" for certain forward-looking statements.
This Prospectus may contain or incorporate by reference forward-
looking statements which reflect the Company's current views with
respect to future events and financial performance. These forward-
looking statements are subject to certain risks and
uncertainties, including those identified below, which could
cause future results to differ materially from historical results
or those anticipated. The words "believe," expect," "anticipate,"
"intend," "estimate" and other expressions which indicate future
events and trends identify forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of their dates. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise. The following factors,
among others, could cause future results to differ materially
from historical results or those anticipated: (1) the level of
demand for mortgage credit, which is affected by such external
factors as the level of interest rates, the strength of the
various segments of the economy and demographics of the Company's
lending markets; (2) the direction of interest rates; (3) the
relationship between mortgage interest rates and the cost of
funds; (4) federal and state regulation of the Company's mortgage
banking operations; and (5) competition within the mortgage
banking industry. See also "Risk Factors."
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and
should be read in conjunction with, the more detailed information
and the financial statements, including the notes thereto,
appearing elsewhere or incorporated by reference in this
Prospectus. Prospective investors are urged to read this
Prospectus in its entirety. For an index of certain defined
terms used in this Prospectus, see "Index of Certain Terms."
The Trust
The Trust is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust, dated as of
May 28, 1997 and (ii) the filing of a certificate of trust with
the Secretary of State of the State of Delaware on May 28, 1997.
The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities representing undivided beneficial
ownership interests in the assets of the Trust, (ii) investing
the gross proceeds from such sales in the Old Debentures and the
Old Debt Guarantee, which will be exchanged for the New
Debentures and the New Debt Guarantee, respectively, pursuant to
the Exchange Offer and (iii) engaging in only those other
activities necessary or incidental thereto, including engaging in
the Exchange Offer.
The Trust's registered office in the State of Delaware is
c/o The Bank of New York (Delaware), 400 White Clay Center, Route
273, Newark, Delaware 19711, Attn: Corporate Trust
Administration. The principal place of business of the Trust is
c/o Countrywide Credit Industries, Inc., 4500 Park Granada,
Calabasas, California 91302, and its telephone number is
(818) 225-3000.
The Company
The Company is a holding company which through its principal
subsidiary, CHL, is engaged primarily in the mortgage banking
business. The Company, through its other wholly owned
subsidiaries, offers products and services complementary to its
mortgage banking business. The Company 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 4500 Park Granada, Calabasas, California 91302,
and its telephone number is (818) 225-3000.
CHL
CHL, the principal subsidiary of the Company, is engaged
primarily in the mortgage banking business and as such
originates, purchases, sells and services mortgage loans. CHL is
a New York corporation, originally incorporated in 1969. Its
principal executive offices are located at 4500 Park Granada,
Calabasas, California 91302, and its telephone number is
(818) 225-3000.
The Offering
The Old Capital The Old Capital Securities were sold by the
Securities: Trust in an offering consummated on June 4,
1997 (the "Offering"), and were subsequently
resold to Qualified Institutional Buyers (as
defined herein) pursuant to Rule 144A and to
certain foreign purchasers in reliance on
Regulation S under the Securities Act.
Registration Rights In connection with the Offering, the Company,
Agreement: CHL and the Trust entered into the
Registration Rights Agreement, which granted
holders of the Old Capital Securities certain
exchange and registration rights. The
Exchange Offer is intended to satisfy such
exchange and registration rights, which
terminate upon the consummation of the
Exchange Offer, except under limited
circumstances. See "The Exchange Offer -
Shelf Registration Statement."
The Exchange Offer
Securities Up to $200,000,000 aggregate liquidation
Offered: amount of New Capital Securities (liquidation
amount $1,000 per New Capital Security)
evidencing undivided beneficial ownership
interests in the assets of the Trust.
Holders of New Capital Securities will be
entitled to a preference over the Common
Securities in certain circumstances with
respect to Distributions and amounts payable
on liquidation, redemption or otherwise.
The Exchange Pursuant to the Exchange Offer, $1,000
Offer: liquidation amount of New Capital Securities
will be issued in exchange for each $1,000
liquidation amount of Old Capital Securities
that are validly tendered and not withdrawn.
Old Capital Securities may be tendered only
in blocks having a minimum aggregate
liquidation amount of $100,000 (100 Old
Capital Securities) and in integral multiples
of $1,000 in excess thereof. As of October
1, 1997, there was one registered holder of
Old Capital Securities. On such date,
$200,000,000 aggregate liquidation amount of
Old Capital Securities were outstanding.
The Exchange Offer is not being made to, nor
will the Trust accept surrenders of Old
Capital Securities for exchange from, holders
thereof in any jurisdiction in which the
Exchange Offer or the acceptance thereof
would not be in compliance with the
securities or blue sky laws of such
jurisdiction.
Resales: The Company, CHL and the Trust are making the
Exchange Offer in reliance on the position of
the staff of the Division of Corporation
Finance of the Commission as set forth in
certain interpretive letters addressed to
third parties in other transactions.
However, none of the Company, CHL and the
Trust has sought its own interpretive letter
and there can be no assurance that the staff
of the Division of Corporation Finance of the
Commission would make a similar determination
with respect to the Exchange Offer as it has
in such interpretive letters to third
parties. Based on these interpretations by
the staff of the Division of Corporation
Finance, and subject to the two immediately
following sentences, the Company, CHL and the
Trust believe that New Capital Securities
issued pursuant to the Exchange Offer in
exchange for Old Capital Securities may be
offered for resale, resold and otherwise
transferred by a holder thereof (other than a
holder who is a broker-dealer or who is an
"affiliate" of the Company, CHL or the Trust
within the meaning of Rule 405 of the
Securities Act) without further compliance
with the registration and prospectus delivery
requirements of the Securities Act, provided
that (i) such New Capital Securities are
acquired in the ordinary course of such
holder's business and (ii) such holder is not
participating, does not intend to participate
and has no arrangement or understanding with
any person to participate, in a distribution
(within the meaning of the Securities Act) of
such New Capital Securities. However, any
holder of Old Capital Securities who is an
"affiliate" of the Company, CHL or the Trust
or who intends to participate in the Exchange
Offer for the purpose of distributing New
Capital Securities, or, as to any unsold
allotments, any broker-dealer who purchased
Old Capital Securities from the Trust to
resell pursuant to Rule 144A or any other
available exemption under the Securities Act,
(a) will not be able to rely on the
interpretations of the staff of the Division
of Corporation Finance of the Commission set
forth in the above-mentioned interpretive
letters, (b) will not be permitted or
entitled to tender such Old Capital
Securities in the Exchange Offer and (c) must
comply with the registration and prospectus
delivery requirements of the Securities Act
in connection with any resale of such Old
Capital Securities, with such resale covered
by an effective registration statement
containing the selling security holder
information required by Item 507 of
Regulation S-K under the Securities Act,
unless such resale is made pursuant to an
exemption from such requirements. In
addition, as described below, if any broker-
dealer holds Old Capital Securities acquired
for its own account as a result of market-
making or other trading activities and
exchanges such Old Capital Securities for New
Capital Securities, then such broker-dealer
must deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resales of such New
Capital Securities.
Each holder of Old Capital Securities who
wishes to exchange Old Capital Securities for
New Capital Securities in the Exchange Offer
will be required to represent that (i) it is
not an "affiliate" of the Company, CHL or the
Trust, (ii) any New Capital Securities to be
received by it are being acquired in the
ordinary course of its business, (iii) it has
no arrangement or understanding with any
person to participate in a distribution
(within the meaning of the Securities Act) of
such New Capital Securities and (iv) if such
holder is not a broker-dealer, or is a broker-
dealer but will not receive New Capital
Securities for its own account in exchange
for Old Capital Securities, such holder is
not engaged in, and does not intend to engage
in, a distribution (within the meaning of the
Securities Act) of such New Capital
Securities. In addition, the Company, CHL
and the Trust may require such holder, as a
condition to such holder's eligibility to
participate in the Exchange Offer, to furnish
to the Company, CHL and the Trust (or an
agent thereof) in writing information as to
the number of "beneficial owners" (within the
meaning of Rule 13d-3 under the Exchange Act
on behalf of whom such holder holds the Old
Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that
receives New Capital Securities for its own
account pursuant to the Exchange Offer must
acknowledge that it acquired the Old Capital
Securities for its own account as a result of
market-making activities or other trading
activities and must agree that it will
deliver a prospectus meeting the requirements
of the Securities Act in connection with any
resale of such New Capital Securities. The
Letter of Transmittal states that by so
acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit
that it is an "underwriter" within the
meaning of the Securities Act. Based on the
position taken by the staff of the Division
of Corporation Finance of the Commission in
the interpretive letters referred to above,
the Company, CHL and the Trust believe that
broker-dealers who acquired Old Capital
Securities for their own accounts, as a
result of market-making or other trading
activities (i.e., Participating Broker-
Dealers) may fulfill their prospectus
delivery requirements with respect to the New
Capital Securities received upon exchange of
such Old Capital Securities (other than Old
Capital Securities which represent an unsold
allotment from the original sale of the Old
Capital Securities) with a prospectus meeting
the requirements of the Securities Act, which
may be the prospectus prepared for an
exchange offer so long as it contains a
description of the plan of distribution with
respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as
it may be amended or supplemented from time
to time, may be used by a Participating
Broker-Dealer during the period referred to
below in connection with resales of New
Capital Securities received in exchange for
Old Capital Securities where such Old Capital
Securities were acquired by such
Participating Broker-Dealer for its own
account as a result of market-making or other
trading activities. Subject to certain
provisions set forth in the Registration
Rights Agreement, the Company, CHL and the
Trust have agreed that this Prospectus, as it
may be amended or supplemented from time to
time, may be used by a Participating Broker-
Dealer in connection with resales of such New
Capital Securities for a period ending 90
days after the Registration Statement of
which this Prospectus constitutes a part is
declared effective. However, a Participating
Broker-Dealer who intends to use this
Prospectus in connection with the resale of
New Capital Securities received in exchange
for Old Capital Securities pursuant to the
Exchange Offer must notify the Company, CHL
and the Trust, or cause the Company, CHL and
the Trust to be notified, on or prior to the
Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in
the space provided for that purpose in the
Letter of Transmittal or may be delivered to
the Exchange Agent at one of the addresses
set forth herein under "The Exchange Offer -
Exchange Agent." Any Participating Broker-
Dealer who is an "affiliate" of the Company,
CHL or the Trust may not rely on such
interpretive letters and must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Participating Broker-
Dealer who surrenders Old Capital Securities
pursuant to the Exchange Offer will be deemed
to have agreed, by execution of the Letter of
Transmittal, that, upon receipt of notice
from the Company, CHL or the Trust of the
occurrence of any event or the discovery of
any fact which makes any statement contained
in this Prospectus untrue in any material
respect or which causes this Prospectus to
omit to state a material fact necessary in
order to make the statements contained
herein, in light of the circumstances under
which they were made, not misleading or of
the occurrence of certain other events
specified in the Registration Rights
Agreement, such Participating Broker-Dealer
will suspend the sale of New Capital
Securities pursuant to this Prospectus until
the Company, CHL and the Trust have amended
or supplemented this Prospectus to correct
such misstatement or omission and has
furnished copies of the amended or
supplemented Prospectus to such Participating
Broker-Dealer or the Company, CHL or the
Trust have given notice that the sale of the
New Capital Securities may be resumed, as the
case may be. See "The Exchange Offer -
Resales of New Capital Securities."
Expiration Date: The Exchange Offer will expire at 5:00 p.m.,
New York City time, on ________, 1997, unless
extended, in which case the term "Expiration
Date" shall mean the latest date and time to
which the Exchange Offer is extended. Any
extension, if made, will be publicly
announced through a release to the Dow Jones
News Service and as otherwise required by
applicable law or regulations. See "The
Exchange Offer - Expiration Date; Extensions;
Amendments."
Conditions to the The Exchange Offer is not conditioned upon
Exchange Offer: any minimum liquidation amount of Old Capital
Securities being tendered for exchange.
However, the Exchange Offer is subject to
certain conditions, which may be waived by
the Trust, and to the terms and provisions of
the Registration Rights Agreement. See "The
Exchange Offer - Conditions of the Exchange
Offer."
The Company, CHL and the Trust reserve the
right, in their sole discretion, subject to
applicable law, (i) to delay accepting any
Old Capital Securities, (ii) to terminate the
Exchange Offer if any conditions set forth
under "The Exchange Offer - Conditions of the
Exchange Offer" shall not have been
satisfied, (iii) to extend the Expiration
Date of the Exchange Offer and retain all Old
Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the
right of holders of Old Capital Securities to
withdraw their tendered Old Capital
Securities and (iv) to waive any condition or
otherwise amend the terms of the Exchange
Offer in any manner. See "The Exchange Offer
- Expiration Date; Extensions; Amendments."
Procedures for Each holder of Old Capital Securities wishing
Tendering Old to tender their Old Capital Securities
Capital pursuant to the Exchange Offer must complete,
Securities: sign and date the Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein,
and mail or otherwise deliver such Letter of
Transmittal, or a facsimile thereof, together
with any other required documentation, and
either with the Old Capital Securities to be
tendered or in compliance with the specified
procedures for guaranteed delivery of Old
Capital Securities, to The Bank of New York,
as exchange agent (the "Exchange Agent"), at
the address set forth herein and therein or
effect a tender of such Old Capital
Securities pursuant to the procedures for
book-entry transfers as provided herein and
in the Letter of Transmittal. See "The
Exchange Offer - Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should
not be sent to the Company, CHL or the Trust.
Such documents should only be sent to the
Exchange Agent. Questions regarding how to
tender and requests for information should be
directed to the Exchange Agent. See "The
Exchange Offer - Exchange Agent."
Special Procedures Any beneficial owner whose Old Capital
for Beneficial Securities are registered in the name of a
Owners: broker, dealer, commercial bank, trust
company or other nominee and who wishes to
tender such Old Capital Securities in the
Exchange Offer should contact such registered
holder promptly and instruct such registered
holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering such
owner's Old Capital Securities, either make
appropriate arrangements to register
ownership of the Old Capital Securities in
such owner's name or obtain a properly
completed bond power from the registered
holder. The transfer of registered ownership
may take considerable time and may not be
able to be completed prior to the Expiration
Date. See "The Exchange Offer - Procedures
for Tendering Old Capital Securities."
Guaranteed Holders of Old Capital Securities who wish to
Delivery tender their Old Capital Securities and whose
Procedures: Old Capital Securities are not immediately
available or who cannot deliver their Old
Capital Securities, the Letter of Transmittal
or any other documents required by such
Letter of Transmittal to the Exchange Agent
prior to the Expiration Date or who cannot
complete the procedures for book-entry
transfer on a timely basis, must tender their
Old Capital Securities according to the
guaranteed delivery procedures set forth in
"The Exchange Offer - Procedures for
Tendering Old Capital Securities - Guaranteed
Delivery."
Untendered Old Holders of Old Capital Securities that are
Capital eligible to participate in the Exchange Offer
Securities: whose Old Capital Securities are not tendered
and accepted in the Exchange Offer will
continue to hold such Old Capital Securities
and will be entitled to all the rights and
preferences, and, except as described herein,
will be subject to the limitations applicable
thereto, under the Declaration. Following
consummation of the Exchange Offer, such
holders of Old Capital Securities will
continue to be subject to any existing
restrictions upon transfer thereof, and none
of the Company, CHL and the Trust will have
any further obligation to such holders (other
than under certain limited circumstances) to
provide for the registration under the
Securities Act of the Old Capital Securities
held by them and the Distribution Rate on the
New Capital Securities will not be subject to
increase as the Distribution Rate on the Old
Capital Securities. To the extent that Old
Capital Securities are tendered and accepted
in the Exchange Offer, the liquidation amount
outstanding of Old Capital Securities will be
reduced by the liquidation amount so
exchanged. Accordingly, a holder's ability
to sell untendered Old Capital Securities
could be adversely affected.
Consequences of Except for Old Capital Securities that become
Failure unrestricted securities as a result of
to Exchange: transfers in accordance with Regulation S
under the Securities Act, any Old Capital
Securities that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Old Capital
Securities (if the holders thereof are not
entitled to the benefit of the shelf
registration statement described below) may
be resold only (i) to CHL, (ii) pursuant to
Rule 144A or Rule 144 under the Securities
Act or pursuant to some other exemption from
registration under the Securities Act, (iii)
outside the United States pursuant to the
requirements of Regulation S under the
Securities Act or (iv) pursuant to an
effective registration statement under the
Securities Act. See "The Exchange Offer -
Consequences of Failure to Exchange" and "-
Shelf Registration Statement" and "Risk
Factors - Consequences of a Failure to
Exchange Old Capital Securities." The New
Capital Securities and any Old Capital
Securities which remain outstanding after
consummation of the Exchange Offer will
constitute a single class of Capital
Securities under the Declaration and,
accordingly, will vote together as a single
class for purposes of determining whether
holders of the requisite percentage in
outstanding liquidation amount thereof have
taken certain actions or exercised certain
rights under the Declaration. See
"Description of Capital Securities - General"
and " - Voting Rights; Amendment of the
Declaration."
Shelf Registration If (i) the Company, CHL and the Trust are not
Statement: required to file an Exchange Offer
Registration Statement or permitted to
consummate the Exchange Offer because the
Exchange Offer is not permitted by applicable
law or Commission policy, (ii) CHL has
received an opinion of counsel rendered by a
law firm having a recognized national tax
practice, to the effect that, as a result of
the consummation of the Exchange Offer, there
is more than an insubstantial risk that (x)
the Trust would be subject to United States
federal income tax with respect to income
received or accrued on the Debentures, (y)
interest payable by CHL on such Debentures
would not be deductible by CHL, in whole or
in part, for United States federal income tax
purposes or (z) the Trust would be subject to
more than a de minimis amount of other taxes,
duties or other governmental charges or (iii)
any holder of Old Capital Securities provides
CHL with an opinion of counsel on or before
the twentieth Business Day (as defined
herein) following the consummation of the
Exchange Offer to the effect that (A) such
holder is prohibited by law or Commission
policy from participating in the Exchange
Offer, (B) such holder may not resell the New
Capital Securities it acquired in the
Exchange Offer to the public without
delivering a prospectus and this Prospectus
is not appropriate or available for such
resales or (C) such holder is a broker-dealer
and owns Old Capital Securities acquired
directly from the Trust or an affiliate of
the Trust, then the Company, CHL and the
Trust will use their reasonable best efforts
to file a shelf registration statement with
respect to the resale of Old Capital
Securities (the "Shelf Registration
Statement") with the Commission on or prior
to 150 days after such filing obligation
arises and to cause the Shelf Registration
Statement to be declared effective by the
Commission on or prior to 180 days after such
obligation arises and to keep the Shelf
Registration Statement effective for two
years from the date of the original issuance
of the Old Capital Securities; provided,
however, that if the Company or CHL is
engaged in a material acquisition or
disposition and in certain other
circumstances, the Company, CHL and the Trust
may suspend offers and sales under the Shelf
Registration Statement, subject to certain
conditions, for up to 30 days in each year
during which the Shelf Registration Statement
is required to be effective. See "The
Exchange Offer - Shelf Registration
Statement."
Acceptance of Old Subject to certain conditions (as described
Capital Securities more fully in the "The Exchange Offer -
and Delivery of Conditions of the Exchange Offer"), the Trust
New Capital will accept for exchange any and all Old
Securities: Capital Securities which are properly
tendered in the Exchange Offer and not
withdrawn, prior to 5:00 p.m., New York City
time, on the Expiration Date. The New
Capital Securities issued pursuant to the
Exchange Offer will be delivered as promptly
as practicable following the Expiration Date.
Withdrawal Rights: Except as otherwise provided herein, tenders
of Old Capital Securities may be withdrawn at
any time prior to 5:00 p.m., New York City
time, on the Expiration Date. See "The
Exchange Offer - Withdrawal Rights."
Tax For a discussion of certain U.S. federal tax
Considerations: considerations relating to the exchange of
the New Capital Securities for the Old
Capital Securities and the purchase,
ownership and disposition of New Capital
Securities, see "Certain United States
Federal Income Tax Consequences."
Exchange Agent: The Bank of New York is the Exchange Agent.
The addresses, telephone numbers and
facsimile numbers of the Exchange Agent are
set forth in "The Exchange Offer - Exchange
Agent" and in the Letter of Transmittal.
Summary of Terms of the New Capital Securities
General: The form and terms of the New Capital
Securities will be identical in all material
respects to the form and terms of the Old
Capital Securities (which they replace)
except that (i) the New Capital Securities
will have been registered under the
Securities Act and therefore will not contain
terms with respect to transfer restrictions,
(ii) the Distribution Rate on the New Capital
Securities will not be subject to increase in
certain circumstances relating to the timing
of the Exchange Offer and (iii) the holders
of New Capital Securities will not be
entitled to certain rights under the
Registration Rights Agreement, which rights
will terminate when the Exchange Offer is
consummated. The New Capital Securities will
evidence the same undivided beneficial
ownership interests in the assets of the
Trust as the Old Capital Securities and,
except as described herein, will be entitled
to the benefits of the Declaration. See
"Description of Capital Securities."
Distributions: Holders of New Capital Securities will be
entitled to receive Distributions at a rate
per annum equal to 8.05% of the stated
liquidation amount of $1,000 per New Capital
Security (the "Distribution Rate"), accruing
from the most recent date on which
Distributions were made on the Old Capital
Securities or, if no Distributions have been
made on the Old Capital Securities, from June
4, 1997, and payable semi-annually in arrears
on June 15 and December 15 of each year,
commencing December 15, 1997, and at
maturity. The Distribution Rate,
distribution payment dates and other payment
dates for the New Capital Securities will
correspond to the interest rate, interest
payment dates and other payment dates on the
New Debentures. See "Description of Capital
Securities - Distributions."
New Debentures: $206,200,000 aggregate principal amount of
New Debentures, to be exchanged for the Old
Debentures. The Company will fully and
unconditionally guarantee payment of
principal of, premium, if any, and interest
on the New Debentures as hereinafter
described. The New Debentures will mature on
June 15, 2027, or earlier in certain
circumstances, following the occurrence of a
Tax Event (the "Stated Maturity").
The New Debentures and the New Debt Guarantee
will rank subordinate and junior in right of
payment to all existing and future Senior
Indebtedness of CHL and the Company,
respectively, and will rank pari passu with
the 1996 Debentures and the related guarantee
by the Company, respectively. At all times,
CHL's obligations under the New Debentures
and the Company's obligations under the New
Debt Guarantee will be structurally
subordinated to all existing and future
liabilities and obligations of CHL's and the
Company's subsidiaries, respectively. See
"Risk Factors - Ranking of Obligations Under
the Guarantees and the New Debentures" and
"Description of New Debentures and New Debt
Guarantee - Ranking."
Guarantees: Payment of Distributions out of moneys held
by the Trust, and payments on liquidation of
the Trust or the redemption of Capital
Securities, are guaranteed by the Company to
the extent the Trust has funds available
therefor, which funds will not be available
except to the extent CHL has made payments
of interest or principal or other payments
on the New Debentures or the Company has
made such payments pursuant to the New Debt
Guarantee. If CHL does not make payments on
the New Debentures, and the Company does not
make such payments, to the extent required,
under the New Debt Guarantee, the Trust will
not have sufficient funds to make payments
on the Capital Securities, in which event
the Trust Guarantee will not apply to such
payments until the Trust has sufficient
funds available therefor. The Company's
obligations under the Guarantees, the
Indenture and the Declaration, taken
together with CHL's obligations under the
New Debentures and the Indenture, including
CHL's obligation to pay all costs, expenses
and liabilities of the Trust (other than
with respect to the Trust Securities),
constitute a full and unconditional
guarantee by the Company of all of the
Trust's obligations under the Capital
Securities. See "Description of Trust
Guarantee" and "Relationship Among the
Capital Securities, the New Debentures and
the Guarantees." The obligations of the
Company under the New Guarantees will be
subordinate and junior in right of payment
to all existing and future Senior
Indebtedness of the Company. See "Risk
Factors - Ranking of Obligations Under the
Guarantees and the New Debentures,"
"Description of Trust Guarantee" and
"Description of New Debentures and New Debt
Guarantee - Ranking."
Right to Defer CHL has the right to defer payment of
Interest: interest on the New Debentures by extending
the interest payment period on the New
Debentures, from time to time, for up to 10
consecutive semi-annual periods. There could
be multiple Extension Periods of varying
lengths throughout the term of the New
Debentures. If interest payments on the New
Debentures are so deferred, Distributions on
the Capital Securities will also be deferred
for an equivalent period and (a) the Company
and CHL shall not declare or pay dividends
on, or make a distribution with respect to,
or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of
its capital stock (other than (i) purchases
or acquisitions of shares of any such
capital stock or rights to acquire such
capital stock in connection with the
satisfaction by the Company or CHL,
respectively, of its obligations under any
employee benefit plans, (ii) as a result of
a reclassification of the Company's or CHL's
capital stock or rights to acquire such
capital stock or the exchange or conversion
of one class or series of the Company's or
CHL's capital stock or rights to acquire
such capital stock for another class or
series of the Company's or CHL's capital
stock or rights to acquire such capital
stock, (iii) the purchase of fractional
interests in shares of the Company's or
CHL's capital stock pursuant to the
conversion or exchange provisions of such
capital stock or the security being
converted or exchanged or (iv) dividends and
distributions made on the Company's or CHL's
capital stock or rights to acquire such
capital stock with the Company's or CHL's
capital stock or rights to acquire such
capital stock) or make any guarantee
payments with respect to any of the
foregoing and (b) the Company and CHL shall
not make any payment of interest, principal
or premium, if any, on or repay, repurchase
or redeem any debt securities (including any
guarantees, other than the Guarantees)
issued by the Company or CHL that rank pari
passu with or junior to the New Debentures.
During an Extension Period, interest on the
New Debentures will continue to accrue (and
the amount of Distributions to which holders
of the Capital Securities are entitled will
accumulate) at the Distribution Rate,
compounded semi-annually. During an
Extension Period, holders of the New Capital
Securities will be required to include the
stated interest on their pro rata share of
New Debentures in their income as OID,
subject to United States federal income tax,
even though the cash payments attributable
thereto have not been made. See "Description
of New Debentures and New Debt Guarantee -
Option to Extend Interest Payment Period"
and "Certain United States Federal Income
Tax Consequences - Interest Income and
Original Issue Discount."
Redemption: The Trust Securities will be mandatorily
redeemed upon repayment of the New
Debentures held by the Trust at maturity or
their earlier redemption. The New Debentures
are not redeemable at the option of CHL,
other than in certain circumstances
following the occurrence of a Special Event,
as described under "- Special Event" below.
Special Event: Upon the occurrence and continuation of a
Special Event, CHL will have the right, if
certain conditions are met, (i) in the case
of a Tax Event, to shorten the Stated
Maturity of the New Debentures to a date not
earlier than December 15, 2011 or (ii) to
redeem the New Debentures in whole (but not
in part) within 90 days following the
occurrence of such Special Event (at a
redemption price equal to 100% of the
principal amount of such New Debentures,
plus accrued and unpaid interest to the date
of redemption) and thereby cause a mandatory
redemption of the Capital Securities. See
"Description of Capital Securities -
Redemption - Special Event Redemption or
Distribution of New Debentures; Shortening
of Stated Maturity."
Liquidation of the The Company has the right at any time to
Trust: dissolve the Trust, and cause the New
Debentures and the New Debt Guarantee to be
distributed to the holders of the Capital
Securities in exchange therefor upon
liquidation of the Trust. In the event of
the liquidation of the Trust, after
satisfaction of the claims of creditors of
the Trust, if any, as provided by applicable
law, the holders of the Capital Securities
will be entitled to receive a liquidation
amount of $1,000 per Capital Security, plus
accumulated and unpaid Distributions thereon
to the date of payment, unless in connection
with such liquidation, New Debentures are
distributed to the holders of the Capital
Securities. If such liquidation amount can
be paid only in part because the Trust has
insufficient assets available to pay in full
the aggregate liquidation amount, then the
amounts payable directly by the Trust on the
Capital Securities shall be paid on a pro
rata basis. The holders of the Common
Securities will be entitled to receive
distributions upon any such liquidation pro
rata with the holders of the Capital
Securities, except that if an Indenture
Event of Default has occurred and is
continuing, the Capital Securities shall
have a priority over the Common Securities.
See "Description of Capital Securities -
Liquidation Distribution Upon Dissolution."
Ratings: The New Capital Securities are expected to
be rated "A" by Standard & Poor's Ratings
Group, "a3" by Moody's Investors Service,
Inc. and "A" by Fitch Investors Service,
Inc., which ratings were the ratings
assigned by such rating agencies to the Old
Capital Securities. A security rating is
not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning
rating organization.
Use of Proceeds: None of the Company, CHL or the Trust will
receive any proceeds from the issuance of the
New Capital Securities pursuant to this
Prospectus. See "Use of Proceeds."
Absence of a The New Capital Securities will be a new
Public Market for issue of securities for which there currently
the New Capital is no established trading market. The Trust
Securities: has been advised by the Initial Purchasers
that following completion of the Exchange
Offer, they currently intend to make a market
in the New Capital Securities; however, they
are not obligated to do so and any market-
making activities with respect to the New
Capital Securities may be discontinued at any
time. There can be no assurance that an
active trading market for the New Capital
Securities will develop. The Trust and the
Company do not currently intend to apply for
listing of the New Capital Securities on the
NYSE. See "Risk Factors - Absence of Public
Market for the New Capital Securities."
Risk Factors
For a discussion of certain matters that should be
considered in evaluating an investment in the New Capital
Securities, see "Risk Factors."
ERISA Considerations
Prospective investors must carefully consider the
restrictions on purchase set forth under "ERISA Considerations."
Summary Historical Financial Information
The summary consolidated financial data with respect to the
Company set forth below for each of the five fiscal years in the
period ended February 28, 1997 have been derived from, and should
be read in conjunction with, the Company's related audited
financial statements and accompanying notes incorporated by
reference herein. The consolidated financial information
presented below as of and for the three-month periods ended
May 31, 1997 and May 31, 1996 is unaudited; however, in the
opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation have
been included. The results of operations for the three-month
period ended May 31, 1997 are not necessarily indicative of the
results of operations that may be expected for the full year.
See "Incorporation of Certain Information by Reference."
<TABLE>
<CAPTION>
Three Months
Ended
May 31, Years Ended February 28 (29)
1997 1996 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
(in thousands, except Operating Data)
SELECTED STATEMENT OF
EARNINGS DATA:
Revenues:
<S> <C> <C> <C> <C> <C> <C> <C>
Loan origination fees $53,499 $55,949 $193,079 $199,724 $203,426 $379,533 $241,584
Gain (loss) on sale of loans 90,235 47,080 247,450 92,341 (41,342) 88,212 67,537
--------- --------- ---------- ---------- ---------- ---------- ----------
Loan production revenue 143,734 103,029 440,529 292,065 162,084 467,745 309,121
Interest earned 82,180 88,848 350,263 308,449 249,560 300,999 179,785
Interest charges (81,834) (77,066) (316,705) (281,573) (205,464) (219,898) (128,612)
--------- --------- ---------- ---------- ---------- ---------- ----------
Net interest income 346 11,782 33,558 26,876 44,096 81,101 51,173
Loan servicing income 214,315 179,274 773,715 620,835 460,351 326,695 188,895
Amortization and
impairment/recovery of
mortgage servicing rights (25,956) 48,285 (101,380) (342,811) (95,768) (242,177) (151,362)
Servicing hedge benefit
(expense) (44,743) (100,426) (125,306) 200,135 (40,030) 73,400 74,075
Less write-off of servicing
hedge - - - - (25,600) - -
--------- --------- ---------- ---------- ---------- ---------- ----------
Net loan administration
income 143,616 127,133 547,029 478,159 298,953 157,918 111,608
Commissions, fees and other
income 30,949 21,338 91,346 63,642 40,650 48,816 33,656
Gain on sale of servicing - - - - 56,880 - -
--------- --------- ---------- ---------- ---------- ---------- ----------
Total revenues 318,645 263,282 1,112,462 860,742 602,663 755,580 505,558
--------- --------- ---------- ---------- ---------- ---------- ----------
Expenses:
Salaries and related expenses 88,041 68,998 286,884 229,668 199,061 227,702 140,063
Occupancy and other office
expenses 38,066 29,898 129,877 106,298 102,193 101,691 64,762
Guarantee fees 42,576 37,501 159,360 121,197 85,831 57,576 29,410
Marketing expenses 10,320 8,824 34,255 27,115 23,217 26,030 12,974
Other operating expenses 24,939 18,677 80,188 50,264 37,016 43,481 24,894
Branch and administrative
office consolidation costs - - - - 8,000 - -
--------- --------- ---------- ---------- ---------- ---------- ----------
Total expenses 203,942 163,898 690,564 534,542 455,318 456,480 272,103
--------- --------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes 114,703 99,384 421,898 326,200 147,345 299,100 233,455
Provision for income taxes 44,734 38,760 164,540 130,480 58,938 119,640 93,382
--------- --------- ---------- ---------- ---------- ---------- ----------
Net earnings $69,969 60,624 257,358 195,720 88,407 179,460 140,073
========= ========= ========== ========== ========== ========== ==========
SELECTED BALANCE SHEET DATA
AT END OF PERIOD:
Mortgage loans and mortgage-
backed securities shipped
and held for sale $4,580,769 $4,816,886 $2,579,972 $4,740,087 $2,898,825 $3,714,261 $2,316,297
Total assets 10,303,957 9,241,207 8,089,292 8,657,653 5,710,182 5,631,061 3,369,499
Short-term debt 4,240,271 4,873,088 2,567,420 4,423,738 2,664,006 3,111,945 1,579,68
Long-term debt 2,785,661 1,867,500 2,367,661 1,911,800 1,499,306 1,197,096 734,762
Convertible preferred stock - - - - - - 25,800
Common shareholders' equity 1,682,969 1,376,428 1,611,531 1,319,755 942,558 880,137 693,105
OPERATING DATA (DOLLAR
AMOUNTS IN MILLIONS):
Loan servicing portfolio (at
period end)(1) $163,466 $143,438 $158,585 $136,835 $113,111 $84,678 $54,484
Volume of loans originated 9,360 11,002 37,811 34,584 27,866 52,459 32,388
Ratio of earnings to fixed
charges(2) 2.37 2.26 2.30 2.13 1.69 2.32 2.76
- ----------
<FN>
(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).
</FN>
</TABLE>
RISK FACTORS
Before investing in the New Capital Securities, prospective
investors should carefully review the information contained
elsewhere in this Prospectus and should particularly consider the
following matters.
Enforcement of Certain Rights by Holders of Capital Securities
If a Trust Enforcement Event (as defined herein) occurs and
is continuing, then the holders of the Capital Securities would
rely on, and in certain circumstances could cause, the
enforcement by the Property Trustee (as defined herein) of its
rights as a holder of the New Debentures and the New Debt
Guarantee on behalf of the Trust against CHL and the Company,
respectively. In addition, the holders of a majority in
liquidation amount of the Capital Securities will have the right
to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or to direct the
exercise of any trust or power conferred upon the Property
Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a
holder of the New Debentures and the New Debt Guarantee. If the
Property Trustee fails to enforce its rights with respect to the
New Debentures or the New Debt Guarantee held by the Trust after
a majority in liquidation amount of the Capital Securities have
so directed the Property Trustee, any registered holder of
Capital Securities may institute a legal proceeding directly
against CHL to enforce the Property Trustee's rights under such
New Debentures or against the Company to enforce the Property
Trustee's rights under the New Debt Guarantee without first
instituting any legal proceeding against the Property Trustee or
any other person or entity.
If CHL were to default on its obligation to pay amounts
payable under the New Debentures and the Company does not make
such payments, to the extent required, under the New Debt
Guarantee, the Trust would lack funds for the payment of
Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the
Capital Securities would not be able to rely upon the Trust
Guarantee for payment of such amounts. However, in the event CHL
failed to pay interest on, premium, if any, or principal of the
New Debentures on the payment dates on which such payments are
due and payable (including on any redemption date) and the
Company does not make such payments, to the extent required,
under the New Debt Guarantee, then a registered holder of Capital
Securities may directly institute a proceeding against CHL or the
Company, as the case may be, on or after such respective due
dates specified in the New Debentures for enforcement of payment
to such holder of the interest on, premium, if any, or principal
of such New Debentures having an aggregate principal amount equal
to the aggregate liquidation amount of the Capital Securities of
such holder (a "Direct Action"). In connection with such Direct
Action, the Company will be subrogated to the rights of such
holder of Capital Securities under the Declaration to the extent
of any payment made by the Company, pursuant to the New Debt
Guarantee, to such holder of Capital Securities in such Direct
Action. Except as described herein, holders of Capital Securities
will not be able to exercise directly any other remedy available
to the holders of New Debentures or assert directly any other
rights in respect of the New Debentures or the New Debt
Guarantee. See "Description of Capital Securities - Trust
Enforcement Events," "Description of Trust Guarantee" and
"Description of New Debentures and New Debt Guarantee - Indenture
Events of Default." In the case of the issuance of one or more
New Capital Securities in registered global form (the "Global
Securities"), the record owner will be The Depository Trust
Company ("DTC") or its nominee for credit to the account of
Participants (as defined herein) in DTC. Persons who are not
direct or indirect Participants may beneficially own such Global
Securities only through such direct or indirect Participants. See
"Book-Entry Issuance." The Declaration provides that each holder
of Capital Securities by acceptance thereof agrees to the
provisions of the Guarantees and the Indenture.
Ranking of Obligations under the Guarantees and the New Debentures
The obligations of CHL under the New Debentures and the
Indenture and the obligations of the Company under the Guarantees
and the Indenture will be unsecured and rank subordinate and
junior in right of payment to all existing and future Senior
Indebtedness of the Company and CHL, respectively, but will at
all times be senior to common and preferred equity of the Company
and CHL, respectively. In addition, at all times such obligations
will be structurally subordinated to all existing and future
liabilities and obligations of the Company's and CHL's
subsidiaries, respectively. At May 31, 1997, after giving pro
forma effect to the Offerings, CHL would have had approximately
$6.5 billion aggregate principal amount of Senior Indebtedness
outstanding and the Company would have had no indebtedness
outstanding (excluding indebtedness of subsidiaries guaranteed by
the Company). In addition, at such date, subsidiaries of the
Company (other than CHL) had outstanding indebtedness of
approximately $43 million.
The terms of the Capital Securities, the New Debentures and
the Guarantees place no limitation on the amount of Senior
Indebtedness that may be incurred by the Company or CHL or on the
amount of liabilities and obligations of the Company's or CHL's
subsidiaries. See "Description of Trust Guarantee - Status of the
Trust Guarantee" and "Description of New Debentures and New Debt
Guarantee - Ranking."
Trust Guarantee Covers Distribution and Other Payments Only to
the Extent the Trust Has Available Funds; Related Remedies
The following payments or distributions with respect to the
Capital Securities, to the extent not paid by or on behalf of the
Trust (the "Trust Guarantee Payments"), will be subject to the
Trust Guarantee: (i) any accumulated and unpaid Distributions
required to be paid on the Capital Securities, to the extent that
the Trust has sufficient funds available therefor at such time,
(ii) the Redemption Price (as defined herein) with respect to any
Capital Securities called for redemption, to the extent that the
Trust has sufficient funds available therefor at such time, or
(iii) upon a voluntary or involuntary dissolution, winding up or
liquidation of the Trust (unless the New Debentures are
distributed to holders of the Capital Securities), the lesser of
(a) the aggregate liquidation amount of the Capital Securities
and all accrued and unpaid Distributions thereon to the date of
payment, to the extent that the Trust has sufficient funds
available therefor at such time, and (b) the amount of assets of
the Trust remaining available for distribution to holders of
Capital Securities. The Company's obligation to make a Trust
Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the Capital
Securities or by causing the Trust to pay such amounts to such
holders.
The Trust Guarantee will apply only to the extent that the
Trust has sufficient funds available to make such payments.
If CHL does not make payments on the New Debentures held by
the Trust and the Company does not make such payments, to the
extent required, under the New Debt Guarantee, the Trust will not
be able to make payments on the Capital Securities and will not
have funds legally available therefor. The Trust Guarantee does
not limit the incurrence or issuance of other secured or
unsecured debt of the Company, whether under any existing
indenture or under any other indenture that the Company may enter
into in the future or otherwise.
An event of default under the Trust Guarantee will occur
upon the failure of the Company to perform any of its payment or
other obligations thereunder. The holders of not less than a
majority in aggregate liquidation amount of the Capital
Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust
Securities Guarantee Trustee (as defined herein) in respect of
the Trust Guarantee or to direct the exercise of any trust or
power conferred upon the Trust Securities Guarantee Trustee under
the Trust Guarantee. If the Trust Securities Guarantee Trustee
fails to enforce the Trust Guarantee, then any holder of the
Capital Securities may institute a legal proceeding directly
against the Company to enforce the Trust Securities Guarantee
Trustee's rights under the Trust Guarantee without first
instituting a legal proceeding against the Trust, the Trust
Securities Guarantee Trustee or any other person or entity. See
"Description of Trust Guarantee."
Option to Extend Interest Payment Period; Tax Consequences
CHL has the right under the Indenture to defer the payment
of interest on the New Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual
periods, provided that no Extension Period may extend beyond the
Stated Maturity of the New Debentures. As a consequence of any
such deferral, semi-annual Distributions on the Capital
Securities by the Trust will be deferred during such Extension
Period but will continue to accumulate at 8.05% per annum,
compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, CHL may further
extend the Extension Period, provided that no Extension Period
may exceed 10 consecutive semi-annual periods or extend beyond
the Stated Maturity of the New Debentures. Upon the termination
of any Extension Period and the payment of all amounts then due
on any Interest Payment Date, CHL may elect to begin a new
Extension Period subject to the above requirements. See
"Description of Capital Securities - Distributions," "Description
of New Debentures and New Debt Guarantee - Option to Extend
Interest Payment Period" and "- Certain Covenants of CHL and the
Company."
During any Extension Period, a holder of Capital Securities
will be required to accrue income (in the form of OID) for United
States federal income tax purposes in respect of its pro rata
share of the New Debentures held by the Trust. As a result,
holders of Capital Securities will include such income in their
income subject to United States federal income tax, in advance of
the receipt of cash attributable to such income, and will not
receive the cash related to such income from the Trust if the
holder disposes of the Capital Securities prior to the record
date for the payment of Distributions with respect to such
Extension Period. See "Certain United States Federal Income Tax
Consequences - Interest Income and Original Issue Discount" and
"- Sales of New Capital Securities."
CHL has no current intention of exercising its right to
defer payments of interest by extending any interest payment
period on the New Debentures. However, should CHL elect to
exercise such right in the future, the market price of the
Capital Securities is likely to be adversely affected. A holder
that disposes of its Capital Securities during an Extension
Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Capital
Securities. In addition, as a result of the existence of CHL's
right to defer interest payments, the market price of the Capital
Securities (which represent undivided beneficial ownership
interests in the New Debentures and the New Debt Guarantee) may
be more volatile than the market prices of other similar
securities where the issuer does not have such right to defer
interest payments.
Liquidation Distribution of New Debentures
At any time, the Company will have the right to dissolve the
Trust and, after the satisfaction of liabilities to creditors of
the Trust (if any), cause the New Debentures, together with the
New Debt Guarantee, to be distributed to the holders of the Trust
Securities in liquidation of the Trust. In addition, upon certain
other events, the Trust may be liquidated and the New Debentures
and the New Debt Guarantee may be distributed to such holders.
Under current United States federal income tax law and
interpretations thereof and assuming, as expected, the Trust is
treated as a grantor trust for United States federal income tax
purposes, a distribution by the Trust of the New Debentures and
the New Debt Guarantee pursuant to a liquidation of the Trust
will not be a taxable event to the Trust or to holders of the
Capital Securities and will result in a holder of the Capital
Securities receiving directly such holder's pro rata share of the
New Debentures and the New Debt Guarantee (previously held
indirectly through the Trust). If, however, the liquidation of
the Trust were to occur because the Trust is subject to United
States federal income tax with respect to income accrued or
received on the New Debentures as a result of the occurrence of a
Tax Event or otherwise, the distribution of New Debentures and
the New Debt Guarantee to holders of the Capital Securities by
the Trust could be a taxable event to the Trust and each holder,
and holders of the Capital Securities may be required to
recognize gain or loss as if they had exchanged their Capital
Securities for the New Debentures and the New Debt Guarantee they
received upon the liquidation of the Trust. See "Certain United
States Federal Income Tax Consequences - Distribution of New
Debentures or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for the
Capital Securities or the New Debentures and the New Debt
Guarantee that may be distributed in exchange for the Capital
Securities if a dissolution or liquidation of the Trust occurs.
Accordingly, the Capital Securities that an investor may receive
or purchase, whether pursuant to the Exchange Offer or in the
secondary market, or the New Debentures and the New Debt
Guarantee that a holder of Capital Securities may receive on
dissolution or liquidation of the Trust, may trade at a discount
to the price that the investor paid to purchase the Capital
Securities. Because the ability of the Trust to pay amounts due
on the Capital Securities is wholly dependent upon CHL's making
payments on the New Debentures as and when required, or the
Company's making payments on the New Debt Guarantee as and when
required, and because holders of the Capital Securities may
receive the New Debentures and the New Debt Guarantee upon a
dissolution of the Trust, prospective purchasers of the Capital
Securities are also making an investment decision with regard to
the New Debentures and New Debt Guarantee and should carefully
review all the information regarding the New Debentures, the New
Debt Guarantee, CHL and the Company contained or incorporated
herein, and evaluate the credit risk of CHL and the Company. See
"Description of Capital Securities - Redemption - Special Event
Redemption or Distribution of New Debentures; Shortening of
Stated Maturity" and "Description of New Debentures and New Debt
Guarantee - General."
Special Event Redemption; Shortening of Stated Maturity
Upon the occurrence and continuation of a Special Event, CHL
will have the right, if certain conditions are met, (i) in the
case of a Tax Event, to shorten the Stated Maturity of the New
Debentures to a date not earlier than December 15, 2011 or
(ii) to redeem the New Debentures in whole (but not in part)
within 90 days following the occurrence of such Special Event at
a redemption price equal to 100% of the aggregate principal
amount of such New Debentures, plus accrued and unpaid interest
to the date of redemption, and thereby cause a mandatory
redemption of the Capital Securities. See "Description of Capital
Securities - Redemption - Special Event Redemption or
Distribution of New Debentures; Shortening of Stated Maturity."
There can be no assurance as to the market prices for the
Capital Securities (or the New Debentures that may be distributed
in exchange for Capital Securities if a dissolution or
liquidation of the Trust were to occur) if the Stated Maturity of
the New Debentures is shortened. Accordingly, the Capital
Securities that an investor may receive or purchase, whether
pursuant to the Exchange Offer or in the secondary market, or the
New Debentures and the New Debt Guarantee that a holder of
Capital Securities may receive on liquidation of the Trust, may
trade at a discount to the price that the investor paid to
purchase the Capital Securities. Because the ability of the
Trust to pay amounts due on the Capital Securities is wholly
dependent upon CHL's making payments on the New Debentures as and
when required, or the Company's making payments on the New Debt
Guarantee as and when required, and because holders of Capital
Securities may receive the New Debentures and the New Debt
Guarantee upon a dissolution of the Trust, prospective purchasers
of Capital Securities are also making an investment decision with
regard to the New Debentures and the New Debt Guarantee and
should carefully review all the information regarding the New
Debentures, the New Debt Guarantee, CHL and the Company contained
or incorporated herein, and evaluate the credit risk of CHL and
the Company. See "Description of Capital Securities - Redemption
- - Special Event Redemption or Distribution of New Debentures;
Shortening of Stated Maturity."
Recent Tax Legislation
Recently enacted U.S. federal income tax legislation will
have no effect on the income tax treatment of the Capital
Securities. However, there can be no assurance that future legislation
will not adversely affect the ability of CHL to deduct interest on the
New Debentures or otherwise affect the tax treatment of the
transactions described herein. Moreover, such legislation could
give rise to a Tax Event, which would permit CHL to shorten the
maturity of the New Debentures or cause a redemption of the
Capital Securities, as described more fully under "Description of
Capital Securities - Redemption - Special Event Redemption or
Distribution of New Debentures; Shortening of Stated Maturity."
Declaration May Be Modified to Effect Adverse Changes to Rights,
Powers and/or Preferences of Capital Securities Without the
Consent of Each Holder of Capital Securities Affected Thereby
The Declaration provides that it may be modified and amended
if approved by the Regular Trustees (as defined herein) (and in
certain circumstances, the Property Trustee and the Delaware
Trustee (as defined herein)), provided that, if any proposed
amendment would (i) adversely affect the powers, preferences or
special rights of the Trust Securities or (ii) result in the
dissolution, winding-up or termination of the Trust other than
pursuant to the terms of the Declaration, then the holders of the
Trust Securities, voting together as a single class, will be
entitled to vote on such amendment, and such amendment shall not
be effective except with the approval of at least a majority in
liquidation amount of the Trust Securities affected thereby;
provided that if any amendment referred to in clause (i) above
would adversely affect only the Capital Securities or the Common
Securities, then only the affected class will be entitled to vote
on such amendment and such amendment shall not be effective
except with the approval of a majority in liquidation amount of
such class of Trust Securities. Notwithstanding any provision of
the Declaration, however, Section 316(b) of the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act") provides that
the right of any holder of Trust Securities to receive payment of
Distributions and other payments upon redemption or otherwise on
or after their respective due dates, or to institute suit for the
enforcement of any such payment on or after such respective due
dates, shall not be impaired or affected without the consent of
such holder. Accordingly, amendments to the Declaration that may
adversely affect the powers, preferences or special rights of the
Capital Securities - other than those affecting a holder's rights
to receive payments on or after their respective due dates and to
institute suit to enforce such payments on or after their
respective due dates as described in Section 316(b) of the Trust
Indenture Act - may be effected with the consent of only a
majority in liquidation amount of Capital Securities rather than
with the consent of each holder of Capital Securities affected
thereby.
Limited Voting Rights
Holders of Capital Securities generally will have limited
voting rights relating only to the modification of the Capital
Securities and certain other matters described herein. Holders
of Capital Securities will not be entitled to vote to appoint,
remove or replace any of the Trustees (as defined herein), which
voting rights are vested exclusively in the holder of the Common
Securities. The Trustees and the Company may amend the
Declaration without the consent of holders of Capital Securities
to ensure that the Trust will be classified as a grantor trust
for United States federal income tax purposes, even if such
action adversely affects the interests of such holders. See
"Description of Capital Securities - Voting Rights; Amendment of
the Declaration."
Absence of Public Market for the New Capital Securities
Although the New Capital Securities will generally be
permitted to be resold or otherwise transferred by the holders
(who are not affiliates of the Company, CHL or the Trust) without
compliance with the registration requirements under the
Securities Act, they will constitute a new issue of securities
with no established trading market. Accordingly, no assurance
can be given that an active public or other market will develop
for the New Capital Securities or as to the liquidity of or the
trading market for the New Capital Securities. The Trust and the
Company do not currently intend to apply for a listing of the New
Capital Securities on the NYSE. If an active public market does
not develop, the market price and liquidity of the New Capital
Securities may be adversely affected.
If a public trading market develops for the New Capital
Securities, future trading prices of such securities will depend
on many factors, including, among other things, prevailing
interest rates, results of operations and the market for similar
securities. Depending on prevailing interest rates, the market
for similar securities and other factors, including the financial
condition of the Company, the New Capital Securities may trade at
a discount.
Notwithstanding the registration of the New Capital
Securities, holders who are "affiliates" (as defined under Rule
405 of the Securities Act) of the Company, CHL or the Trust may
publicly offer for sale or resell the New Capital Securities only
in compliance with the provisions of Rule 144 under the
Securities Act.
Each broker-dealer that receives New Capital Securities for
its own account in exchange for Old Capital Securities, where
such Old Capital Securities were acquired by such broker-dealer
as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See
"Plan of Distribution."
Consequences of a Failure to Exchange Old Capital Securities
The Old Capital Securities have not been registered under
the Securities Act or any state securities laws and therefore may
not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities
Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and
restrictions, including the Trust's and the Property Trustee's
right in certain cases to require the delivery of opinions of
counsel, certifications and other information prior to any such
transfer. After consummation of the Exchange Offer, Old Capital
Securities that remain outstanding will continue to bear legends
restricting transfers. In addition, upon consummation of the
Exchange Offer, holders of Old Capital Securities which remain
outstanding (subject to limited exceptions, if applicable) will
not be entitled to any rights to have such Old Capital Securities
registered under the Securities Act or to any similar rights
under the Registration Rights Agreement. The Trust currently
does not intend to register under the Securities Act any Old
Capital Securities which remain outstanding after consummation of
the Exchange Offer (subject to limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and
accepted in the Exchange Offer, the liquidation amount of
outstanding Old Capital Securities will be reduced by the
liquidation amount so tendered and exchanged and a holder's
ability to sell untendered Old Capital Securities could be
adversely affected. In addition, although the Old Capital
Securities have been designated for trading in the Private
Offerings, Resale and Trading through Automatic Linkages
("PORTAL") market, to the extent that Old Capital Securities are
tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities which remain
outstanding after the Exchange Offer could be adversely affected.
The Old Capital Securities provide for certain Distribution
Rate increases if the Exchange Offer is not consummated by
January 14, 1998. Upon consummation of the Exchange Offer,
holders of Old Capital Securities will not be entitled to any
increase in the Distribution Rate thereon or any further
registration rights under the Registration Rights Agreement,
except under limited circumstances. See "The Exchange Offer -
Purpose and Effect of the Exchange Offer" and "- Shelf
Registration Statement."
The New Capital Securities and any Old Capital Securities
that remain outstanding after consummation of the Exchange Offer
will constitute a single class of Capital Securities under the
Declaration and, accordingly, will vote together as a single
class for purposes of determining whether holders of a requisite
percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the
Declaration. See "Description of Capital Securities - General"
and "- Voting Rights; Amendment of the Declaration."
USE OF PROCEEDS
None of the Company, CHL or the Trust will receive any
proceeds from the issuance of the New Capital Securities offered
hereby. In consideration for issuing the New Capital Securities
as contemplated in this Prospectus, the Trust will receive in
exchange Old Capital Securities in like liquidation amount, the
terms and forms of which are identical in all material respects
to the New Capital Securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of
earnings to fixed charges for the Company and its subsidiaries.
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).
<TABLE>
<CAPTION>
Three Months
Ended
May 31, Year Ended February 28 (29),
1997 1996 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings
to Fixed Charges 2.37 2.26 2.30 2.13 1.69 2.32 2.76
</TABLE>
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated
into the Company's consolidated financial statements, with the
New Capital Securities shown as "Company-Obligated Mandatorily
Redeemable Subordinated Capital Income Securities of Subsidiary
Trust Holding Solely a Company-Guaranteed Related Subordinated
Debt." The Trust's sole assets will be the New Debentures and the
New Debt Guarantee. See "Capitalization."
CAPITALIZATION
The following table sets forth the consolidated
capitalization of the Company at May 31, 1997 on an historical
basis and as adjusted to give effect to the Offerings. The table
should be read in conjunction with the Company's consolidated financial
statements and notes thereto incorporated by reference herein. See
"Incorporation of Certain Information by Reference."
<TABLE>
<CAPTION>
May 31, 1997
--------------------------
Actual Adjusted
------------ -----------
(Dollar amounts in
thousands)
<S> <C> <C>
Long-term debt: $2,785,661 $2,785,661
Company-Obligated Mandatorily
Redeemable preferred securities of
subsidiary trust holding Company-
guaranteed related subordinated
debt(1)........................... 300,000 300,000
Company-Obligated Mandatorily
Redeemable Subordinated Capital
Income Securities of subsidiary
trust holding a Company-
guaranteed related subordinated
debt(2)........................... 0 200,000(3)
Shareholders' equity:
Preferred Stock - authorized
1,500,000 shares of $.05 par
value; issued and outstanding,
none.............................. 0 0
Common Stock - authorized,
240,000,000 shares of $.05 par
value; 106,513,249 issued and
outstanding, shares(4)............ 5,326 5,326
Additional paid-in capital......... 937,061 937,061
Unrealized loss on available-for-
sale securities.................... (39,718) (39,718)
Retained earnings.................. 780,300 780,300
Total shareholders' equity......... 1,682,969 1,682,969
Total Preferred Stock and common
shareholders' equity $1,682,969 $1,682,969
- -------------------
<FN>
(1) Represents the 8% Capital Trust Pass-through Securities of
Countrywide Capital I, a Delaware business trust.
(2) As described herein, the Trust invested the gross proceeds
from the sale of the Common Securities and the Old Capital
Securities in the Old Debentures in an aggregate principal
amount of approximately $206,200,000 on June 4, 1997.
In connection with the Exchange Offer, CHL intends
to exchange the New Debentures for such Old Debentures.
Upon the redemption of such New Debentures, Trust
Securities having an aggregate liquidation amount equal to the
aggregate principal amount of New Debentures being redeemed
will be mandatorily redeemable. None of the Company, CHL or
the Trust will receive any proceeds from the issuance of the
New Capital Securities or the New Debentures. As described
herein, the sole assets of the Trust will be the New
Debentures and the New Debt Guarantee. The Company owns all of
the Common Securities of the Trust.
(3) Reflects the issuance of the Old Capital Securities on June 4,
1997 and the issuance of New Capital Securities in exchange
therefor pursuant to the Exchange Offer. See Note (2).
(4) Does not include 10,155,261 shares reserved for issuance
upon exercise of stock options of which options for 4,159,678
shares were exercisable as of May 31, 1997.
</FN>
</TABLE>
THE COMPANY
The Company is a holding company which through its principal
subsidiary, CHL, is engaged primarily in the mortgage banking
business, and as such originates, purchases, sells and services
mortgage loans. The Company's mortgage loans are principally
prime credit quality first-lien mortgage loans secured by single-
(one-to-four) family residences ("Prime mortgages"). The Company
also offers home equity loans both in conjunction with newly
produced Prime mortgages and as a separate product. In addition,
the Company offers sub-prime credit quality first-lien single-
family mortgage loans ("Sub-prime loans").
The Company, through its other wholly-owned subsidiaries,
offers products and services complementary to its mortgage
banking business. One of these subsidiaries acts as an agent in
the sale of insurance, including homeowners, fire, flood,
earthquake, auto, annuities, home warranty, life and disability,
to CHL's mortgagors and others. The Company also has a
subsidiary that acts as a title insurance agent and provides
escrow, credit reporting and home appraisal services. The
Company also has subsidiaries that reinsure a portion of mortgage
insurance losses on loans originated by the Company that are
insured by the mortgage insurance companies with which the
Company entered into the reinsurance agreement. Another
subsidiary of the Company serves as trustee under deeds of trust
in connection with foreclosures on loans in the Company's
servicing portfolio in California and other states. There is a
subsidiary of the Company which also provides tax services to
ensure that property taxes are paid current at origination and
throughout the life of the loan. On February 28, 1997, the
Company acquired a mutual fund manager which provides investment
advisory services for 15 affiliated mutual funds and individual
investors and management services for unaffiliated funds. The
Company also has a registered broker-dealer subsidiary,
Countrywide Securities Corporation (which is one of the Initial
Purchasers), which trades to other broker-dealers and
institutional investors mortgage-backed securities and other
mortgage-related assets. Through two subsidiaries, the Company
issues mortgage- and asset-backed securities which are backed by
Prime mortgage loans, Sub-prime loans or home equity loans.
The Company 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
4500 Park Granada, Calabasas, California 91302, and its
telephone number is (818) 225-3000.
CHL
CHL, the principal subsidiary of the Company, 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 mortgages. CHL also offers
home equity loans, both in conjunction with newly produced Prime
mortgages and as a separate product, and Sub-prime loans. The
principal sources of revenue of CHL are: (i) loan origination
fees, (ii) gains from the sale of loans, if any, (iii) interest
earned on mortgage loans during the period that they are held by
CHL pending sale, net of interest paid on funds borrowed to
finance such mortgage loans, (iv) loan servicing fees and
(v) interest benefit derived from the custodial balances
associated with CHL's servicing portfolio.
CHL produces mortgage loans through three separate
divisions. The Consumer Markets Division originates 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. To guarantee timely
and full payment of principal and interest on mortgage-backed
securities and whole loans sold to permanent investors and to
transfer the credit risk of the loans in the servicing portfolio,
the Company pays guarantee fees to the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation and the
Government National Mortgage Association.
CHL services substantially all of the mortgage loans that it
originates or purchases. In addition, CHL purchases bulk
servicing contracts 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 the Company of the proceeds of
public offerings of preferred and common stock.
CHL is a New York corporation, originally incorporated in
1969. Its principal executive offices are located at 4500 Park
Granada, Calabasas, California 91302, and its telephone number
is (818) 225-3000.
THE TRUST
The Trust is a statutory business trust formed under the
Delaware Business Trust Act, as amended (the "Trust Act"),
pursuant to (i) a declaration of trust, dated as of May 28, 1997,
as amended and restated as of June 4, 1997 (as so amended and
restated, the "Declaration"), executed by the Company and (ii) a
certificate of trust, dated as of May 28, 1997, filed with the
Secretary of State of the State of Delaware. The Declaration
incorporates such provisions as are required by the Trust
Indenture Act. The Company acquired Common Securities in an
aggregate liquidation amount equal to approximately 3% of the
total capital of the Trust, at the same time as the Old Capital
Securities were sold. The Trust used all the proceeds derived
from the issuance of the Trust Securities to purchase the Old
Debentures and Old Debt Guarantee and, accordingly, the assets of
the Trust currently consist solely of the Old Debentures and the
Old Debt Guarantee. Subsequent to the exchange of New Debentures
for Old Debentures and the Old Guarantee for the New Debt
Guarantee as described herein, the assets of the Trust will
consist solely of the New Debentures and the New Debt Guarantee.
The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities representing undivided beneficial
ownership interests in the assets of the Trust, (ii) investing
the gross proceeds from such sales in the Old Debentures and the
Old Debt Guarantee which will be exchanged for the New Debentures
and the New Debt Guarantee and (iii) engaging in only those other
activities necessary or incidental thereto, including engaging in
the Exchange Offer.
Pursuant to the Declaration, there are five trustees of the
Trust (the "Trustees"). Three of the Trustees (the "Regular
Trustees") are individuals who are employees or officers of or
who are affiliated with the Company. The fourth Trustee is a
financial institution that is unaffiliated with the Company (the
"Property Trustee"). The fifth Trustee is an entity that
maintains its principal place of business in the State of
Delaware (the "Delaware Trustee"). The Bank of New York, a New
York banking corporation, currently acts as Property Trustee, and
its affiliate, The Bank of New York (Delaware), a Delaware
corporation, currently acts as Delaware Trustee, and each will
continue to serve in such capacity until it is removed or
replaced by the Company as holder of the Common Securities. The
Bank of New York also acts as trustee under the Trust Guarantee
and under the Debt Guarantee and will act as trustee under the
New Trust Guarantee (the "Trust Securities Guarantee Trustee")
and the New Debt Guarantee.
The Property Trustee will hold title to the New Debentures
and New Debt Guarantee for the benefit of the holders of the
Trust Securities and, as the holder of the New Debentures and New
Debt Guarantee, the Property Trustee will have the power to
exercise all rights, powers and privileges of a holder of the New
Debentures and New Debt Guarantee under the Indenture. In
addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property
Account") to hold all payments made in respect of the New
Debentures and New Debt Guarantee for the benefit of the holders
of the Trust Securities. The Trust Securities Guarantee Trustee
will hold the New Trust Guarantee for the benefit of the holders
of the Trust Securities. The Property Trustee will make payments
of Distributions and payments on liquidation, redemption and
otherwise to registered holders of the Trust Securities out of
funds in the Property Account. The Company, as the holder of all
the Common Securities, has the right to appoint, remove or
replace any of the Trustees and to increase or decrease the
number of Trustees, provided that the number of Trustees will be
at least three; provided further that at least one Trustee is a
Delaware Trustee, at least one Trustee is the Property Trustee
and at least one Trustee is a Regular Trustee. CHL is obligated
to pay all fees and expenses related to the organization and
operations of the Trust (including any taxes, duties, assessments
or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any other
domestic taxing authority upon the Trust), the Offering and the
Exchange Offer and be responsible for all debts and obligations
of the Trust (other than with respect to the Trust Securities).
For so long as the Capital Securities remain outstanding,
the Company has covenanted (i) to maintain directly or indirectly
100% ownership of the Common Securities, (ii) to cause the Trust
to remain a statutory business trust and not to voluntarily
dissolve, wind-up, liquidate or be terminated, except as
permitted by the Declaration, (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be an
"investment company" for purposes of the Investment Company Act
of 1940, as amended (the "1940 Act") and (iv) to take no action
that would be reasonably likely to cause the Trust to be
classified as an association or a publicly-traded partnership
taxable as a corporation for United States federal income tax
purposes.
The rights of the holders of the Capital Securities,
including economic rights, rights to information and voting
rights, are set forth in the Declaration and the Trust Indenture
Act. See "Description of Capital Securities."
The location of the principal executive office of the Trust
is c/o Countrywide Credit Industries, Inc., 4500 Park Granada,
Calabasas, California 91302, and its telephone number is
(818) 225-3000.
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Old Capital Securities were sold by the Trust on June 4,
1997 to the Initial Purchasers in reliance on Section 4(2) of the
Securities Act. The Initial Purchasers offered and sold the Old
Capital Securities only (i) to "Qualified Institutional Buyers"
(as defined in Rule 144A) in compliance with Rule 144A and (ii)
outside the United States to persons other than U.S. Persons,
which term includes dealers or other professional fiduciaries in
the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust), in reliance
upon Regulation S under the Securities Act.
In connection with the sale of the Old Capital Securities,
the Company, CHL and the Trust and the Initial Purchasers entered
into the Registration Rights Agreement, pursuant to which the
Company, CHL and the Trust agreed to use their respective
reasonable best efforts to file and to cause to be declared
effective by the Commission a registration statement with respect
to the exchange of the Old Capital Securities for capital income
securities with terms identical in all material respects to the
terms of the Old Capital Securities (except as described below).
A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is
a part.
The Exchange Offer is being made pursuant to the
Registration Rights Agreement to satisfy the Company's, CHL's and
the Trust's obligations thereunder with regard to the Old Capital
Securities. The form and terms of the New Capital Securities
will be identical in all material respects to the form and terms
of the Old Capital Securities except that (i) the New Capital
Securities will have been registered under the Securities Act and
therefore will not contain terms with respect to transfer
restrictions, (ii) the Distribution Rate on the New Capital
Securities will not be subject to increase in certain
circumstances relating to the timing of the Exchange Offer and
(iii) the holders of New Capital Securities will not be entitled
to certain rights under the Registration Rights Agreement, which
rights will terminate when the Exchange Offer is consummated.
The Old Capital Securities provide, among other things, that if
the Exchange Offer is not consummated by January 14, 1998 (the
"Targeted Consummation Date"), the Distribution Rate will
increase (as a result of a corresponding increase in interest
payable on the Old Debentures) by $.05 per week per $1,000
liquidation amount of Old Capital Securities during the first 90-
day period following the Targeted Consummation Date and then will
increase by $.05 per week per $1,000 liquidation amount of Old
Capital Securities during each subsequent 90-day period following
the Targeted Consummation Date up to a maximum of $.25 per week
per $1,000 liquidation amount of Old Capital Securities, until
the Exchange Offer is consummated. See "Risk Factors -
Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Capital Securities."
Upon the Registration Statement being declared effective,
the Trust will offer the New Capital Securities in exchange for
surrender of the Old Capital Securities. The Company will keep
the Exchange Offer open for not less than 20 Business Days (or
longer if required by applicable law) after the date notice of
the Exchange Offer is mailed to the holders of the Old Capital
Securities. For each Old Capital Security surrendered to the
Trust pursuant to the Exchange Offer, the holder of such Old
Capital Security will receive a New Capital Security having a
liquidation amount equal to that of the surrendered Old Capital
Security. Distributions on each New Capital Security will accrue
from the last Distribution Payment Date on which Distributions
were made on the Old Capital Security surrendered in exchange
therefor or, if no Distributions have been made on such Old
Capital Security, from June 4, 1997. The term "holder" with
respect to the Exchange Offer means any person in whose name Old
Capital Securities are registered on the Property Trustee's books
or any other person who has obtained a properly completed bond
power from the registered holder, or any person whose Old Capital
Securities are held of record by DTC who desires to deliver such
Old Capital Securities, by book-entry transfer at DTC. See "Book-
Entry Issuance."
As soon as practicable after the Expiration Date, and as an
integral part of their obligations under the Registration Rights
Agreement, the Trust will exchange the Old Trust Guarantee for
the New Trust Guarantee, all of the Old Debentures, of which
$206,200,000 aggregate principal amount is outstanding, for a
like aggregate principal amount of the New Debentures and the Old
Debt Guarantee for the New Debt Guarantee. The New Trust
Guarantee, the New Debentures and the New Debt Guarantee have
been registered under the Securities Act.
The Exchange Offer is not being made to, nor will the Trust
accept surrenders of Old Capital Securities for exchange from,
holders thereof in any jurisdiction in which the Exchange Offer
or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Participation in the Exchange Offer is voluntary and holders
should carefully consider whether to accept. Holders of the Old
Capital Securities are urged to consult their financial and tax
advisors in making their own decisions on whether to participate
in the Exchange Offer.
Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal, to exchange up to $200,000,000 aggregate
liquidation amount of New Capital Securities for a like aggregate
liquidation amount of Old Capital Securities properly tendered on
or prior to the Expiration Date and not properly withdrawn in
accordance with the procedures described below. Upon the terms
and subject to the conditions set forth in this Prospectus and in
the Letter of Transmittal, the Trust will accept any and all Old
Capital Securities validly tendered and not withdrawn prior to
5:00 p.m., New York City time, on the Expiration Date. Subject
to the minimum denomination requirements of the New Capital
Securities, the Trust will issue $1,000 liquidation amount of New
Capital Securities in exchange for each $1,000 liquidation amount
of outstanding Old Capital Securities accepted in the Exchange
Offer. Holders may tender some or all of their Old Capital
Securities pursuant to the Exchange Offer. However, Old Capital
Securities may be tendered only in amounts that are in blocks
having a minimum aggregate liquidation amount of $100,000 (100
Old Capital Securities) and in integral multiples of $1,000
liquidation amount.
The Exchange Offer is not conditioned upon any minimum
aggregate liquidation amount of Old Capital Securities being
tendered for exchange. As of October 1, 1997, $200,000,000
aggregate liquidation amount of Old Capital Securities was
outstanding with one registered holder. This Prospectus,
together with the Letter of Transmittal, is being sent to such
registered holder.
Holders of Old Capital Securities do not have any appraisal
or dissenters' rights under the Declaration in connection with
the Exchange Offer. The Company, CHL and the Trust intend to
conduct the Exchange Offer in accordance with the provisions of
the Registration Rights Agreement and the applicable requirements
of the Exchange Act and the rules and regulations of the
Commission thereunder. Old Capital Securities which are not
tendered for exchange, are tendered but are validly withdrawn or
are tendered but not accepted in connection with the Exchange
Offer will remain outstanding, will continue to be entitled to
the benefits of the Declaration, and Distributions thereon will
continue to accrue, but such Old Capital Securities will not be
entitled to any rights or benefits under the Registration Rights
Agreement, except under limited circumstances. See "Risk Factors
- - Consequences of a Failure to Exchange Old Capital Securities"
and "Description of Capital Securities."
The Trust shall be deemed to have accepted validly tendered
Old Capital Securities when, as and if the Trust has given oral
or written notice thereof to the Exchange Agent. The Exchange
Agent will act as agent for the tendering holders for the
purposes of receiving the New Capital Securities from the Trust.
If any tendered Old Capital Securities are not accepted for
exchange because of an invalid tender, the occurrence of certain
other events set forth herein or otherwise, certificates for any
such unaccepted Old Capital Securities will be returned, without
expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Old Capital Securities in the Exchange
Offer will not be required to pay brokerage commissions or fees
or, subject to the instructions in the Letter of Transmittal,
transfer taxes with respect to the exchange of Old Capital
Securities pursuant to the Exchange Offer. CHL will pay all
charges and expenses, other than certain applicable taxes
described below, in connection with the Exchange Offer. See "-
Fees and Expenses."
Each holder who tenders Old Capital Securities will warrant
and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old
Capital Securities, that the Trust will acquire good, marketable
and unencumbered title to the tendered Old Capital Securities,
free and clear of all liens, restrictions, charges and
encumbrances, and the Old Capital Securities tendered for
exchange are not subject to any adverse claims or proxies. The
holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Trust
or the Exchange Agent to be necessary or desirable to complete
the exchange, sale, assignment, and transfer of the Old Capital
Securities tendered pursuant to the Exchange Offer.
The Trust reserves the right in its sole discretion to
(a) purchase or make offers for any Old Capital Securities that
remain outstanding subsequent to the Expiration Date, (b) as set
forth under "- Expiration Date; Extensions; Amendments," to
terminate the Exchange Offer and (c) to the extent permitted by
applicable law, purchase Old Capital Securities in the open
market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers may differ from the terms
of the Exchange Offer.
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR ANY TRUSTEE OF
THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL
OR ANY PORTION OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE
EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE
ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES MUST
MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND IF SO, THE AGGREGATE LIQUIDATION AMOUNT OF OLD
CAPITAL SECURITIES TO TENDER AFTER READING THIS PROSPECTUS AND
THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISORS, IF
ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York
City time, on , 1997, unless the Company and the
Trust extend the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date and time to which
the Exchange Offer is extended. Although the Company and the
Trust have no current intention to extend the Exchange Offer, the
Company and the Trust reserve the right to extend the Exchange
Offer at any time and from time to time by giving oral or written
notice to the Exchange Agent and by timely public announcement
communicated, unless otherwise required by applicable law or
regulation, by making a release to the Dow Jones News Service.
During any extension of the Exchange Offer, all Old Capital
Securities previously tendered pursuant to the Exchange Offer and
not withdrawn will remain subject to the Exchange Offer. The
date of the exchange of the New Capital Securities for Old
Capital Securities will be the first New York Stock Exchange
trading day following the Expiration Date.
The Company, CHL and the Trust reserve the right, in their
sole discretion, subject to applicable law, (i) to delay
accepting any Old Capital Securities, (ii) to terminate the
Exchange Offer if any of the conditions set forth below under "-
Conditions of the Exchange Offer" shall not have been satisfied
in the good faith determination of the Trust, by giving oral or
written notice of such delay, extension or termination to the
Exchange Agent, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital Securities tendered
pursuant to the Exchange Offer, subject, however, to the right of
holders of Old Capital Securities to withdraw their tendered Old
Capital Securities as described under "- Withdrawal Rights" and
(iv) to waive any condition or otherwise amend the terms of the
Exchange Offer in any manner. If the Exchange Offer is amended
in any manner determined by the Company and the Trust to
constitute a material change, the Company and the Trust will
promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered holders,
the Company and the Trust will extend the Exchange Offer for a
period of time, depending upon the significance of the amendment
and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such period.
Any such delay in acceptance, extension, termination, waiver
or amendment will be followed as promptly as practicable by oral
or written notice thereof to the Exchange Agent and by making
public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City
time, on the next Business Day after the previously scheduled
Expiration Date. Without limiting the manner in which the
Company and the Trust may choose to make any public announcement,
and subject to applicable law, the Company and the Trust shall
have no obligation to publish, advertise or otherwise communicate
any such public announcement other than by issuing a release to
an appropriate news agency.
In all cases, issuance of the New Capital Securities for Old
Capital Securities that are accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the
Exchange Agent of properly completed and duly executed Letters of
Transmittal and all other required documents; provided, however,
that the Trust reserves the absolute right to waive any
conditions of the Exchange Offer or defects or irregularities in
the tender of Old Capital Securities. If any tendered Old
Capital Securities are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Old Capital
Securities are submitted for a greater liquidation amount at
maturity, as the case may be, than the holder desires to
exchange, such unaccepted or non-exchanged Old Capital Securities
or substitute Old Capital Securities evidencing the unaccepted
portion, as appropriate, will be returned without expense to the
tendering holder, unless otherwise provided in the Letter of
Transmittal, as promptly as practicable after the expiration or
termination of the Exchange Offer.
Distributions on the New Capital Securities
Each New Capital Security will pay cumulative Distributions
from the most recent date Distributions were made on the Old
Capital Securities surrendered in exchange for such New Capital
Securities or, if no distributions have been paid on such Old
Capital Securities, from June 4, 1997. Holders of the Old
Capital Securities whose Old Capital Securities are accepted for
exchange will not receive accumulated Distributions on such Old
Capital Securities for any period from and after the last date
Distributions were made on such Old Capital Securities prior to
the original issue date of the New Capital Securities or, if no
such Distributions have been paid, will not receive any
accumulated Distributions on such Old Capital Securities.
Acceptance For Exchange and Issuance of New Capital Securities
Upon the terms and subject to the conditions of the Exchange
Offer, the Trust will exchange, and will issue to the Exchange
Agent, New Capital Securities for Old Capital Securities validly
tendered and not withdrawn (pursuant to the withdrawal rights
described under "- Withdrawal Rights") promptly after the
Expiration Date.
In all cases, delivery of New Capital Securities in exchange
for Old Capital Securities tendered and accepted for exchange
pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of (i) Old Capital Securities or a
book-entry confirmation of a book-entry transfer of Old Capital
Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a
Letter of Transmittal, (ii) the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with
any required signature guarantees or (in the case of a book-entry
transfer) an Agent's Message in lieu of the Letter of Transmittal
and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely
confirmation of a book-entry transfer of Old Capital Securities
into the Exchange Agent's account at DTC. The term "Agent's
Message" means a message, transmitted by DTC to and received by
the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express
acknowledgement from the tendering Participant, which
acknowledgement states that such Participant has received and
agrees to be bound by the Letter of Transmittal and that the
Trust and the Company may enforce such Letter of Transmittal
against such Participant.
Subject to the terms and conditions of the Exchange Offer,
the Company and the Trust will be deemed to have accepted for
exchange, and thereby exchanged, Old Capital Securities validly
tendered and not withdrawn as, if and when the Trust gives oral
or written notice to the Exchange Agent of the Company's and the
Trust's acceptance of such Old Capital Securities for exchange
pursuant to the Exchange Offer. The Exchange Agent will act as
agent for the Company and the Trust for the purpose of receiving
tenders of Old Capital Securities, Letters of Transmittal and
related documents, and as agent for tendering holders for the
purpose of receiving Old Capital Securities, Letters of
Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be
made promptly after the Expiration Date. If, for any reason
whatsoever, acceptance for exchange or the exchange of any Old
Capital Securities tendered pursuant to the Exchange Offer is
delayed (whether before or after the Company's and the Trust's
acceptance for exchange of Old Capital Securities) or the Company
and the Trust extend the Exchange Offer or are unable to accept
for exchange or exchange Old Capital Securities tendered pursuant
to the Exchange Offer, then, without prejudice to the Company's
and the Trust's rights set forth herein, the Exchange Agent may,
nevertheless, on behalf of the Company and the Trust and subject
to Rule 14e-1(c) under the Exchange Act, retain tendered Old
Capital Securities and such Old Capital Securities may not be
withdrawn except to the extent tendering holders are entitled to
withdrawal rights as described under " - Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in
lieu thereof, a holder of Old Capital Securities will warrant and
agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old
Capital Securities, that the Trust will acquire good, marketable
and unencumbered title to the tendered Old Capital Securities,
free and clear of all liens, restrictions, charges and
encumbrances, and the Old Capital Securities tendered for
exchange are not subject to any adverse claims or proxies. The
holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the
Company, the Trust or the Exchange Agent to be necessary or
desirable to complete the exchange, sale, assignment, and
transfer of the Old Capital Securities tendered pursuant to the
Exchange Offer.
Procedures For Tendering Old Capital Securities
Valid Tender
Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer,
a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees or (in
the case of a book-entry tender) an Agent's Message in lieu of
the Letter of Transmittal and any other required documents, must
be received by the Exchange Agent at its address set forth under
"- Exchange Agent," on or prior to the Expiration Date and (i)
tendered Old Capital Securities must be received by the Exchange
Agent, or (ii) such Old Capital Securities must be tendered
pursuant to the procedures for book-entry transfer set forth
below and a book-entry confirmation, including an Agent's Message
if the tendering holder has not delivered a Letter of
Transmittal, must be received by the Exchange Agent, in each case
on or prior to the Expiration Date, or (iii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of the Old Capital Securities are tendered,
a tendering holder should fill in the amount of Old Capital
Securities being tendered in the appropriate box on the Letter of
Transmittal or so indicate in an Agent's Message in lieu of the
Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK
OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY
MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY
INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer
The Exchange Agent will establish an account with respect to
the Old Capital Securities at DTC for purposes of the Exchange
Offer within two Business Days after the date of this Prospectus.
Any financial institution that is a participant in DTC's book-
entry transfer facility system may make a book-entry delivery of
the Old Capital Securities by causing DTC to transfer such Old
Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However,
although delivery of Old Capital Securities may be effected
through book-entry transfer into the Exchange Agent's account at
DTC, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature
guarantees, or an Agent's Message in lieu of a Letter of
Transmittal, and any other required documents, must in any case
be delivered to and received by the Exchange Agent at its address
set forth under "- Exchange Agent" on or prior to the Expiration
Date, or the guaranteed delivery procedures set forth below must
be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees
Certificates for the Old Capital Securities need not be
endorsed and signature guarantees on the Letter of Transmittal
are unnecessary unless (i) a certificate for the Old Capital
Securities is registered in a name other than that of the person
surrendering the certificate or (ii) such registered holder
completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In
the case of (i) or (ii) above, such certificates for Old Capital
Securities must be duly endorsed or accompanied by a properly
executed bond power, with the endorsement or signature on the
bond power and on the Letter of Transmittal guaranteed by a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act
as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities
broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association (an "Eligible
Institution"), unless surrendered on behalf of such Eligible
Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery
If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not
permit all required documents to reach the Exchange Agent on or
before the Expiration Date, or the procedures for book-entry
transfer cannot be completed on a timely basis, such Old Capital
Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible
Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying
the Letter of Transmittal, is received by the Exchange
Agent, as provided below, on or prior to the Expiration
Date; and
(iii) the certificates (or a book-entry confirmation)
representing all tendered Old Capital Securities, in proper
form for transfer, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof or
Agent's Message in lieu thereof), with any required
signature guarantees and any other documents required by the
Letter of Transmittal are received by the Exchange Agent
within three New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand
or transmitted by facsimile or mail to the Exchange Agent and
must include a guarantee by an Eligible Institution in the form
set forth in such notice.
Notwithstanding any other provision hereof, the delivery of
New Capital Securities in exchange for Old Capital Securities
tendered and accepted for exchange pursuant to the Exchange Offer
will in all cases be made only after timely receipt by the
Exchange Agent of Old Capital Securities, or of a book-entry
confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or
facsimile thereof or an Agent's Message in lieu thereof),
together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly,
the delivery of New Capital Securities might not be made to all
tendering holders at the same time, and will depend upon when Old
Capital Securities, book-entry confirmations or an Agent's
Message in lieu thereof with respect to Old Capital Securities
and other required documents are received by the Exchange Agent.
The Company and the Trust's acceptance for exchange of Old
Capital Securities tendered pursuant to any of the procedures
described above will constitute a binding agreement among the
tendering holder, the Company and the Trust upon the terms and
subject to the conditions of the Exchange Offer.
Determination of Validity
All questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for
exchange of any tendered Old Capital Securities will be
determined by the Company and the Trust, in their sole
discretion, whose determination shall be final and binding on all
parties. The Company and the Trust reserve the absolute right,
in their sole discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of
which, or exchange for, may, in the view of counsel to the
Company or the Trust, be unlawful. The Company and the Trust
also reserve the absolute right, subject to applicable law, to
waive any of the conditions of the Exchange Offer as set forth
under "- Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any
particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The Company's and the Trust's interpretation of the terms
and conditions of the Exchange Offer (including the Letter of
Transmittal and the instructions thereto) will be final and
binding. No tender of Old Capital Securities will be deemed to
have been validly made until all irregularities with respect to
such tender have been cured or waived. None of the Company, the
Trust, any affiliates or assigns of the Company or the Trust, the
Exchange Agent or any other person shall be under any duty to
give any notification of any irregularities in tenders or incur
any liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power
of attorney, or any other document required by the Letter of
Transmittal is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such
person should so indicate when signing, and unless waived by the
Trust, proper evidence satisfactory to the Company and the Trust,
in their sole discretion, of such person's authority to so act
must be submitted.
A beneficial owner of Old Capital Securities that are held
by or registered in the name of a broker, dealer, commercial
bank, trust company or other nominee or custodian is urged to
contact such entity promptly if such beneficial holder wishes to
participate in the Exchange Offer.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital
Securities may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
To withdraw a tender of Old Capital Securities in an
Exchange Offer, a written or facsimile transmission notice of
withdrawal must be received by the Exchange Agent at its address
set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify
the name of the person having deposited the Old Capital
Securities to be withdrawn (the "Depositor"), (ii) identify the
Old Capital Securities to be withdrawn (including the certificate
number or numbers and liquidation amount of such Old Capital
Securities), (iii) contain a statement that such holder is
withdrawing its election to have such Old Capital Securities
exchanged, (iv) be signed by such holder in the same manner as
the original signature on the Letter of Transmittal by which such
Old Capital Securities were tendered (including any required
signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Old Capital
Securities register the transfer of such Old Capital Securities
in the name of the person withdrawing the tender and (v) specify
the name in which any such Old Capital Securities are to be
registered, if different from that of the Depositor. If Old
Capital Securities have been tendered pursuant to the procedures
for book-entry transfer set forth in " Procedures for Tendering
Old Capital Securities," the notice of withdrawal must specify
the name and number of the account at DTC to be credited with the
withdrawal of Old Capital Securities, in which case a notice of
withdrawal will be effective if delivered to the Exchange Agent
by written, telegraphic, telex or facsimile transmission. Any
notice of withdrawal must specify the name and number of the
account at the book-entry transfer facility.
All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by
the Company and the Trust, in their sole discretion, whose
determination shall be final and binding on all parties. None of
the Company, the Trust, the Exchange Agent or any other person
will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification. Any Old Capital
Securities so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no New Capital
Securities will be issued with respect thereto unless the Old
Capital Securities so withdrawn are validly retendered.
Withdrawals of tenders of Old Capital Securities may not be
rescinded. Any Old Capital Securities which have been tendered
but which are not accepted for exchange will be returned to the
holder thereof without cost to such holder as soon as practicable
after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Capital Securities may be
retendered by following one of the procedures described above
under "- Procedures for Tendering Old Capital Securities " at any
time prior to the Expiration Date.
Conditions of the Exchange Offer
Notwithstanding any other terms of the Exchange Offer, or
any extension of the Exchange Offer, the Company and the Trust
shall not be required to accept for exchange, or to exchange New
Capital Securities for, any Old Capital Securities, and, as
described below, may terminate the Exchange Offer (whether or not
any Old Capital Securities have theretofore been accepted for
exchange) or may waive any conditions to amend the Exchange
Offer, if any of the following conditions have occurred or exist
or have not been satisfied:
(a) there shall occur a change in the current
interpretation by the staff of the Division of Corporation
Finance of the Commission which permits the New Capital
Securities issued pursuant to the Exchange Offer in exchange
for Old Capital Securities to be offered for resale, resold
and otherwise transferred by holders thereof (other than
broker-dealers and any such holder which is an "affiliate"
of the Company, CHL or the Trust within the meaning of Rule
405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the
Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holders'
business and such holders are not participating and have no
arrangement or understanding with any person to participate
in the distribution of such New Capital Securities;
(b) any action or proceeding shall have been
instituted or threatened in any court or by or before any
governmental agency or body with respect to the Exchange
Offer which, in the Company's and the Trust's judgment,
would reasonably be expected to impair the ability of the
Trust or the Company to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have
been adopted or enacted which, in the Company's and the
Trust's judgment, would reasonably be expected to impair the
ability of the Trust or the Company to proceed with the
Exchange Offer;
(d) a banking moratorium shall have been declared by
United States federal or New York State authorities which,
in the Company's and the Trust's judgment, would reasonably
be expected to impair the ability of the Trust or the
Company to proceed with the Exchange Offer;
(e) trading on the NYSE or generally in the United
States over-the-counter market shall have been suspended by
order of the Commission or any other governmental authority
which, in the Company's and the Trust's judgment, would
reasonably be expected to impair the ability of the Trust or
the Company to proceed with the Exchange Offer;
(f) a stop order shall have been issued by the
Commission or any state securities authority suspending the
effectiveness of the Registration Statement or proceedings
shall have been initiated or, to the knowledge of the
Company or the Trust, threatened for that purpose or that
any governmental approval has not been obtained, which
approval the Company and the Trust shall, in their sole
discretion, deem necessary for the consummation of the
Exchange Offer as contemplated hereby;
(g) any change, or any development involving a
prospective change, in the business or financial affairs of
the Trust or the Company or any of its subsidiaries has
occurred which, in the sole judgment of the Company and the
Trust, might materially impair the ability of the Trust or
the Company to proceed with the Exchange Offer; or
(h) there is a reasonable likelihood in the Company's
judgment that, or a material uncertainty exists in the
Company's judgment as to whether, consummation of the
Exchange Offer would result in an adverse tax consequence to
the Company.
If the Company and the Trust determine in their sole and
absolute discretion that any of the above conditions are not
satisfied, the Company and the Trust may, subject to applicable
law, (i) terminate the Exchange Offer (whether or not any Old
Capital Securities have theretofore been accepted for exchange),
refuse to accept any Old Capital Securities and return all
tendered Old Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Old Capital Securities tendered
prior to the Expiration Date, subject, however, to the right of
holders to withdraw such Old Capital Securities (see " - Terms of
the Exchange Offer" and " - Withdrawal Rights") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer,
or amend the terms of the Exchange Offer, and accept all validly
tendered Old Capital Securities which have not been withdrawn.
If such waiver or amendment constitutes a material change to the
Exchange Offer, the Company and the Trust will promptly disclose
such waiver or amendment by means of a prospectus supplement that
will be distributed to the registered holders, and the Company
and the Trust will extend the Exchange Offer for a period of
time, depending upon the significance of the waiver and the
manner of disclosure to the registered holders, if the Exchange
Offer would otherwise expire during such period.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent
for the Exchange Offer. Delivery of the Letters of Transmittal
and any other required documents, questions and requests for
assistance, requests for additional copies of this Prospectus or
of the Letter of Transmittal and requests for the Notice of
Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:
By Hand or Overnight Courier: By Registered or Certified
mail:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Corporate Trust Services Window Floor 7E
Ground Floor New York, New York 10286
New York, New York 10286 Attention: Reorganization
Attention: Reorganization Section
Section
Facsimile Transmission:
(Eligible Institutions Only)
(212) 539-6339
Confirm by Telephone:
(212) 815-2742
For information with respect to the Exchange Offer, call:
The Bank of New York
at (212) 815-
Delivery to other than the above addresses or facsimile
numbers will not constitute a valid delivery.
Fees and Expenses
The expenses of soliciting tenders will be borne by CHL.
The principal solicitation is being made by mail; however,
additional solicitation may be made by telecopy, telephone or in
person by officers and regular employees of the Company, CHL, the
Trust and their respective affiliates. No additional
compensation will be paid to any such officers and employees who
engage in soliciting tenders.
Neither the Company nor the Trust has retained any dealer-
manager or other soliciting agent in connection with the Exchange
Offer, and CHL will not make any payments to brokers, dealers or
others soliciting acceptance of the Exchange Offer. CHL,
however, will pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. CHL may also pay
brokerage houses and other custodians, nominees and fiduciaries
the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this Prospectus, the Letter of Transmittal
and related documents to the beneficial owners of the Old Capital
Securities and in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange
Offer will be paid by CHL. Such expenses include fees and
expenses of the Exchange Agent and transfer agent and registrar,
accounting and legal fees and printing costs, among others.
CHL will pay all transfer taxes, if any, applicable to the
exchange of the Old Capital Securities pursuant to the Exchange
Offer. If, however, New Capital Securities, or Old Capital
Securities for principal amounts not tendered or accepted for
exchange, are to be delivered to, or to be issued in the name of,
any person other than the registered holder of the Old Capital
Securities tendered or if a transfer tax is imposed for any
reason other than the exchange of the Old Capital Securities
pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such
tendering holder.
Resales of New Capital Securities
The Company, CHL and the Trust are making the Exchange Offer
in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain
interpretive letters addressed to third parties in other
transactions. However, none of the Company, CHL and the Trust
has sought its own interpretive letter and there can be no
assurance that the staff of the Division of Corporation Finance
of the Commission would make a similar determination with respect
to the Exchange Offer as it has in such interpretive letters to
third parties. Based on these interpretations by the staff of
the Division of Corporation Finance, and subject to the two
immediately following sentences, the Company, CHL and the Trust
believe that New Capital Securities issued pursuant to the
Exchange Offer in exchange for Old Capital Securities may be
offered for resale, resold and otherwise transferred by a holder
thereof (other than a holder who is a broker-dealer or who is an
"affiliate" of the Company, CHL or the Trust within the meaning
of Rule 405 of the Securities Act) without further compliance
with the registration and prospectus delivery requirements of the
Securities Act, provided that (i) such New Capital Securities are
acquired in the ordinary course of such holder's business and
(ii) such holder is not participating, does not intend to
participate and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of
the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the
Company, CHL or the Trust or who intends to participate in the
Exchange Offer for the purpose of distributing New Capital
Securities, or, as to any unsold allotments, any broker-dealer
who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available exemption under the
Securities Act, (a) will not be able to rely on the
interpretations of the staff of the Division of Corporation
Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and
(c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
of such Old Capital Securities, with such resale covered by an
effective registration statement containing the selling security
holder information required by Item 507 of Registration S-K under
the Securities Act, unless such resale is made pursuant to an
exemption from such requirements. In addition, as described
below, if any broker-dealer holds Old Capital Securities acquired
for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for New
Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange
Old Capital Securities for New Capital Securities in the Exchange
Offer will be required to represent that (i) it is not an
"affiliate" of the Company, CHL or the Trust, (ii) any New
Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such New Capital
Securities and (iv) if such holder is not a broker-dealer or is a
broker-dealer but will not receive New Capital Securities for its
own account in exchange for Old Capital Secutities, such holder
is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such
New Capital Securities. In addition, the Company, CHL and the
Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to
the Company, CHL and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the
meaning of Rule 13d-3 under the Exchange Act) on behalf of whom
such holder holds the Old Capital Securities to be exchanged in
the Exchange Offer. Each broker-dealer that receives New Capital
Securities for its own account pursuant to the Exchange Offer
must acknowledge that it acquired the Old Capital Securities for
its own account as a result of market-making activities or other
trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the
interpretive letters referred to above, the Company, CHL and the
Trust believe that broker-dealers who acquired Old Capital
Securities for their own accounts, as a result of market-making
or other trading activities (i.e., Participating Broker-Dealers)
may fulfill their prospectus delivery requirements with respect
to the New Capital Securities received upon exchange of such Old
Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of
the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan
of distribution with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection
with resales of New Capital Securities received in exchange for
Old Capital Securities where such Old Capital Securities were
acquired by such Participating Broker-Dealer for its own account
as a result of market-making or other trading activities.
Subject to certain provisions set forth in the Registration
Rights Agreement, the Company, CHL and the Trust have agreed that
this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Capital Securities for a
period ending 90 days after the Registration Statement of which
this Prospectus constitutes a part is declared effective.
However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of New Capital
Securities received in exchange for Old Capital Securities
pursuant to the Exchange Offer must notify the Company, or cause
the Company to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may be
given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under " - Exchange Agent." Any
Participating Broker-Dealer who is an "affiliate" of the Company,
CHL or the Trust may not rely on such interpretive letters and
must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who
surrenders Old Capital Securities pursuant to the Exchange Offer
will be deemed to have agreed, by execution of the Letter of
Transmittal, that, upon receipt of notice from the Company, CHL
or the Trust of the occurrence of any event or the discovery of
any fact which makes any statement contained in this Prospectus
untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the
statements contained herein, in light of the circumstances under
which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale
of New Capital Securities pursuant to this Prospectus until the
Company, CHL and the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and have
furnished copies of the amended or supplemented Prospectus to
such Participating Broker-Dealer or the Company, CHL or the Trust
has given notice that the sale of the New Capital Securities may
be resumed, as the case may be.
Consequences of Failure to Exchange
The Old Capital Securities have not been registered under
the Securities Act or any state securities laws and therefore may
not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities
Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and
restrictions, including the Trust's and the Property Trustee's
right in certain cases to require the delivery of opinions of
counsel, certifications and other information prior to any such
transfer. After consummation of the Exchange Offer, Old Capital
Securities that remain outstanding will continue to bear legends
restricting transfer. In addition, upon consummation of the
Exchange Offer, holders of Old Capital Securities which remain
outstanding (subject to limited exceptions, if applicable) will
not be entitled to any rights to have such Old Capital Securities
registered under the Securities Act or to any similar rights
under the Registration Rights Agreement. The Trust currently
does not intend to register under the Securities Act any Old
Capital Securities which remain outstanding after consummation of
the Exchange Offer (subject to limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and
accepted in the Exchange Offer, the liquidation amount of
outstanding Old Capital Securities will be reduced by the
liquidation amount so tendered and exchanged and a holder's
ability to sell untendered Old Capital Securities could be
adversely affected. In addition, although the Old Capital
Securities have been designated for trading in the PORTAL market,
to the extent that Old Capital Securities are tendered and
accepted in connection with the Exchange Offer, any trading
market for Old Capital Securities which remain outstanding after
the Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities
which remain outstanding after consummation of the Exchange Offer
will constitute a single Capital Securities under the Declaration
and, accordingly, will vote together as a single class for
purposes of determining whether holders of the requisite
percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the
Declaration. See "Description of Capital Securities - General"
and " - Voting Rights; Amendment of the Declaration."
Shelf Registration Statement
If (i) the Company, CHL and the Trust are not required to
file an Exchange Offer Registration Statement or permitted to
consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy, (ii) CHL has
received an opinion of counsel rendered by a law firm having a
recognized national tax practice, to the effect that, as a result
of the consummation of the Exchange Offer, there is more than an
insubstantial risk that (x) the Trust would be subject to United
States federal income tax with respect to income received or
accrued on the Debentures, (y) interest payable by CHL on such
Debentures would not be deductible by CHL, in whole or in part,
for United States federal income tax purposes or (z) the Trust
would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges or (iii) any holder of Old
Capital Securities provides CHL with an opinion of counsel on or
before the twentieth Business Day following the consummation of
the Exchange Offer to the effect that (A) such holder is
prohibited by law or Commission policy from participating in the
Exchange Offer, (B) such holder may not resell the New Capital
Securities it acquired in the Exchange Offer to the public
without delivering a prospectus and this Prospectus is not
appropriate or available for such resales or (C) such holder is a
broker-dealer and owns Old Capital Securities acquired directly
from the Trust or an affiliate of the Trust, then the Company,
CHL and the Trust will use their reasonable best efforts to file
a shelf registration statement with respect to the resale of Old
Capital Securities with the Commission on or prior to 150 days
after such filing obligation arises and to cause the Shelf
Registration Statement to be declared effective by the Commission
on or prior to 180 days after such obligation arises and to keep
the Shelf Registration Statement effective for two years from the
date of the original issuance of the Old Capital Securities;
provided, however, that if the Company or CHL is engaged in a
material acquisition or disposition and in certain other
circumstances, the Company, CHL and the Trust may suspend offers
and sales under the Shelf Registration Statement, subject to
certain conditions, for up to 30 days in each year during which
the Shelf Registration Statement is required to be effective.
Each holder of the Old Capital Securities will be required to
deliver information to be used in connection with the Shelf
Registration Statement and to provide comments on the Shelf
Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Old Capital
Securities included in the Shelf Registration Statement.
Accounting Treatment
The New Capital Securities would be recorded at the same
carrying value as the Old Capital Securities, as reflected in the
Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The costs of the Exchange Offer and
the unamortized expenses related to the issuance of the Old
Capital Securities will be amortized over the terms of the
Capital Securities.
DESCRIPTION OF CAPITAL SECURITIES
The Old Capital Securities offered in the Offering were
issued, and the New Capital Securities offered pursuant to the
Exchange Offer will be issued, under the Declaration. Upon the
consummation of the Exchange Offer, the Declaration will be
subject to and governed by the Trust Indenture Act. The
following summary of the material provisions of the Declaration
does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the
Declaration (a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus constitutes a
part), including the definitions of certain terms contained
therein and those terms made part of the Declaration by reference
to the Trust Act and the Trust Indenture Act. For definitions of
certain capitalized terms used in the following summary, see
"Index of Certain Terms." References to "Section" are to sections
of the Declaration.
General
The Capital Securities will rank on a parity, and payments
will be made thereon pro rata, with the Common Securities except
as described under "- Subordination of Common Securities." Legal
title to the New Debentures and the New Debt Guarantee will be
held by the Property Trustee in trust for the benefit of the
holders of the Trust Securities. The Trust Guarantee executed by
the Company for the benefit of the holders of the Capital
Securities will be a guarantee with respect to the Capital
Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of the Capital
Securities when the Trust does not have sufficient funds
available to make such payments. See "Description of Trust
Guarantee." The Company's obligations under the Guarantees, the
Indenture and the Declaration, taken together with CHL's
obligations under the New Debentures and the Indenture, including
CHL's obligation to pay all costs, expenses and liabilities of
the Trust (other than with respect to the Trust Securities),
constitute a full and unconditional guarantee by the Company of
all of the Trust's obligations under the Capital Securities.
Holders of the Capital Securities have no preemptive or
similar rights.
Distributions
Distributions will accumulate from the most recent date
Distributions were made on the Old Capital Securities or, if no
Distributions have been made on the Old Capital Securities, from
June 4, 1997, at a rate per annum equal to 8.05% of the stated
liquidation amount of $1,000 per Capital Security. Distributions
will be payable semi-annually in arrears on June 15 and December
15 of each year, commencing December 15, 1997, and at maturity.
In the event that any date on which Distributions are payable on
the Capital Securities is not a Business Day, then payment of the
Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any additional
Distributions or other payments in respect of any such delay),
except that, if such Business Day is in the next succeeding
calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable
(each date on which Distributions are payable in accordance with
the foregoing, a "Distribution Date"). A "Business Day" means
any day other than a Saturday or a Sunday, or a day on which
banking institutions in The City of New York or Los Angeles,
California are authorized or required by law or executive order
to remain closed or a day on which the principal corporate trust
office of the Indenture Trustee (as defined herein) or the
principal corporate trust office of the Property Trustee is
closed for business. The amount of Distributions payable for any
semi-annual distribution period will be computed (i) for any full
180-day semi-annual distribution period, on the basis of a 360-
day year of twelve 30-day months and (ii) for any period shorter
than a full 180-day semi-annual distribution period for which
Distributions are computed, on the basis of the actual number of
days elapsed in such 180-day semi-annual period (assuming each
full month elapsed in such period consists of 30 days).
Distributions on the Capital Securities (other than
distributions on a redemption date) will be payable to the
holders thereof as they appear on the register of the Trust as of
the close of business on the relevant record dates, which, as
long as the Capital Securities are represented by one or more
global certificated securities ("Global Certificates"), will be
the close of business on the Business Day prior to the relevant
Distribution Dates, unless otherwise provided in the Declaration
or unless a different regular record date is established or
provided for the corresponding interest payment date on the New
Debentures. If the Capital Securities are no longer represented
by one or more Global Certificates, the Regular Trustees will
have the right to select record dates, which will be at least one
Business Day prior to the relevant payment dates. Distributions
payable on any Capital Securities that are not punctually paid on
any Distribution Date will cease to be payable to the person in
whose name such Capital Securities are registered on the relevant
record date, and such defaulted Distribution will instead be
payable to the person in whose name such Capital Securities are
registered on the special record date or other specified date
determined in accordance with the Declaration.
At all times, the Distribution Rate, the Distribution Dates
and other payment dates for the Capital Securities will
correspond to the interest rate, interest payment dates and other
payment dates on the New Debentures, which, together with the New
Debt Guarantee, will be the sole assets of the Trust.
Distributions on the Capital Securities must be paid on the
dates payable to the extent that the Trust has funds available
for the payment of such Distributions. The revenue of the Trust
available for distribution to holders of its Capital Securities
will be limited to payments received from CHL under the New
Debentures or from the Company under the New Debt Guarantee. See
"Description of New Debentures and New Debt Guarantee." If CHL
does not make payments on the New Debentures and the Company does
not make such payments, to the extent required, pursuant to the
New Debt Guarantee, the Property Trustee will not have funds
available to make payments on the Capital Securities, and the
Trust Guarantee will not apply to such payments until the Trust
has sufficient funds therefor.
CHL will have the right under the Indenture to defer the
payment of interest on the New Debentures at any time or from
time to time for a period not exceeding 10 consecutive
semi-annual periods provided that no Extension Period may extend
beyond the Stated Maturity of the New Debentures. Accordingly,
there could be multiple Extension Periods of varying terms
throughout the term of the New Debentures. As a consequence of
any such extension, semi-annual Distributions on the Capital
Securities will be deferred by the Trust during any such
Extension Period. Distributions to which holders of the Capital
Securities are entitled will accumulate and compound
semi-annually at the Distribution Rate from the relevant
Distribution Date for such Distributions. The term
"Distributions" as used herein includes any such compounded
amounts unless the context otherwise requires. During any such
Extension Period, (a) the Company and CHL shall not declare or
pay dividends on, or make a distribution with respect to, or
redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or
acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by
the Company or CHL, respectively, of its obligations under any
employee benefit plans, (ii) as a result of a reclassification of
the Company's or CHL's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or
series of the Company's or CHL's capital stock or rights to
acquire such capital stock for another class or series of the
Company's or CHL's capital stock or rights to acquire such
capital stock, (iii) the purchase of fractional interests in
shares of the Company's or CHL's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the
security being converted or exchanged or (iv) dividends and
distributions made on the Company's or CHL's capital stock or
rights to acquire such capital stock with the Company's or CHL's
capital stock or rights to acquire such capital stock) or make
any guaranteed payments with respect to any of the foregoing and
(b) the Company and CHL shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem
any debt securities (including any guarantees, other than the
Guarantees) issued by the Company or CHL that rank pari passu
with or junior to the New Debentures. Prior to the termination of
any such Extension Period, CHL may further extend the Extension
Period, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated
Maturity of the New Debentures. Upon the termination of any such
Extension Period and the payment of all amounts then due on any
Interest Payment Date, CHL may elect to begin a new Extension
Period, subject to the foregoing requirements. See "Description
of the New Debentures and New Debt Guarantee - Option to Extend
Interest Payment Period" and "Certain United States Federal
Income Tax Consequences - Interest Income and Original Issue
Discount." CHL has no current intention of exercising its right
to defer any payments of interest by extending any interest
payment period of the New Debentures.
Redemption
General
Upon the repayment or redemption of the New Debentures held
by the Trust, whether at Stated Maturity or upon earlier
redemption as provided in the Indenture, the proceeds from such
repayment or redemption will be applied by the Property Trustee
to redeem the Trust Securities. The New Debentures are not
redeemable at the option of CHL other than in certain
circumstances following a Special Event. See "Description of New
Debentures and New Debt Guarantee - Redemption."
Special Event Redemption or Distribution of New Debentures;
Shortening of Stated Maturity
If, at any time, either a Tax Event or an Investment Company
Event (as defined herein) (each, a "Special Event") shall have
occurred and be continuing, the Regular Trustees may, within 90
days following the occurrence of such Special Event, elect to
dissolve the Trust upon not less than 30 nor more than 60 days'
notice and, after satisfaction of liabilities to creditors of the
Trust, if any, cause the New Debentures and the New Debt
Guarantee to be distributed to the holders of the Trust
Securities in liquidation of the Trust. If an Investment Company
Event shall have occurred and be continuing, CHL also has the
option to redeem the New Debentures, in whole but not in part
(and thereby cause a mandatory redemption of the Capital
Securities), at any time within 90 days following the occurrence
of such Investment Company Event at a redemption price equal to
100% of the aggregate principal amount thereof, plus accrued and
unpaid interest to the date of redemption. In addition, if a Tax
Event shall have occurred and be continuing and in the opinion of
counsel, rendered by a law firm having a recognized national tax
practice, there would in all cases, after effecting the
dissolution of the Trust and the distribution of the New
Debentures and the New Debt Guarantee to the holders of the Trust
Securities in exchange therefor upon liquidation of the Trust, be
more than an insubstantial risk that the Tax Event would continue
to exist, then CHL will have the right (a) to shorten the Stated
Maturity of the New Debentures to a date not earlier than
December 15, 2011 (a "Maturity Advancement") such that, in the
opinion of such counsel, after advancing the Stated Maturity of
the New Debentures, interest paid on the New Debentures will be
deductible by CHL for United States federal income tax purposes
or (b) to redeem the New Debentures, in whole but not in part
(and thereby cause a mandatory redemption of the Capital
Securities), at any time within 90 days following the occurrence
of a Tax Event at a redemption price equal to 100% of the
aggregate principal amount thereof, plus accrued and unpaid
interest to the date of redemption. Under current United States
federal income tax law and interpretations thereof and assuming
that, as expected, the Trust is treated as a grantor trust, a
distribution of the New Debentures and the New Debt Guarantee
would not be a taxable event to holders of the Capital
Securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or other circumstances, however,
the distribution could be a taxable event to holders of the
Capital Securities. See "Certain United States Federal Income
Tax Consequences."
If CHL does not elect any of the options described above,
the Capital Securities will remain outstanding until the
repayment of the New Debentures, whether at maturity or their
earlier redemption, and in the event a Tax Event shall have
occurred and be continuing, CHL will be obligated to pay any
additional taxes, duties, assessments and other governmental
charges (other than withholding taxes) to which the Trust has
become subject as a result of a Tax Event. See "Description of
New Debentures and New Debt Guarantee."
As used herein:
(i) "Tax Event" means that the Regular Trustees
shall have received an opinion of counsel, rendered by a law
firm having a recognized national tax practice, to the
effect that, as a result of (a) any amendment to, or change
(including any announced proposed change) in, the laws (or
any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein
or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations,
which amendment or change is effective or such proposed
change, pronouncement or decision is announced on or after
the date of original issuance of the Old Capital Securities,
there is more than an insubstantial risk that (i) the Trust
is, or will be within 90 days after the date thereof,
subject to United States federal income tax with respect to
interest accrued or received on the New Debentures, (ii) the
Trust is, or will be within 90 days after the date thereof,
subject to more than a de minimis amount of other taxes,
duties or other governmental charges, or (iii) interest
payable on the New Debentures is not, or within 90 days of
the date thereof will not, be deductible, in whole or in
part, by CHL for United States federal income tax purposes.
(ii) "Investment Company Event" means that the
Regular Trustees shall have received an opinion of counsel,
rendered by a law firm having a recognized national
securities practice, to the effect that, as a result of the
occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be
considered an "investment company" which is required to be
registered under the 1940 Act, which Change in 1940 Act Law
becomes effective on or after the date of original issuance
of the Old Capital Securities.
Redemption Procedures
Capital Securities redeemed on each redemption date will be
redeemed at the redemption price in respect of the New Debentures
plus an amount equal to accrued and unpaid Distributions thereon
through the date of redemption (the "Redemption Price") with the
applicable proceeds from the contemporaneous redemption or
payment of the New Debentures. Redemptions of the Capital
Securities will be made and the Redemption Price will be payable
on each redemption date only to the extent that the Trust has
sufficient funds available for the payment of such Redemption
Price. See also "- Subordination of Common Securities."
Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder
of Capital Securities to be redeemed at its registered address.
If the Trust gives a notice of redemption in respect of the
Capital Securities, then, by 12:00 noon, New York City time, on
the redemption date, to the extent funds are available, the
Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price for all Capital
Securities held by DTC and will give DTC irrevocable instructions
and authority to pay the Redemption Price to the holders of the
Capital Securities. See "Book-Entry Issuance." If any Capital
Securities are not represented by one or more Global
Certificates, the Trust, to the extent funds are available, will
irrevocably deposit with the Paying Agent (as defined herein) for
such Capital Securities funds sufficient to pay the applicable
Redemption Price and will give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the
holders thereof upon surrender of their certificates evidencing
the Capital Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the redemption date for any
Capital Security called for redemption will be payable to the
holders of such Capital Security on the relevant record dates for
the related Distribution Dates. If notice of redemption shall
have been given and funds deposited as required, then immediately
prior to the close of business on the date of such deposit, all
rights of the holders of such Capital Securities so called for
redemption will cease, except the right of the holders of such
Capital Securities to receive the Redemption Price, but without
interest on such Redemption Price, and such Capital Securities
will cease to be outstanding. In the event that any date fixed
for redemption of Capital Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made
on the next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if
made on the date such payment was originally payable.
In the event that payment of the Redemption Price in respect
of Capital Securities called for redemption is improperly
withheld or refused and not paid either by the Trust or by the
Company pursuant to the Trust Guarantee as described under
"Description of Trust Guarantee," Distributions on such Capital
Securities will continue to accumulate at the Distribution Rate,
to the extent permitted by applicable law, from the redemption
date originally established by the Trust for the Capital
Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price. See
" - Distributions."
Subject to applicable law (including, without limitation,
United States federal securities law), the Company or any of its
subsidiaries may at any time and from time to time purchase
outstanding New Capital Securities by tender, in the open market
or by private agreement.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of,
the Trust Securities, as applicable, shall be made pro rata based
on the liquidation amount of such Trust Securities; provided,
however, that, if on any Distribution Date or redemption date an
Indenture Event of Default shall have occurred and be continuing,
no payment of any Distribution on, or Redemption Price of, any of
the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding
Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price,
the full amount of such Redemption Price on all of the
outstanding Capital Securities then called for redemption, shall
have been made or provided for, and all funds available to the
Property Trustee shall first be applied to the payment in full in
cash of all Distributions on, or Redemption Price of, the Capital
Securities then due and payable.
Distribution of the New Debentures
At any time, the Company will have the right to dissolve the
Trust and, after satisfaction of the liabilities of creditors of
the Trust as provided by applicable law, cause the New Debentures
and the New Debt Guarantee to be distributed to the holders of
the Trust Securities in liquidation of the Trust. Under current
United States federal income tax law and interpretation and
assuming, as expected, the Trust is treated as a grantor trust, a
distribution of the New Debentures and the New Debt Guarantee
would not be a taxable event to holders of the Capital
Securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or other circumstances, however,
the distribution could be a taxable event to the holders of the
Capital Securities. In addition, a dissolution of the Trust in
which holders of the Capital Securities receive cash would be a
taxable event to such holders. See "Certain United States Federal
Income Tax Consequences."
Liquidation Distribution Upon Dissolution
Pursuant to the Declaration, the Trust shall automatically
dissolve on the first to occur of: (i) the bankruptcy of the
Company or CHL, (ii) the filing of a certificate of dissolution
or its equivalent with respect to the Company or CHL and the
revocation of the charter of the Company or CHL and the
expiration of 90 days after the date of revocation without a
reinstatement thereof, (iii) the entry of a decree of judicial
dissolution of the Company, CHL or the Trust, (iv) the time when
all of the Trust Securities shall have been called for redemption
and the amounts then due thereon shall have been paid to the
holders thereof in accordance with the terms of the Trust
Securities, (v) upon the election of the Regular Trustees,
following the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Trust Securities and all of the
New Debentures and the New Debt Guarantee shall have been
distributed to the holders of the Trust Securities in exchange
for all of the Trust Securities or (vi) the time when all of the
Regular Trustees and the Company shall have consented to
termination of the Trust, provided such action is taken before
the issuance of any Trust Securities.
If an early dissolution occurs as described in clause (i),
(ii), (iii), (v) or (vi) above, the Trust shall be liquidated by
the Trustees as expeditiously as the Trustees determine to be
possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the
holders of the Trust Securities their pro rata interest in the
New Debentures and the New Debt Guarantee, unless such
distribution is determined by the Property Trustee not to be
practical, in which event such holders will be entitled to
receive out of the assets of the Trust available for distribution
to holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, an amount equal to the
aggregate of the stated liquidation amount of $1,000 per Capital
Security, plus accrued and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Trust Securities
shall be paid on a pro rata basis. The holder(s) of the Common
Securities will be entitled to receive distributions upon any
such liquidation pro rata with the holders of the Capital
Securities, except that if an Indenture Event of Default has
occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities with regard to such
distributions.
After the liquidation date is fixed for any distribution of
New Debentures to holders of the Capital Securities, (i) the
Capital Securities will no longer be deemed to be outstanding,
(ii) DTC or its nominee, as a record holder of Capital
Securities, will receive a registered Global Certificate or
Certificates representing the New Debentures to be delivered upon
such distribution and (iii) any certificates representing Capital
Securities not held by DTC or its nominee will be deemed to
represent New Debentures having an aggregate principal amount
equal to the aggregate liquidation amount of such Capital
Securities, and bearing accrued and unpaid interest in an amount
equal to the accrued and unpaid Distributions on such Capital
Securities until such certificates are presented for cancellation
whereupon CHL will issue to such holder(s), and the Indenture
Trustee will authenticate, a certificate representing such New
Debentures.
Trust Enforcement Events
An Indenture Event of Default that has occurred and is
continuing constitutes a "Trust Enforcement Event" under the
Declaration with respect to the Trust Securities, provided that
pursuant to the Declaration, the holder of the Common Securities
will be deemed to have waived any Trust Enforcement Event with
respect to the Common Securities until all Trust Enforcement
Events with respect to the Capital Securities have been cured,
waived or otherwise eliminated. Until such Trust Enforcement
Event with respect to the Capital Securities has been so cured,
waived or otherwise eliminated, the Property Trustee will be
deemed to be acting solely on behalf of the holders of the
Capital Securities and only the holders of the Capital Securities
will have the right to direct the Property Trustee with respect
to certain matters under the Declaration, and therefore the
Indenture.
Upon the occurrence of a Trust Enforcement Event, the
Indenture Trustee or the Property Trustee as the holder of the
New Debentures will have the right under the Indenture to declare
the principal of, premium, if any, and interest on the New
Debentures to be immediately due and payable. Each of the Company
and the Trust is required to file annually with the Property
Trustee an officers' certificate as to its compliance with all
conditions and covenants under the Declaration.
If the Property Trustee fails to enforce its rights with
respect to the New Debentures or the New Debt Guarantee held by
the Trust, after holders of a majority in liquidation amount of
the Capital Securities have so directed the Property Trustee, any
registered holder of Capital Securities may institute a legal
proceeding directly against CHL or the Company, respectively, to
enforce the Property Trustee's rights under the Indenture and the
New Debt Guarantee without first instituting any legal proceeding
against the Property Trustee or any other person or entity. In
addition, if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of CHL
to pay interest, principal or other required payments on the New
Debentures on the date such interest, principal or other payment
is otherwise payable (including any redemption date), and the
Company does not make such payments, to the extent required,
under the New Debt Guarantee, then a registered holder of Capital
Securities may, on or after the respective due dates specified in
the New Debentures, institute a Direct Action against CHL or the
Company, respectively. In connection with such Direct Action, the
rights of the Company will be subrogated to the rights of such
holder of Capital Securities to the extent of any payment made by
the Company pursuant to the New Debt Guarantee to such holder of
Capital Securities. In the case of the issuance of one or more
Global Securities, the record owner will be DTC or its nominee
for credit to the account of Participants or Indirect
Participants in DTC. Persons who are not Participants or Indirect
Participants may beneficially own such Global Securities only
through such Participants or Indirect Participants. See "Book-
Entry Issuance."
The Declaration provides that the Property Trustee may,
under certain circumstances, withhold from the holders of Capital
Securities notice of a Trust Enforcement Event (except for any
default in the payment of principal of, premium, if any, or
interest on the New Debentures) if the Property Trustee considers
it in the interest of such holders to do so.
Voting Rights; Amendment of the Declaration
Except as provided below and under "Description of Trust
Guarantee - Amendments and Assignment" and as otherwise required
by law and the Declaration, the holders of the Capital Securities
will have no voting rights.
So long as any New Debentures are held by the Property
Trustee, the holders of a majority in liquidation amount of the
Capital Securities shall have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Property Trustee, or to direct the exercise of
any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee,
as holder of the New Debentures and the New Debt Guarantee, to
(i) exercise the remedies available to it under the Indenture and
the New Debt Guarantee, (ii) consent to any amendment or
modification of the Indenture or the New Debentures where such
consent shall be required or (iii) waive any past default and its
consequences that is waivable under the Indenture; provided,
however, that if an Indenture Event of Default has occurred and
is continuing, then the holders of 25% of the aggregate
liquidation amount of the Capital Securities may direct the
Property Trustee to declare the principal of, premium, if any,
and interest on the New Debentures due and payable; provided,
further, that where a consent or action under the Indenture would
require the consent or act of the holders of more than a majority
of the aggregate principal amount of New Debentures affected
thereby, only the holders of the percentage of the aggregate
stated liquidation amount of the Capital Securities which is at
least equal to the percentage required under the Indenture may
direct the Property Trustee to give such consent to take such
action. The Property Trustee shall notify each holder of the
Capital Securities of any notice of any Indenture Event of
Default which it receives from CHL with respect to the New
Debentures. Except with respect to directing the time, method,
and place of conducting a proceeding for a remedy, the Property
Trustee shall be under no obligation to take any of the actions
described in clauses (i) and (ii) and (iii) above unless the
Property Trustee has obtained an opinion of independent tax
counsel to the effect that the Trust will not fail to be
classified as a grantor trust for United States federal income
tax purposes, as a result of such action, and each holder will be
treated as owning an undivided beneficial ownership interest in
the New Debentures and the New Debt Guarantee.
The Declaration may also be amended without the consent of
the holders of the Trust Securities to (i) cure any ambiguity,
(ii) correct or supplement any provision in the Declaration that
may be defective or inconsistent with any other provision of the
Declaration, (iii) add to the covenants, restrictions or
obligations of the Company, (iv) conform to any change in Rule
3a-5 under the 1940 Act ("Rule 3a-5") or written change in
interpretation or application of Rule 3a-5 by any legislative
body, court, government agency or regulatory authority which
amendment does not have a material adverse effect on the rights,
preferences or privileges of the holders or (v) modify,
eliminate and add to any provision of the Declaration to ensure
that the Trust will be classified as a grantor trust for United
States federal income tax purposes at all times that any Trust
Securities are outstanding or to ensure that the Trust will not
be required to register as an "investment company" under the 1940
Act, provided, however, that such modification, elimination or
addition would not adversely affect in any material respect the
rights, privileges or preferences of any holder of the Trust
Securities.
The Declaration provides that it may be modified and amended
if approved by the Regular Trustees (and in certain
circumstances, the Property Trustee and the Delaware Trustee)
provided that, if any proposed amendment would (i) adversely
affect the powers, preferences or special rights of the Trust
Securities or (ii) result in the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such
amendment and such amendment shall not be effective except with
the approval of at least a majority in liquidation amount of the
Trust Securities affected thereby; provided that if any amendment
referred to in clause (i) above would adversely affect only the
Capital Securities or the Common Securities, then only the
affected class will be entitled to vote on such amendment and
such amendment shall not be effective except with the approval of
a majority in liquidation amount of such class of Trust
Securities. Notwithstanding any provision of the Declaration,
however, Section 316(b) of the Trust Indenture Act provides that
the right of any holder of Trust Securities to receive payment of
Distributions and other payments upon redemption or otherwise on
or after their respective due dates, or to institute suit for the
enforcement of any such payment on or after such respective due
dates, shall not be impaired or affected without the consent of
such holder. Accordingly, amendments to the Declaration that may
adversely affect the powers, preferences or special rights of the
Capital Securities - other than those affecting a holder's rights
to receive payments on or after their respective due dates and to
institute suit to enforce such payments on or after their
respective due dates as described in Section 316(b) of the Trust
Indenture Act - may be effected with the consent of only a
majority in liquidation amount of Capital Securities rather than
with the consent of each holder of Capital Securities affected
thereby.
In addition, the Declaration provides that no amendment
shall be made, and any such purported amendment shall be void and
ineffective which would (i) cause the Trust to be classified
other than as a grantor trust for United States federal income
tax purposes, (ii) reduce or otherwise adversely affect the
powers of the Property Trustee in contravention of the Trust
Indenture Act or (iii) cause the Trust to be deemed to be an
"investment company" required to be registered under the 1940
Act.
Any required approval or direction of holders of Capital
Securities may be given at a meeting of holders of Capital
Securities convened for such purpose or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting
at which holders of Capital Securities are entitled to vote, or
of any matter upon which action by written consent of such
holders is to be taken, to be given to each holder of record of
Capital Securities in the manner set forth in the Declaration.
No vote or consent of the holders of Capital Securities will
be required for the Trust to redeem and cancel its Capital
Securities in accordance with the Declaration.
Notwithstanding that holders of Capital Securities are
entitled to vote or consent under any of the circumstances
described above, any of the Capital Securities that are owned by
the Company, the Trustees or any affiliate of the Company or any
Trustees, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
Expenses and Taxes
In the Indenture, CHL, as borrower, has agreed to pay all
debts and other obligations (other than with respect to the Trust
Securities) and all costs and expenses of the Trust (including
costs and expenses relating to the organization of the Trust, the
fees and expenses of the Trustees and the costs and expenses
relating to the operation of the Trust) and to pay any and all
taxes and all costs and expenses with respect thereto (other than
United States withholding taxes) to which the Trust might become
subject. The foregoing obligations of CHL under the Indenture are
for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are
owed (a "Creditor") whether or not such Creditor has received
notice thereof. Any such Creditor may enforce such obligations of
CHL directly against CHL, and CHL has irrevocably waived any
right or remedy to require that any such Creditor take any action
against the Trust or any other person before proceeding against
CHL. CHL has also agreed in the Indenture to execute such
additional agreements as may be necessary or desirable to give
full effect to the foregoing.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer
agent for the Capital Securities.
Registration of transfers or exchanges of Capital Securities
will be effected without charge by or on behalf of the Trust, but
upon payment of any tax or other governmental charges that may be
imposed in connection with any transfer or exchange, the Trust
may charge a sum sufficient to cover any such payment. The Trust
will not be required (i) to issue, register or cause to be
registered the transfer or exchange of any Capital Securities
during a period beginning at the opening of business 15 days
before the day of the mailing of the relevant notice of
redemption and ending at the close of business on the day of such
mailing or (ii) to register or cause to be registered the
transfer or exchange of any Capital Securities to be redeemed.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and
continuance of a Trust Enforcement Event, undertakes to perform
only such duties as are specifically set forth in the Declaration
(and no implied covenants shall be read into the Declaration
against the Property Trustee) and, after the occurrence of such
Trust Enforcement Event (which has not been cured or waived),
must exercise the same degree of care and skill as a prudent
person would exercise or use under the circumstances in the
conduct of his or her own affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration at the request of any
holder of Capital Securities unless it is offered reasonable
security and indemnity against the costs, expenses and
liabilities that might be incurred thereby, provided that the
Property Trustee, upon the occurrence of an Indenture Event of
Default, will not be relieved of its obligation to exercise the
rights and powers vested in it under the Declaration. If no Trust
Enforcement Event has occurred and is continuing and the Property
Trustee is required to decide between alternative courses of
action, construe ambiguous provisions in the Declaration or is
unsure of the application of any provision of the Declaration,
and the matter is not one on which holders of Capital Securities
are entitled under the Declaration to vote, then the Property
Trustee may, but shall be under no duty to, take such action as
is directed by the Company and, if not so directed, shall take
such action as it deems advisable and in the best interests of
the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
Payment and Paying Agency
Payments in respect of the Global Certificates shall be made
to DTC, which shall credit the relevant accounts at DTC on the
applicable Distribution Dates or, if the Capital Securities are
not represented by one or more Global Certificates, such payments
shall be made by check mailed to the address of the holder
entitled thereto as such address shall appear on the register in
respect of the registrar. The paying agent (the "Paying Agent")
shall initially be the Property Trustee and any co-paying agent
chosen by the Property Trustee and acceptable to the Regular
Trustees and the Company. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Company. In the event that the Property
Trustee shall no longer be the Paying Agent, the Regular Trustees
shall appoint a successor (which shall be a bank or trust company
acceptable to the Regular Trustees and the Company) to act as
Paying Agent.
Mergers, Consolidations, Amalgamations or Replacements of the
Trust
The Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any
corporation or other Person (as defined in the Declaration),
except as described below. The Trust may, at the request of the
Company, with the consent of the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees, and
without the consent of the holders of the Capital Securities, the
Delaware Trustee or the Property Trustee, merge with or into,
consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a
trust organized as such under the laws of any State, provided
that (i) such successor entity (if not the Trust) either
(a) expressly assumes all of the obligations of the Trust with
respect to the Capital Securities or (b) substitutes for the
Capital Securities other securities having substantially the same
terms as the Capital Securities (the "Successor Securities") so
long as the Successor Securities rank the same as the Capital
Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the
Company expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as
the holder of the New Debentures and the New Debt Guarantee,
(iii) the Capital Securities or any Successor Securities continue
to be listed or quoted, or any Successor Securities will be
listed or quoted upon notification of issuance, on any national
securities exchange or with any other organization on or through
which the Capital Securities are then listed or quoted
immediately prior to the effective date of such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of
the Capital Securities (including any Successor Securities) in
any material respect (other than with respect to any dilution of
the holders' percentage interest in the successor entity),
(vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer, or lease, the Company has
received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and
privileges of the holders of the Capital Securities (including
any Successor Securities) in any material respect (other than
with respect to any dilution of the holders' percentage interest
in the successor entity) and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease, (1) neither the Trust nor such successor entity will be
required to register as an "investment company" under the 1940
Act and (2) the Trust or the successor entity will continue to be
classified as a grantor trust for United States federal income
tax purposes, (viii) the Company or any permitted successor or
assignee owns all of the Common Securities of such successor
entity and guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by
the Trust Guarantee and (ix) such successor entity expressly
assumes all of the obligations of the Trust with respect to the
Trustees. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in aggregate
liquidation amount of the Capital Securities, consolidate,
amalgamate, merge with or into, be replaced by or convey,
transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the
successor entity to be classified as other than a grantor trust
for United States federal income tax purposes and each holder of
the Capital Securities not to be treated as owning an undivided
beneficial interest in the New Debentures and the New Debt
Guarantee.
Merger or Consolidation of Trustees
Any corporation into which the Property Trustee, the
Delaware Trustee or any Regular Trustee that is not a natural
person may be merged or converted or with which such Trustee may
be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Trustee shall be a
party, or any corporation succeeding to all or substantially all
the corporate trust business of such Trustee, shall be the
successor of such Trustee under the Declaration, provided such
corporation shall be otherwise qualified and eligible.
Miscellaneous
The Regular Trustees are authorized and directed to conduct
the affairs of and to operate the Trust in such a way that the
Trust will not be deemed to be an "investment company" required
to be registered under the 1940 Act or classified as other than a
grantor trust for United States federal income tax purposes and
so that the New Debentures will be treated as indebtedness of CHL
for United States federal income tax purposes. In this
connection, the Company and the Regular Trustees are authorized
to take any action, not inconsistent with applicable law, the
Certificate of Trust or the Declaration, that the Company and the
Regular Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the
Capital Securities.
The Trust may not borrow money, issue debt, reinvest
proceeds derived from investments, mortgage or pledge any of its
assets. In addition the Trust may not undertake any activity that
would cause the Trust not to be classified as a grantor trust for
United States federal income tax purposes.
DESCRIPTION OF NEW DEBENTURES AND NEW DEBT GUARANTEE
The New Debentures and the New Debt Guarantee are to be
issued pursuant to an Indenture (the "Indenture"), among CHL, as
issuer, the Company, as guarantor, and The Bank of New York, as
trustee (the "Indenture Trustee"). This summary of material terms
and provisions of the New Debentures, the Indenture and the New
Debt Guarantee does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the provisions
of the Indenture (a copy of which has been filed as an exhibit to
the Registration Statement of which this Prospectus constitutes a
part), including the definitions of certain terms contained
therein and those terms made part of the Indenture by reference
to the Trust Indenture Act. The New Debentures will be fully
and unconditionally guaranteed as to principal, premium, if any,
and interest by the Company pursuant to the New Debt Guarantee.
Certain capitalized terms used herein are defined in the
Indenture.
General
The New Debentures will be in an aggregate principal amount
equal to the aggregate liquidation amount of the Trust
Securities. The New Debentures will accrue interest at a rate
equal to 8.05% of the principal amount thereof, payable semi-
annually in arrears on June 15 and December 15 of each year,
commencing December 15, 1997, and at maturity. Each of the
foregoing semi-annual interest payment dates is herein referred
to as an "Interest Payment Date."
Interest on the New Debentures is payable to the person in
whose name the New Debentures are registered, subject to certain
exceptions, at the close of business on the Business Day next
preceding the relevant Interest Payment Date. In the event the
Capital Securities shall not continue to be represented by one or
more Global Certificates and the New Debentures are not
represented by one or more Global Certificates, CHL shall have
the right to select record dates, which shall be at least one
Business Day before the relevant Interest Payment Date. It is
anticipated that, until the liquidation, if any, of the Trust,
each New Debenture will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Trust
Securities. The amount of interest payable for any semi-annual
interest period will be computed (i) for any full 180-day semi-
annual interest payment period, on the basis of a 360-day year of
twelve 30-day months and (ii) for any period shorter than a full
180-day semi-annual interest payment period for which interest
payments are computed, on the basis of the actual number of days
elapsed in such period (assuming each full month elapsed in such
period consists of 30 days). In the event that any date on which
interest is payable on the New Debentures is not a Business Day,
then payment of the interest payable on such date will be made on
the next succeeding day that is a Business Day (and without any
additional interest or other payment in respect of any such
delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same
force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on
the amount thereof (to the extent permitted by law) at the
interest rate specified for the New Debentures, compounded
semi-annually. The term "interest" as used herein shall include
interest payments and interest on interest payments not paid on
the applicable Interest Payment Date.
The New Debentures will mature on June 15, 2027, or earlier,
in certain circumstances, upon the occurrence and continuation of
a Tax Event. See "Description of Capital Securities -
Redemption - Special Event Redemption or Distribution of New
Debentures; Shortening of Stated Maturity."
The New Debentures and the New Debt Guarantee will be
unsecured and will rank junior and be subordinate in right of
payment to all existing and future Senior Indebtedness of CHL and
the Company, respectively. The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of CHL
or the Company, whether under any existing indenture or under any
other indenture that CHL or the Company may enter into in the
future or otherwise. See "- Ranking" and "Risk Factors - Ranking
of Obligations under the Guarantees and the New Debentures."
The general provisions of the Indenture do not afford
holders of the New Debentures protection in the event of a highly
leveraged or other transaction involving CHL or the Company that
may adversely affect holders of the New Debentures.
New Debt Guarantee
The Indenture provides that the Company will fully and
unconditionally guarantee the due and punctual payment of the
principal of, premium, if any, and interest on the New Debentures
when the same shall become due and payable, whether at maturity,
upon redemption or otherwise. Because the Company is a holding
company, the right of the Company and, hence, the right of
creditors of the Company (including the holders of the New
Debentures with respect to the New Debt Guarantee) to participate
in any distribution of the assets of any subsidiaries of the
Company, whether upon liquidation, reorganization or otherwise,
is subject to prior claims of creditors of its subsidiaries,
except to the extent that claims of the Company itself as a
creditor of a subsidiary may be recognized.
Option to Extend Interest Payment Period
So long as no Indenture Event of Default has occurred and is
continuing, CHL has the right under the Indenture to defer the
payment of interest at any time or from time to time for a period
not exceeding 10 consecutive semi-annual periods with respect to
each Extension Period, provided that no Extension Period may
extend beyond the Stated Maturity of the New Debentures. At the
end of any Extension Period, CHL must pay all interest then
accrued and unpaid (together with interest thereon at the rate
specified for the New Debentures, compounded semi-annually, to
the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of New
Debentures (or holders of Capital Securities while the Capital
Securities are outstanding) will be required to accrue interest
income (as OID) for United States federal income tax purposes.
See "Certain United States Federal Income Tax Consequences -
Interest Income and Original Issue Discount."
During any such Extension Period, (a) the Company and CHL
shall not declare or pay dividends on, or make a distribution
with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of shares of any such
capital stock or rights to acquire such capital stock in
connection with the satisfaction by the Company or CHL,
respectively, of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of the Company's or
CHL's capital stock or rights to acquire such capital stock or
the exchange or conversion of one class or series of the
Company's or CHL's capital stock or rights to acquire such
capital stock for another class or series of the Company's or
CHL's capital stock or rights to acquire such capital stock,
(iii) the purchase of fractional interests in shares of the
Company's or CHL's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being
converted or exchanged or (iv) dividends and distributions made
on the Company's or CHL's capital stock or rights to acquire such
capital stock with the Company's or CHL's capital stock or rights
to acquire such capital stock) or make any guarantee payments
with respect to any of the foregoing and (b) the Company and CHL
shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities
(including any guarantees, other than the Guarantees) issued by
the Company or CHL that rank pari passu with or junior to the New
Debentures. Prior to the termination of any such Extension
Period, CHL may further extend the Extension Period, provided
that no Extension Period may exceed 10 consecutive semi-annual
periods or extend beyond the Stated Maturity of the New
Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date,
CHL may elect to begin a new Extension Period, subject to the
above requirements. Accordingly, there could be multiple
Extension Periods of varying lengths throughout the term of the
New Debentures. No interest shall be due and payable during an
Extension Period, except at the end thereof. CHL must give the
Company, the Property Trustee, the Regular Trustees and the
Indenture Trustee written notice of its election of such
Extension Period not less than one Business Day prior to the
record date for the applicable Interest Payment Date. The
Property Trustee shall give notice of CHL's election to begin a
new Extension Period to the holders of the Capital Securities.
Redemption
The New Debentures are not redeemable at the option of CHL,
unless a Special Event shall have occurred and be continuing. If,
at any time, a Special Event shall have occurred and be
continuing, the New Debentures are redeemable at the option of
CHL, in whole (but not in part), in certain circumstances within
90 days of the occurrence of such Special Event, at a redemption
price equal to 100% of the aggregate principal amount of such New
Debentures, plus accrued and unpaid interest, if any, to the date
of redemption. See "Description of Capital Securities -
Redemption - Special Event Redemption or Distribution of New
Debentures; Shortening of Stated Maturity."
If the New Debentures are redeemed, the Trust must redeem
the Trust Securities having an aggregate liquidation amount equal
to the aggregate principal amount of New Debentures so redeemed.
See "Description of Capital Securities - Redemption."
Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder
of New Debentures to be redeemed at its registered address.
Unless CHL defaults in payment of the redemption price, on and
after the redemption date interest ceases to accrue on such New
Debentures to be redeemed.
Certain Covenants of CHL and the Company
CHL has covenanted in the Indenture that if and so long as
the Trust is the holder of all the New Debentures, CHL, as
borrower, will pay all debts and obligations of the Trust (other
than with respect to the Trust Securities), all costs and
expenses related to the organization and operation of the Trust
and all other costs and expenses of the Trust (including any
taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United
States or any domestic taxing authority upon the Trust.
The Company and CHL has also covenanted that they will not
(i) declare or pay any dividends or distributions on, or make a
distribution with respect to, or redeem, purchase or acquire, or
make a liquidation payment with respect to, any of its capital
stock (other than (1) purchases or acquisitions of shares of any
such capital stock or rights to acquire such capital stock in
connection with the satisfaction by the Company or CHL,
respectively, of its obligations under any employee benefit
plans, (2) as a result of a reclassification of the Company's or
CHL's capital stock or rights to acquire such capital stock or
the exchange or conversion of one class or series of the
Company's or CHL's capital stock or rights to acquire such
capital stock for another class or series of the Company's or
CHL's capital stock or rights to acquire such capital stock,
(3) the purchase of fractional interests in shares of the
Company's or CHL's capital stock pursuant to conversion or
exchange provisions of such capital stock or the security being
converted or exchanged or (4) dividends and distributions made on
the Company's or CHL's capital stock or rights to acquire such
capital stock with the Company's or CHL's capital stock or rights
to acquire such capital stock) or make any guarantee payments
with respect to any of the foregoing and (ii) make any payment of
interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities (including any guarantees, other
than the Guarantees) issued by the Company or CHL that rank pari
passu with or junior to the New Debentures, if at such time
(x) there shall have occurred any event of which the Company has
actual knowledge that (I) with the giving of notice or the lapse
of time, or both, would constitute an Indenture Event of Default
with respect to New Debentures and (II) in respect of which CHL
shall not have taken reasonable steps to cure, (y) the Company
shall be in default with respect to its payment of any
obligations under the New Debt Guarantee or (z) CHL shall have
given notice of its election of an Extension Period as provided
in the Indenture and shall not have rescinded such notice, or
such Extension Period, or any extension thereof, shall be
continuing.
In addition, the Company has also covenanted, with respect
to the New Debentures, that for so long as the Trust Securities
remain outstanding, the Company will, among other things,
(i) maintain 100% direct or indirect ownership of the Common
Securities; provided, however, that any permitted successor of
the Company under the New Debt Guarantee may succeed to the
Company's ownership of the Common Securities, (ii) timely perform
its duties as sponsor of the Trust, (iii) use its reasonable
efforts to cause the Trust (a) to remain a business trust
classified as a grantor trust, except in connection with a
distribution of the New Debentures and the New Debt Guarantee to
the holders of Capital Securities in liquidation of the Trust,
the redemption of all of the Trust Securities or certain mergers,
consolidations or amalgamations, each as permitted by the
Declaration, and (b) continue not to be treated as an association
taxable as a corporation for United States federal income tax
purposes (other than in connection with a distribution of New
Debentures and the New Debt Guarantee to the holders of Capital
Securities in liquidation of the Trust) and (iv) use its
reasonable efforts to cause each holder of Trust Securities to be
treated as owning an undivided beneficial interest in the New
Debentures.
Ranking
The New Debentures will be subordinated and junior in right
of payment to all existing and future Senior Indebtedness of CHL.
In addition, the New Debt Guarantee will be subordinated and
junior in right of payment to all existing and future Senior
Indebtedness of the Company. Accordingly: (I) no payment of
principal (including redemption payments) of, premium, if any, or
interest on the New Debentures and no payment under the New Debt
Guarantee may be made if (A) any principal of, premium, if any,
or interest on any Senior Indebtedness of CHL or the Company, as
the case may be, is not paid when due and any applicable grace
period with respect to such payment default under such Senior
Indebtedness has ended and such default has not been cured or
waived or (B) the maturity of any Senior Indebtedness of CHL or
the Company, as the case may be, has been accelerated because of
a default; (II) upon any payment by or any distribution of assets
of CHL or the Company, as the case may be, to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether
voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, premium, if
any, and interest due or to become due on all Senior Indebtedness
of CHL or the Company, as the case may be, must be paid in full
(or payment thereof provided for) before the holders of New
Debentures or the New Debt Guarantee are entitled to receive or
retain any payment; and (III) upon satisfaction of all claims of
all Senior Indebtedness then outstanding, the holders of New
Debentures or the New Debt Guarantee will be subrogated to the
rights of the holders of Senior Indebtedness of CHL or the
Company, as the case may be, to receive payments or distributions
applicable to Senior Indebtedness until all amounts owing on the
New Debentures or the New Debt Guarantee, as the case may be, are
paid in full.
"Senior Indebtedness" means, with respect to CHL or the
Company, as the case may be, (i) the principal, premium, if any,
and interest in respect of (A) indebtedness of such obligor for
money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such
obligor, (ii) all capital lease obligations of such obligor,
(iii) all obligations of such obligor issued or assumed as the
deferred purchase price of property, all conditional sale
obligations of such obligor and all obligations of such obligor
under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all
obligations of such obligor for reimbursement on any letter of
credit, any banker's acceptance, any security purchase facility,
any repurchase agreement or similar arrangement, any interest
rate swap, any other hedging arrangement, any obligation under
options or any similar credit or other transaction, (v) all
obligations of the type referred to in clauses (i) through (iv)
above of other persons for the payment of which such obligor is
responsible or liable as obligor, guarantor or otherwise and
(vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any
property or asset of such obligor (whether or not such obligation
is assumed by such obligor), except for (1) any such indebtedness
that contains express terms, or is issued under a deed, indenture
or other instrument that contains express terms, providing that
it is subordinate or ranks pari passu with the New Debentures or
the New Debt Guarantee, as the case may be, (2) any indebtedness
between or among CHL or the Company or any affiliate of CHL or
the Company and (3) all other debt securities and guarantees in
respect of those debt securities, in any case issued by CHL or
the Company to any trust (including, without limitation,
Countrywide Capital I), or a trustee of such trust, partnership
or other entity affiliated with CHL or the Company that is a
financing vehicle of CHL or the Company (a "financing entity") in
connection with the issuance by such financing entity of
securities of a similar nature to the Capital Securities or of
other securities that rank pari passu with, or junior to, the
Capital Securities. Such Senior Indebtedness shall continue to be
Senior Indebtedness and to be entitled to the benefits of the
subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
The Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the
Company or CHL or on the amount of any indebtedness or other
liabilities that may be incurred by the Company's or CHL's
subsidiaries. CHL's obligations under the New Debentures and the
Company's obligations under the New Debt Guarantee will be
structurally subordinated to all existing and future liabilities
and obligations of the Company's and CHL's subsidiaries, as the
case may be. At May 31, 1997, after giving pro forma effect to
the Offerings, CHL would have had approximately $6.5 billion
aggregate principal amount of Senior Indebtedness outstanding and
the Company would have had no indebtedness outstanding (excluding
indebtedness of subsidiaries guaranteed by the Company). In
addition, at such date, the Company's subsidiaries (other than
CHL) had outstanding indebtedness of $43 million.
Indenture Events of Default
The Indenture provides that any one or more of the following
described events with respect to the New Debentures that has
occurred and is continuing constitutes an "Indenture Event of
Default" with respect to the New Debentures:
(a) default for 30 days in payment of any interest on
the New Debentures when due; provided, however, that a valid
extension of the interest payment period by CHL shall not
constitute a default in the payment of interest on the New
Debentures; or
(b) default in payment of principal and premium, if
any, on the New Debentures when due either at maturity, upon
redemption, by declaration or otherwise; or
(c) default by CHL or the Company in the performance of
any other of the covenants or agreements in the Indenture
which shall not have been remedied for a period of 90 days
after notice; or
(d) certain events of bankruptcy, insolvency or
reorganization of CHL or the Company; or
(e) the voluntary or involuntary dissolution, winding-
up or termination of the Trust, except in connection with
the distribution of the New Debentures to the holders of
Trust Securities in liquidation of the Trust, the redemption
of all of the Trust Securities of the Trust, or certain
mergers, consolidations or amalgamations, each as permitted
by the Declaration.
The Indenture provides that the Indenture Trustee may, under
certain circumstances, withhold from the holders notice of
default with respect to the New Debentures (except for any
default in the payment of principal of, premium, if any, or
interest on the New Debentures) if the Indenture Trustee
considers it in the interest of such holders to do so.
The Indenture provides that if an Indenture Event of Default
on the New Debentures shall have occurred and be continuing,
either the Indenture Trustee or the holders of not less than 25%
in aggregate principal amount of the New Debentures then
outstanding may declare the principal of, premium, if any, and
accrued interest on all the New Debentures to be due and payable
immediately, but upon certain conditions such declarations may be
annulled and past defaults may be waived (except defaults in
payment of principal of, premium, if any, or interest on the New
Debentures, which must be cured or paid in full) by the holders
of a majority in aggregate principal amount of the New
Debentures.
No holder of any New Debenture shall have any right to
institute any suit, action or proceeding for any remedy under the
Indenture, unless such holder previously shall have given to the
Indenture Trustee written notice of a continuing Indenture Event
of Default with respect to the New Debentures and unless the
holders of not less than 25% in aggregate principal amount of the
New Debentures then outstanding shall have given the Indenture
Trustee a written request to institute such action, suit or
proceeding and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred thereby, and the
Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any
such action, suit or proceeding; provided that no holder of New
Debentures shall have any right to prejudice the rights of any
other holder of New Debentures, obtain priority or preference
over any other such holder or enforce any right under the
Indenture except as provided in the Indenture and for the equal,
ratable and common benefit of all holders of New Debentures.
Notwithstanding the foregoing, the right of any holder of any New
Debenture to receive payment of the principal of, premium, if
any, and interest, if any, on such New Debenture when due, or to
institute suit for the enforcement of any such payment, shall not
be impaired or affected without the consent of such holder.
The holders of a majority in aggregate principal amount of
the New Debentures then outstanding shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to, or exercising any trust or power
conferred on, the Indenture Trustee under the Indenture;
provided, however, that, except under certain circumstances, the
Indenture Trustee may decline to follow any such direction if the
Indenture Trustee determines that the action so directed would be
unjustly prejudicial to holders not taking part in such direction
or unlawful or would involve the Indenture Trustee in personal
liability. The Indenture requires the annual filing by CHL with
the Indenture Trustee of a certificate as to the absence of
certain defaults under the Indenture.
In case an Indenture Event of Default shall occur and be
continuing, the Property Trustee will have the right to declare
the principal of and premium, if any, and the interest on such
New Debentures and any other amounts payable under the Indenture,
to be forthwith due and payable and to enforce its other rights
as a creditor with respect to such New Debentures.
Enforcement of Certain Rights by Holders of Capital Securities
An Indenture Event of Default that has occurred and is
continuing constitutes a Trust Enforcement Event. The holders of
Capital Securities in certain circumstances have the right to
direct the Property Trustee to exercise its rights as the holder
of the New Debentures and the New Debt Guarantee. See
"Description of Capital Securities - Trust Enforcement Events"
and "- Voting Rights; Amendment of the Declaration." If CHL were
to default on its obligation to pay amounts payable under the New
Debentures and the Company does not make such payments, to the
extent required, under the New Debt Guarantee, the Trust would
lack funds for the payment of Distributions or amounts payable on
redemption of the Capital Securities or otherwise, and, in such
event, holders of the Capital Securities would not be able to
rely upon the New Trust Guarantee for payment of such amounts.
However, in the event CHL failed to pay interest on, premium, if
any, or principal of the New Debentures on the payment date on
which such payment is due and payable (including on any
redemption date) and the Company does not make such payments, to
the extent required, under the New Debt Guarantee, then a
registered holder of Capital Securities may directly institute a
proceeding against CHL or the Company, as the case may be, on or
after such respective due dates specified in the New Debentures
for enforcement of payment to such holder of the interest on,
premium, if any, or principal of such New Debentures having a
principal amount equal to the aggregate liquidation amount of the
Capital Securities of such holder. In connection with such Direct
Action, the Company will be subrogated to the rights of such
holder of Capital Securities under the Declaration to the extent
of any payment made by the Company, pursuant to the New Debt
Guarantee, to such holder of Capital Securities in such Direct
Action. Except to the extent described above under "Description
of Capital Securities - Trust Enforcement Events" and "- Voting
Rights; Amendment of the Declaration," the holders of Capital
Securities will not be able to exercise directly any other remedy
available to the holders of the New Debentures and the New Debt
Guarantee.
Consolidation, Merger, Sale of Assets and Other Transactions
Nothing contained in the Indenture or in the New Debentures
or New Debt Guarantee shall prevent any consolidation or merger
of CHL or the Company with or into any other corporation (whether
or not affiliated with CHL or the Company, as the case may be) or
successive consolidations or mergers in which CHL or the Company,
as the case may be, or its successor or successors shall be a
party, or shall prevent any sale, conveyance, transfer or other
disposition of the property of CHL or the Company, as the case
may be, or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether
or not affiliated with CHL or the Company, as the case may be, or
its successor or successors) authorized to acquire and operate
the same; provided, however, CHL or the Company, as the case may
be, shall, upon any such consolidation, merger, sale, conveyance,
transfer or other disposition, cause the obligations of CHL under
the New Debentures or the obligations of the Company under the
New Debt Guarantee, as the case may be, and under the Indenture,
to be expressly assumed, by supplemental indenture satisfactory
in form to the Indenture Trustee and executed and delivered to
the Indenture Trustee, by the successor entity formed by such
consolidation or into which CHL or the Company, as the case may
be, shall have been merged, or which shall have acquired such
property. Upon execution and delivery of such supplemental
indenture to the Indenture Trustee, such successor entity will be
substituted under the Indenture, the New Debentures or the New
Debt Guarantee, as the case may be, and thereupon CHL or the
Company, as the case may be, will be relieved of any further
liability or obligation thereunder.
Modification of Indenture
The Indenture contains provisions permitting CHL, the
Company and the Indenture Trustee, with the consent of the
holders of not less than a majority in principal amount of the
New Debentures at the time outstanding, to modify the Indenture
or the rights of the holders of the New Debentures; provided,
however, that no such modification shall, without the consent of
the holder of each outstanding New Debenture affected thereby,
(a) change the stated maturity of, the principal of, or any
installment of interest on, any New Debenture, or reduce the
principal amount thereof or the rate of interest thereon, or
change the place of payment where, or the coin or currency in
which, any New Debenture or interest thereon is payable, or
impair the right to institute suit for the enforcement of any
such payment on or after the stated maturity thereof (or, in the
case of redemption, on or after the redemption date), or modify
the provisions of the Indenture with respect to the subordination
of the New Debentures in a manner adverse to the holders of the
New Debentures, (b) reduce the percentage in principal amount of
the New Debentures outstanding, the consent of whose holders is
required for any such modification, 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 or (c) modify
any of the provisions of the Indenture regarding amendment with
the consent of the holders of the New Debentures, waiver of
defaults and waiver of compliance with covenants, except to
increase the percentage of aggregate principal amount of
outstanding New Debentures required to consent to such
modification or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the
holder of each outstanding New Debenture affected thereby;
provided, that, so long as any of the Capital Securities remains
outstanding, no such amendment shall be made that adversely
affects the holders of the Capital Securities, and no termination
of the Indenture shall occur, and no waiver of any Indenture
Event of Default or compliance with any covenant under the
Indenture shall be effective, without the prior consent of the
holders of at least a majority of the aggregate liquidation
amount of the outstanding Capital Securities unless and until the
principal of and any premium on the New Debentures and all
accrued and unpaid interest thereon have been paid in full.
Without the consent of any holders of the New Debentures,
CHL and the Company, when authorized by appropriate board
resolutions, and the Indenture Trustee, may enter into one or
more supplemental indentures: (a) to evidence the succession of
another person to CHL or the Company and the assumption by any
such successor of the covenants of CHL or the Company in the
Indenture and in the New Debentures, (b) to add to the covenants
of CHL or the Company for the benefit of the holders of the New
Debentures, or to surrender any right or power herein conferred
upon CHL or the Company, (c) to cure any ambiguity, to correct or
supplement any provision in the Indenture which may be
inconsistent with any other provision in the Indenture, or to
make any other provisions with respect to matters or questions
arising under the Indenture which will not be inconsistent with
the provisions of the Indenture, provided that such action shall
not adversely affect the interests of the holders of the New
Debentures or, so long as any of the Capital Securities shall
remain outstanding, the holders of the Capital Securities, or
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the
Trust Indenture Act.
Defeasance and Discharge
The Indenture provides that CHL, at its option: (a) will be
discharged from any and all obligations in respect of the New
Debentures (except for certain obligations to register the
transfer or exchange of New Debentures, replace mutilated,
defaced, destroyed, lost or stolen New Debentures, maintain
paying agencies and hold moneys for payment in trust) or (b) need
not comply with certain covenants of the Indenture (including
those described under "-- Certain Covenants of CHL and the Company"
above), in each case, if CHL deposits, in trust with the
Indenture Trustee or the Defeasance Agent (as defined in the
Indenture), money or U.S. Government Obligations, or any
combination thereof, which through the payment of interest
thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the principal
of, premium, if any, and interest on, the New Debentures on the
dates such payments in respect thereof are due in accordance with
the terms of such New Debentures. To exercise any such option,
CHL, among other things, is required to deliver to the Indenture
Trustee and the Defeasance Agent, if any, an opinion of counsel
to the effect that the deposit and related defeasance would not
cause the holders of the New Debentures to recognize income, gain
or loss for United States federal income tax purposes and that
such holders will be subject to United States federal income tax
on the same amount and in the same manner and at the same times,
as would have been the case if such deposit, defeasance and/or
discharge had not occurred, and, in the case of a discharge
pursuant to clause (a), such opinion shall be based on the fact
that (x) CHL has received from, or there has been published by,
the Internal Revenue Service a ruling or (y) since the date of
the Indenture, there has been a change in applicable federal
income tax law, in each case, to such effect.
Distributions of New Debentures; Book-Entry Issuance
At any time, New Debentures may be distributed to the
holders of the Trust Securities in liquidation of the Trust after
satisfaction of liabilities to creditors of the Trust as provided
by applicable law. If distributed to holders of New Capital
Securities in liquidation, the New Debentures will initially be
issued in the form of Global Certificates. DTC, or any successor
depositary, will act as depositary for such Global Certificates.
It is anticipated that the depositary arrangements for such
Global Certificates would be substantially identical to those in
effect for the Capital Securities. For a description of Global
Certificates, see "Book-Entry Issuance."
If New Debentures are distributed to holders of Capital
Securities in liquidation, CHL will use its reasonable efforts to
arrange to list, or seek approval for quotation of, such New
Debentures on any securities exchange or other organization on
which the Capital Securities are then listed or quoted, if any.
There can be no assurance as to the market price of any New
Debentures that may be distributed to the holders of Capital
Securities. See "Risk Factors - Liquidation Distribution of New
Debentures."
Payment and Paying Agents
CHL initially will act as Paying Agent with respect to the
New Debentures except that, if the New Debentures are distributed
to the holders of the Capital Securities in liquidation of such
holders' interests in the Trust, the Indenture Trustee will act
as the Paying Agent. CHL at any time may designate additional
Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent
acts, except that CHL will be required to maintain a Paying Agent
at the place of payment.
Any moneys deposited with the Indenture Trustee or any
Paying Agent, or then held by CHL in trust, for the payment of
the principal of and premium, if any, or interest on any New
Debentures and remaining unclaimed for two years after such
principal and premium, if any, or interest has become due and
payable shall, at the request of CHL, be repaid to CHL, and the
holder of such New Debentures shall thereafter look, as a general
unsecured creditor, only to CHL for payment thereof.
Governing Law
The Indenture is, and the New Debentures will be, governed
by and construed in accordance with the laws of the State of New
York.
Information Concerning the Indenture Trustee
The Indenture Trustee has been and is subject to all the
duties and responsibilities specified with respect to an
indenture trustee under the Trust Indenture Act. Subject to such
provisions, the Indenture Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the
request of any holder of New Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Indenture
Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of its duties if the Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
DESCRIPTION OF TRUST GUARANTEE
The New Trust Guarantee will be executed and delivered by
the Company concurrently with the issuance by the Trust of the
New Capital Securities for the benefit of the holders from time
to time of such New Capital Securities. The Bank of New York will
act as Trust Securities Guarantee Trustee under the New Trust
Guarantee. This summary of material provisions of the New Trust
Guarantee and the Old Trust Guarantee does not purport to be
complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Trust Guarantee,
including the definitions therein of certain terms and the
provisions of the Trust Indenture Act made a part thereof. The
Trust Securities Guarantee Trustee will hold the New Trust
Guarantee for the benefit of the holders of the New Capital
Securities.
General
The Company will irrevocably and unconditionally agree to
pay in full, to the extent set forth herein, the Trust Guarantee
Payments to the holders of the Capital Securities, as and when
due, regardless of any defense, right of set-off or counterclaim
that the Trust may have or assert. The following payments or
distributions with respect to the Capital Securities, to the
extent not paid by or on behalf of the Trust, will be subject to
the Trust Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on the New Capital Securities,
to the extent that the Trust has sufficient funds available
therefor at such time, (ii) the Redemption Price with respect to
any Capital Securities called for redemption, to the extent that
the Trust has sufficient funds available therefor at such time,
or (iii) upon a voluntary or involuntary dissolution, winding up
or liquidation of the Trust (unless the New Debentures are
distributed to holders of the Capital Securities), the lesser of
(a) the aggregate liquidation amount of the Capital Securities
and all accrued and unpaid Distributions thereon to the date of
payment, to the extent that the Trust has sufficient funds
available therefor at such time, and (b) the amount of assets of
the Trust remaining available for distribution to holders of
Capital Securities. The Company's obligation to make a Trust
Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the Capital
Securities or by causing the Trust to pay such amounts to such
holders.
The Trust Guarantee will apply only to the extent that the
Trust has sufficient funds available to make such payments.
If CHL does not make payments on the New Debentures held by
the Trust and the Company does not make such payments, to the
extent required, under the New Debt Guarantee, the Trust will not
be able to make payments on the Capital Securities and will not
have funds legally available therefor. The Trust Guarantee does
not limit the incurrence or issuance of other secured or
unsecured debt of the Company, whether under any existing
indenture or under any other indenture that the Company may enter
into in the future or otherwise.
The Company's obligations under the New Guarantees, the
Indenture and the Declaration, taken together with CHL's
obligations under the New Debentures and the Indenture, including
CHL's obligation to pay all costs, expenses and liabilities of
the Trust (other than with respect to the Trust Securities)
constitute a full and unconditional guarantee by the Company of
all of the Trust's obligations under the Capital Securities. No
single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee.
It is only the combined operation of these documents that has the
effect of providing a full and unconditional guarantee by the
Company of the Trust's obligations under the Capital Securities.
See "Relationship Among the Capital Securities, the New
Debentures and the Guarantees."
Status of the Trust Guarantee
The Old Trust Guarantee ranks, and the New Trust Guarantee
will rank, subordinate and junior in right of payment to all
existing and future Senior Indebtedness of the Company. The
Trust Guarantee does not place a limitation on the amount of
additional Senior Indebtedness that may be incurred by the
Company. See "Risk Factors - Ranking of Obligations under the
Guarantees and the New Debentures."
The Trust Guarantee will constitute a guarantee of payment
and not of collection (i.e., the guaranteed party may institute a
legal proceeding directly against the Company to enforce its
rights under the Trust Guarantee without first instituting a
legal proceeding against any other person or entity). The Trust
Guarantee will be held by the Trust Securities Guarantee Trustee
for the benefit of the holders of the Capital Securities. The
Trust Guarantee will not be discharged except by payment of the
Trust Guarantee Payments in full to the extent not paid by the
Trust or upon distribution of the New Debentures to the holders
of the Capital Securities in exchange for all of the Capital
Securities.
Amendments and Assignment
Except with respect to any changes that do not materially
adversely affect the rights of holders of the Capital Securities
(in which case no consent of such holders will be required), the
Trust Guarantee may not be amended without the prior approval of
the holders of not less than a majority of the aggregate
liquidation amount of the outstanding Capital Securities. All
guarantees and agreements contained in the Trust Guarantee shall
bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of
the holders of the Capital Securities then outstanding.
Events of Default
An event of default under the Trust Guarantee will occur
upon the failure of the Company to perform any of its payment or
other obligations thereunder. The holders of not less than a
majority in aggregate liquidation amount of the Capital
Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust
Securities Guarantee Trustee in respect of the Trust Guarantee or
to direct the exercise of any trust or power conferred upon the
Trust Securities Guarantee Trustee under the Trust Guarantee.
If the Trust Securities Guarantee Trustee fails to enforce
the Trust Guarantee, then any holder of the Capital Securities
may institute a legal proceeding directly against the Company to
enforce the Trust Securities Guarantee Trustee's rights under the
Trust Guarantee without first instituting a legal proceeding
against the Trust, the Trust Securities Guarantee Trustee or any
other person or entity.
The Company, as guarantor, is required to file annually with
the Trust Securities Guarantee Trustee a certificate as to
whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Trust
Guarantee.
Information Concerning the Trust Securities Guarantee Trustee
The Trust Securities Guarantee Trustee, other than during
the occurrence and continuance of a default by the Company in
performance of the Trust Guarantee, undertakes to perform only
such duties as are specifically set forth in the New Trust
Guarantee and, after default with respect to the Trust Guarantee
(that has not been cured or waived) that is actually known to a
responsible officer of the Trust Securities Guarantee Trustee,
must exercise the same degree of care and skill as a prudent
person would exercise or use under the circumstances in the
conduct of his or her own affairs. Subject to this provision, the
Trust Securities Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by the Trust Guarantee at
the request of any holder of any Capital Security unless it is
offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
Termination of the Trust Guarantee
The Trust Guarantee will terminate and be of no further
force and effect upon full payment of the Redemption Price of all
of the Capital Securities, upon full payment of the amounts
payable upon liquidation of the Trust or upon distribution of New
Debentures to the holders of the Capital Securities in exchange
for all of the Capital Securities. The Trust Guarantee will
continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the Capital Securities must
restore payment of any sums paid under the Capital Securities or
the Trust Guarantee.
Governing Law
The Old Trust Guarantee is and the New Trust Guarantee will
be governed by and construed and interpreted in accordance with
the laws of the State of New York.
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE NEW DEBENTURES AND THE GUARANTEES
Payments of Distributions and other amounts due on the
Capital Securities (to the extent the Trust has funds available
for such payments) are fully, unconditionally and irrevocably
guaranteed by the Company to the extent set forth under
"Description of Trust Guarantee." If and to the extent that CHL
does not make payments under the New Debentures and the Company
does not make such payments, to the extent required, under the
New Debt Guarantee, the Trust will not pay Distributions or other
amounts due on the Capital Securities. The Trust Guarantee does
not cover payment of Distributions and such other amounts when
the Trust has insufficient funds to pay the same. In such event,
a holder of Capital Securities may institute a legal proceeding
directly against CHL or the Company to enforce payment of such
amounts to such holder after the respective due dates. Taken
together, the Company's obligations under the Guarantees, the
Indenture and the Declaration, and CHL's obligations under the
Indenture and the New Debentures, including CHL's obligation to
pay all costs, expenses and liabilities of the Trust (other than
with respect to the Trust Securities), provide, in the aggregate,
a full and unconditional guarantee by the Company of payments of
Distributions and other amounts due on the Capital Securities. No
single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee.
It is only the combined operation of these documents that has the
effect of providing a full and unconditional guarantee by the
Company of the Trust's obligations under the Capital Securities.
Sufficiency of Payments
As long as payments of interest, principal and other
payments are made when due on the New Debentures, such payments
will be sufficient to cover Distributions and other payments due
on the Capital Securities, primarily because (i) the aggregate
principal amount of the New Debentures will be equal to the sum
of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate, the Interest Payment Dates
and the other payment dates on the New Debentures will match the
Distribution Rate, the Distribution Dates and the other payment
dates for the Capital Securities; (iii) CHL will pay for all and
any costs, expenses and liabilities of the Trust except the
Trust's obligations under the Trust Securities; and (iv) the
Declaration further provides that the Trust will not engage in
any activity that is not consistent with the limited purposes of
the Trust.
Notwithstanding anything to the contrary in the Indenture,
the Company has the right to set-off any payment it is otherwise
required to make thereunder with and to the extent the Company
has theretofore made, or is concurrently on the date of such
payment making, a related payment under the Trust Guarantee.
Limited Purpose of Trust
The Capital Securities evidence an undivided beneficial
ownership interest in the assets of the Trust, and the Trust
exists for the exclusive purposes of issuing the Trust Securities
and investing the proceeds thereof in the Old Debentures and the
Old Debt Guarantee, which Old Debentures and Old Debt Guarantee,
will be exchanged for the New Debentures and New Debt Guarantee,
respectively, pursuant to the Exchange Offer. A principal
difference between the rights of a holder of Capital Securities
and a holder of New Debentures is that a holder of New Debentures
is entitled to receive from CHL (or from the Company under the
New Debt Guarantee) the principal amount of, premium, if any, and
interest accrued on New Debentures held, while a holder of
Capital Securities is entitled to receive Distributions from the
Trust (or from the Company under the Trust Guarantee if and to
the extent the Trust has funds available for the payment of such
Distributions).
Rights Upon Termination
Upon any voluntary or involuntary dissolution of the Trust
involving the liquidation of the Trust, the holders of the
Capital Securities will be entitled to receive, out of assets
held by the Trust, the Liquidation Distribution in cash. See
"Description of Capital Securities - Liquidation Distribution
Upon Dissolution." Upon any voluntary or involuntary liquidation
or bankruptcy of CHL or the Company, the Property Trustee, as
holder of the New Debentures and the New Debt Guarantee, would be
a subordinated creditor of CHL and the Company, subordinated in
right of payment to all Senior Indebtedness, but entitled to
receive payment in full of principal and interest before any
stockholders of CHL or the Company, as the case may be, receive
payments or distributions. Because the Company is the guarantor
under the Guarantees and CHL has agreed to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of the Trust Securities), the
positions of a holder of Capital Securities and a holder of the
New Debentures relative to other creditors and to stockholders of
CHL or the Company in the event of liquidation or bankruptcy of
CHL or the Company would be substantially the same.
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES
The following is a general summary of certain U.S. federal
income tax consequences of the purchase, ownership and
disposition of the New Capital Securities and the exchange of Old
Capital Securities for New Capital Securities, but it does not
purport to be a comprehensive description of all the tax
considerations that may be relevant to a decision to purchase,
own and dispose of the New Capital Securities or exchange Old
Capital Securities for New Capital Securities. This summary does
not describe any tax consequences arising under the laws of any
state, locality or taxing jurisdiction other than the United
States.
Prospective purchasers of the New Capital Securities and holders
of Old Capital Securities considering an exchange of Old Capital
Securities for New Capital Securities should consult their own tax
advisors as to the U.S. and other tax consequences of the purchase,
ownership and disposition of the New Capital Securities and the
exchange of Old Capital Securities for New Capital Securities,
including the particular tax consequences to them in light of their
particular investment circumstances.
General
In addition to the two specific opinions referred to below
under "- Classification of the Trust" and "- Classification of
the New Debentures," Fried, Frank, Harris, Shriver & Jacobson (a
partnership which includes professional corporations), special
counsel to the Company, CHL and the Trust ("Counsel"), has
rendered its opinion generally to the effect that, subject to the
exceptions and qualifications set forth therein, the discussion
of United States federal income taxation which follows summarizes
the material United States federal income tax consequences of the
purchase, ownership and disposition of New Capital Securities.
This summary is based on the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations thereunder, and
administrative and judicial interpretations thereof, each as of
the date hereof, all of which are subject to change, possibly on
a retroactive basis, and is for general information only.
Except as otherwise stated, this summary deals only with a
Security held as a capital asset by a holder who or which
(i) purchased New Capital Securities upon original issuance (an
"Initial Holder") and (ii) is a US Holder (as defined below). It
does not deal with all aspects of United States federal income
taxation, nor with the particular United States federal income
tax (hereafter, "income tax") consequences which may be
applicable to certain classes of US Holders (such as banks,
thrift institutions, real estate investment trusts, regulated
investment companies, insurance companies, brokers and dealers in
securities or currencies, other financial institutions, tax-
exempt organizations, persons holding New Capital Securities as a
position in a "straddle," as part of a "synthetic security or
hedge," as part of a "conversion transaction" or as part of any
other integrated investment, persons having a functional currency
other than the U.S. Dollar and certain United States
expatriates). Further, this summary does not address (a) the
income tax consequences to shareholders in, or partners or
beneficiaries of, a holder of New Capital Securities, (b) the
United States federal alternative minimum tax consequences of the
purchase, ownership or disposition of New Capital Securities or
(c) any state, local or foreign tax consequences of the purchase,
ownership and disposition of New Capital Securities.
A "US Holder" is a holder of New Capital Securities who or
which is a citizen or individual resident (or is treated as a
citizen or individual resident) of the United States for income
tax purposes, a corporation or partnership created or organized
(or treated as created or organized for income tax purposes) in
or under the laws of the United States or any political
subdivision thereof, or a trust or estate the income of which is
includable in its gross income for income tax purposes without
regard to its source. (For taxable years beginning after
December 31, 1996 (or for the immediately preceding taxable year,
if the trustee of a trust so elects), a trust is a US Holder for
income tax purposes if, and only if (i) a court within the United
States is able to exercise primary supervision over the
administration of the trust, and (ii) one or more United States
trustees have the authority to control all substantial decisions
of the trust.)
Exchange of New Capital Securities
The issuance of New Capital Securities in exchange for Old
Capital Securities will not be a taxable event, and the federal
tax characteristics of the New Capital Securities (e.g., tax
basis and holding period) will be the same as those of the Old
Capital Securities surrendered in exchange therefor.
Classification of the Trust
Counsel has rendered its opinion generally to the effect
that, under then current law and assuming full compliance with
the terms of the Declaration (and other documents), and based on
certain assumptions and qualifications referenced in the opinion,
the Trust will be characterized for United States federal income
tax purposes as a grantor trust, and will not be characterized as
an association taxable as a corporation for such purposes.
Accordingly, for income tax purposes, each holder of New Capital
Securities generally will be considered the owner of an undivided
interest in the New Debentures owned by the Trust, and each US
Holder will be required to include all income or gain recognized
for income tax purposes with respect to its allocable share of
the New Debentures on its own income tax return.
Classification of the New Debentures
The Company, CHL, the Trust and the holders of the New
Capital Securities (by acceptance of a beneficial interest in a
New Capital Security) will agree to treat the New Debentures as
indebtedness for all United States income tax purposes. Counsel
has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the
Indenture (and other documents), and based on certain assumptions
and qualifications referenced in the opinion, the New Debentures
will be characterized for United States federal income tax
purposes as debt of CHL.
Interest Income and Original Issue Discount
Under the terms of the New Debentures, CHL has the option to
defer payments of interest from time to time for a period not
exceeding 10 consecutive semi-annual periods, but not beyond the
Stated Maturity of the New Debentures. Recently issued Treasury
regulations under Section 1273 of the Code provide that debt
instruments like the New Debentures will not be considered issued
with OID by reason of CHL's option to defer payments of interest
if the likelihood of deferral is "remote."
CHL has concluded, and this discussion assumes, that, as of
the date of this Prospectus, the likelihood of exercise of that
option is "remote" within the meaning of the applicable
regulations, in part because exercising that option would prevent
the Company and CHL from declaring dividends on their stock and
would prevent the Company and CHL from making any payments with
respect to debt securities that rank pari passu or junior to the
New Debentures. Therefore, the New Debentures should not be
treated as issued with OID by reason of CHL's deferral option.
Rather, stated interest on the New Debentures will generally be
taxable to a US Holder, as ordinary income, when paid or accrued
in accordance with that holder's method of accounting for income
tax purposes. It should be noted, however, that these
regulations have not yet been addressed in any rulings or other
interpretations by the Internal Revenue Service ("IRS").
Accordingly, it is possible that the IRS could take a position
contrary to the interpretation described herein.
In the event CHL subsequently exercised its option to defer
payments of interest, the New Debentures would be treated as
reissued for OID purposes and the sum of the remaining interest
payments on the New Debentures (and any de minimis OID on the New
Debentures (discussed below)) would thereafter be treated as OID,
which would accrue, and be includable in a US Holder's taxable
income, on an economic accrual basis (regardless of the US
Holder's method of accounting for income tax purposes) over the
remaining term of the New Debentures (including any period of
interest deferral), without regard to the timing of payments
under the New Debentures. (Subsequent distributions of interest
on the New Debentures generally would not be taxable.) The
amount of OID that accrued in any period would generally equal
the amount of interest that accrued on the New Debentures in that
period at the stated interest rate (adjusted for any de minimis
OID on the New Debentures). Consequently, during any period of
interest deferral, US Holders will include OID in gross income in
advance of the receipt of cash, and a US Holder which disposes of
a New Capital Security prior to the record date for payment of
Distributions on the New Debentures following that period will be
subject to income tax on OID accrued through the date of
disposition (and not previously included in income), but will not
receive cash from the Trust with respect to that OID.
In the absence of CHL's election to defer an interest
payment period, de minimis OID would not be subject to income tax
until a holder's New Debentures were sold, redeemed or retired,
in which event the de minimis OID would increase any gain or
decrease any loss recognized by the holder. De minimis OID will
be present with respect to the New Debentures, in an amount equal
to the excess of (a) the stated redemption price at maturity (as
defined for income tax purposes) of a New Debenture, over (b) the
issue price of an Old Debenture, if such amount is less than the
product of (x) 0.25% of that redemption price, and (y) the number
of complete calendar years from an Old Debenture's issue date to
the maturity of a New Debenture.
If CHL's option to defer payments of interest were not
treated as remote, the Old Debentures and the New Debentures
would be treated as initially issued with OID in an amount equal
to the aggregate stated interest over the term of the Old
Debentures and the New Debentures, plus the amount of de minimis
OID on the Old Debentures and the New Debentures. That OID would
generally be includable in a US Holder's taxable income, over the
term of the Old Debentures and the New Debentures, on an economic
accrual basis.
Because the income underlying the New Capital Securities
will not be characterized as dividends for income tax purposes,
corporate holders of New Capital Securities will not be entitled
to a dividend received deduction for any income recognized with
respect to the New Capital Securities.
Market Discount and Bond Premium
Holders of New Capital Securities other than Initial Holders
may be considered to have acquired their undivided interests in
the New Debentures with market discount or acquisition premium
(as each phrase is defined for income tax purposes).
Distribution of New Debentures or Cash upon Liquidation of the
Trust
Under the circumstances described under the caption
"Description of New Capital Securities - Redemption - Special
Event Redemption or Distribution of New Debentures; Shortening of
Stated Maturity" above, New Debentures, together with the New
Debt Guarantee, may be distributed to holders in exchange for the
New Capital Securities and in liquidation of the Trust. Except
as discussed below, such a distribution would not be a taxable
event for income tax purposes, and each US Holder would have an
aggregate adjusted basis in its New Debentures (including the New
Debt Guarantee) for income tax purposes equal to such holder's
aggregate adjusted basis in its New Capital Securities. For
income tax purposes, a US Holder's holding period in the New
Debentures (including the New Debt Guarantee) received in such a
liquidation of the Trust would include the period during which
the New Capital Securities were held by the holder. If, however,
the relevant event is a Tax Event which results in the Trust
being treated as an association taxable as a corporation, the
distribution would likely constitute a taxable event to US
Holders of the New Capital Securities for income tax purposes.
Upon retirement of the New Capital Securities, and under
certain circumstances described herein (see "Description of
Capital Securities"), the New Debentures may be redeemed for cash
and the proceeds of such redemption distributed to holders in
redemption of their New Capital Securities. Such a redemption
would be taxable for income tax purposes, and a US Holder would
recognize gain or loss as if it had sold the New Capital
Securities for cash. See " Sales of New Capital Securities"
below.
Sales of New Capital Securities
A US Holder that sells New Capital Securities will recognize
gain or loss equal to the difference between its adjusted basis
in the New Capital Securities and the amount realized on the sale
of such New Capital Securities. A US Holder's adjusted basis in
the New Capital Securities generally will be its initial purchase
price, increased by OID, if any, previously included (or
currently includable) in such holder's gross income to the date
of disposition, and decreased by payments received on the New
Capital Securities subsequent to the effective date of CHL's
first exercise of its option to defer payments of interest. Any
such gain or loss generally will be capital gain or loss, and
generally will be a long-term capital gain or loss if the New
Capital Securities have been held for more than one year.
A holder who disposes of its New Capital Securities between
record dates for payments of Distributions will be required to
include accrued but unpaid interest (or OID) on the New
Debentures through the date of disposition in its taxable income
for United States federal income tax purposes (notwithstanding
that the holder may receive a separate payment from the purchaser
with respect to accrued interest), and to deduct that amount from
the sales proceeds received (including the separate payment, if
any, with respect to accrued interest) for the New Capital
Securities (or as to OID only, to add such amount to such
holder's adjusted tax basis in its New Capital Securities). To
the extent the selling price is less than the holder's adjusted
tax basis (which will include accrued but unpaid OID, if any), a
holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
Recent Tax Legislation
Recently enacted U.S. federal income tax legislation will have
no effect on the income tax treatment of the Capital Securities.
However, there can be no assurance that future legislation will not
adversely affect the ability of CHL to deduct interest on the New
Debentures, or otherwise affect the tax treatment of the
transactions described herein. Moreover, such legislation could
give rise to a Tax Event, which would permit CHL to shorten the
maturity of the New Debentures or cause a redemption of the
Capital Securities, as described more fully under "Description of
Capital Securities - Redemption - Special Event Redemption or
Distribution of New Debentures; Shortening of Stated Maturity."
Non-United States Holders
The following discussion applies to an Initial Holder who is
not a US Holder (a "Non-US Holder").
Payments to a holder of a New Capital Security which is a
Non-US Holder will generally not be subject to withholding of
income tax, provided that (a) the beneficial owner of the New
Capital Security does not (directly or indirectly, actually or
constructively) own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote,
(b) the beneficial owner of the New Capital Security is not a
controlled foreign corporation that is related to the Company
through stock ownership, and (c) either (i) the beneficial owner
of the New Capital Securities certifies to the Trust or its
agent, under penalties of perjury, that it is a Non-US Holder and
provides its name and address, or (ii) a securities clearing
organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or
business (a "Financial Institution"), and holds the New Capital
Security in such capacity, certifies to the Trust or its agent,
under penalties of perjury, that such a statement has been
received from the beneficial owner by it or by another Financial
Institution between it and the beneficial owner in the chain of
ownership, and furnishes the Trust or its agent with a copy
thereof.
As discussed above (see "Description of Capital Securities -
Redemption - Special Event Redemption or Distribution of New
Debentures; Shortening of Stated Maturity"), changes in
legislation affecting the income tax consequences of the New
Debentures are possible, and could adversely affect the ability
of CHL to deduct the interest payable on the New Debentures.
Moreover, any such legislation could, as the Proposed Legislation
would have, adversely affect Non-US Holders by characterizing
income derived from the New Debentures as dividends, generally
subject to a 30% income tax (on a withholding basis) when paid to
a Non-US Holder, rather than as interest which, as discussed
above, is generally exempt form income tax in the hands of a Non-
US Holder.
A Non-US Holder of a New Capital Security will generally not
be subject to withholding of income tax on any gain realized upon
the sale or other disposition of a New Capital Security.
A Non-US Holder which holds New Capital Securities in
connection with the active conduct of a United States trade or
business will be subject to income tax on all income and gains
recognized with respect to its proportionate share of the New
Debentures.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to
payments made on, and proceeds from the sale of, New Capital
Securities held by a noncorporate US Holder within the United
States. In addition, payments made on, and payments of the
proceeds from the sale of, New Capital Securities to or through
the United States office of a broker are subject to information
reporting unless the holder thereof certifies as to its non-
United States status or otherwise establishes an exemption from
information reporting and backup withholding. Taxable income on
the New Capital Securities for a calendar year should be reported
to US Holders on Forms 1099 by the following January 31st.
Payments made on, and proceeds from the sale of, the New
Capital Securities may be subject to a "backup" withholding tax
of 31% unless the holder complies with certain identification or
exemption requirements. Any amounts so withheld will be allowed
as a credit against the holder's income tax liability, or
refunded, provided the required information is provided to the
IRS.
* * *
The preceding discussion is only a summary and does not
address the consequences to a particular holder of the purchase,
ownership and disposition of New Capital Securities. Potential
holders of New Capital Securities are urged to contact their own
tax advisors to determine their particular tax consequences.
BOOK-ENTRY ISSUANCE
The description of book-entry procedures in this Prospectus
includes summaries of certain rules and operating procedures of
DTC that affect transfers of interests in the Global Certificate
or Certificates issued in connection with sales of New Capital
Securities. Except as described in the next paragraph, the New
Capital Securities will be issued only as fully registered
securities registered in the name of Cede & Co. (as nominee for
DTC). One or more fully registered Global Certificates will be
issued, representing, in the aggregate, the New Capital
Securities, and will be deposited with DTC.
The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of securities in
definitive form. Such laws may impair the ability to transfer
beneficial interests in the Global Securities as represented by a
Global Certificate.
DTC has advised the Company and the Trust that it is a
limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants ("Participants") deposit with
DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need
for physical movement of securities certificates. Participants
in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations
("Direct Participants"). DTC is owned by a number of its 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 the DTC system is also
available to others, such as securities brokers and dealers,
banks and trust companies that clear transactions through or
maintain a direct or indirect custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
Purchases of New Capital Securities within the DTC system
must be made by or through Direct Participants, which will
receive a credit of the New Capital Securities on DTC's records.
The ownership interest of each actual purchaser of each New
Capital Security ("Beneficial Owner") is in turn to be recorded
on the Direct Participants' and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC
of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as
well as periodic statements of their holdings, from the Direct or
Indirect Participants through which the Beneficial Owners
purchased New Capital Securities. Transfers of ownership
interests in the New Capital Securities are to be accomplished by
entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the New
Capital Securities, except in the event that use of the book-
entry system for the New Capital Securities is discontinued.
To facilitate subsequent transfers, all the New Capital
Securities deposited by Participants with DTC will be registered
in the name of DTC's nominee, Cede & Co. The deposit of New
Capital Securities with DTC and their registration in the name of
Cede & Co. will effect no change in beneficial ownership. DTC
will have no knowledge of the actual Beneficial Owners of the New
Capital Securities. DTC's records will reflect only the identity
of the Direct Participants to whose accounts such New Capital
Securities are credited, which may or may not be the Beneficial
Owners. The Direct Participants and Indirect Participants will
remain responsible for keeping account of their holdings on
behalf of their customers.
So long as DTC, or its nominee, is the registered owner or
holder of a Global Certificate in respect of the New Capital
Securities, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the New Capital Securities
represented thereby for all purposes under the Declaration and
such New Capital Securities. No Beneficial Owner of an interest
in a Global Certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures.
DTC has advised the Company that it will take any action
permitted to be taken by a holder of New Capital Securities
(including the presentation of New Capital Securities for
exchange as described below) only at the direction of one or more
Participants to whose accounts the DTC interests in the Global
Certificates are credited and only in respect of such portion of
the aggregate liquidation amount of New Capital Securities as to
which such Participant or Participants has or have given such
direction. However, if there is a Declaration Event of Default
with respect to the New Capital Securities, DTC will, upon
notice, exchange the Global Certificates in respect of such New
Capital Securities for certificated securities, which it will
distribute to its Participants.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices in respect of the New Capital Securities
held in book-entry form will be sent to Cede & Co. If less than
all of the New Capital Securities are being redeemed, the New
Capital Securities will be redeemed on a pro rata basis.
Although voting with respect to the New Capital Securities
is limited, in those cases where a vote is required, neither DTC
nor Cede & Co. will itself consent or vote with respect to the
New Capital Securities. Under its usual procedures, DTC would
mail an omnibus proxy to the Trust as soon as possible after the
record date. The omnibus proxy assigns Cede & Co.'s consenting
or voting rights to those Direct Participants to whose accounts
the New Capital Securities are credited on the record date
(identified in a listing attached to the omnibus proxy).
Distributions on the New Capital Securities held in book-
entry form will be made to DTC in immediately available funds.
DTC's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payments on such payment date. Payments
by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Direct
Participants and Indirect Participants and not of DTC, the Trust
or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust,
disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the
Benficial Owners is the responsibility of Direct Participants and
Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest
in a Global Certificate will not be entitled to receive physical
delivery of New Capital Securities. Accordingly, each Beneficial
Owner must rely on the procedures of DTC, the Direct Participants
and the Indirect Participants to exercise any rights under the
New Capital Securities.
Although DTC has agreed to the foregoing procedures in order
to facilitate transfers of interests in the Global Certificates
among the Participants of DTC, DTC is under no obligation to
perform or continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Company,
the Trust or the Trustees will have any responsibility for the
performance by DTC or its Direct Participants or Indirect
Participants under the rules and procedures governing DTC. DTC
may discontinue providing its services as a securities depositary
with respect to the Capital Securities at any time by giving
notice to the Trust. Under such circumstances, in the event that
a successor securities depositary is not obtained, New Capital
Security certificates will be required to be printed and
delivered. Additionally, the Trust (with the consent of the
Company) may decide to discontinue use of the system of book-
entry transfers through DTC (or a successor depositary) with
respect to the New Capital Securities of the Trust. In that
event, certificates for such New Capital Securities will be
printed and delivered.
The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company
and the Trust believes to be reliable, but none of the Company,
DTC, or the Trust takes responsibility for the accuracy thereof.
ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code ("Plans"), may purchase
New Capital Securities, subject to the investing fiduciary's
determination that the investment in New Capital Securities
satisfies ERISA's fiduciary standards and other requirements
applicable to investments by the Plan. Accordingly, an investing
fiduciary of a Plan should consider whether the investment
satisfies ERISA's diversification and prudence requirements,
whether the investment constitutes unauthorized delegation of
fiduciary authority and whether the investment is in accordance
with the documents and instruments governing such Plan.
The Department of Labor ("DOL") has issued a regulation (29
C.F.R. Section 2510.3-101) (the "DOL Regulation") concerning the
definition of what constitutes the assets of a Plan. The DOL
Regulation provides that as a general rule, the underlying assets
and properties of corporations, partnerships, trusts and certain
other entities in which a plan makes an "equity" investment,
where such investment interest does not represent a "publicly
offered security" or a security issued by an investment company
registered under the 1940 Act, will be deemed for purposes of
ERISA to be assets of the investing plan unless it is established
either that the entity is an operating company or that equity
participation by benefit plan investors is not significant. Under
the DOL Regulation, equity participation by benefit plan
investors will not be considered "significant" on any date only
if, immediately after the most recent acquisition of New Capital
Securities, the aggregate interest in the New Capital Securities
held by benefit plan investors will be less than 25% of the value
of the New Capital Securities.
There can be no assurance that any of the exceptions set
forth in the DOL Regulation will apply to the purchase of New
Capital Securities offered hereby and, as a result, an investing
Plan's assets could be considered to include an undivided
beneficial interest in the New Debentures held by the Trust. In
the event that assets of the Trust are considered assets of an
investing Plan, the Company, CHL and the Trustees and other
persons, in providing services with respect to the New
Debentures, may be considered fiduciaries to such Plan and
subject to the fiduciary responsibility provisions of Title I of
ERISA (including the prohibited transaction provisions thereof).
In addition, the prohibited transaction provisions of
Section 4975 of the Code could apply with respect to transactions
engaged in by any "disqualified person," as defined below,
involving such assets unless a statutory or administrative
exemption applies.
Even if they are not fiduciaries, the Company and/or any of
its affiliates may be considered a "party in interest" (within
the meaning of ERISA) or a "disqualified person" (within the
meaning of Section 4975 of the Code) with respect to certain
Plans. The acquisition and ownership of New Capital Securities by
a Plan (or by an individual retirement arrangement or other plan
described in Section 4975(e)(1) of the Code) may constitute or
result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless such New Capital Securities are acquired
pursuant to and in accordance with an applicable exemption. As a
result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should
not acquire New Capital Securities unless such New Capital
Securities are acquired pursuant to and in accordance with an
applicable exemption, including but not limited to: Prohibited
Transaction Class Exemption ("PTE") 90-1, regarding investments
by insurance company pooled separate accounts; PTE 91-38,
regarding investments by bank collective investment funds; PTE
84-14, regarding transactions effected by qualified professional
asset managers; PTE 96-23, regarding transactions effected by
in-house asset managers; or PTE 95-60, regarding investments by
insurance company general accounts. Any purchaser or holder of
the New Capital Securities or any interest therein will be deemed
to have represented and covenanted by its purchase and holding
thereof that either (i) the purchaser and holder is not a Plan or
any entity whose underlying assets include "plan assets" by
reason of any Plan's investment in the entity and is not
purchasing such New Capital Securities on behalf of or with "plan
assets" of any Plan or (ii) the purchase and holding of the New
Capital Securities is covered by one of the prohibited
transaction class exemptions under ERISA and the Code described
above.
Notwithstanding the foregoing, it is possible that the New
Capital Securities may qualify as "publicly offered securities"
under the DOL Regulation if, in addition to an effective
registration statement filed in connection with the Exchange
Offer, they are also "widely held" and "freely transferable"
following consummation of the Exchange Offer. Under the DOL
Regulation, a class of New Capital Securities is "widely held"
only if it is a class of New Capital Securities owned by 100 or
more investors independent of the issuer and each other. Although
it is possible that at the time of the Exchange Offer the New
Capital Securities will be "widely held", no assurances can be
given that will be true. If the New Capital Securities are
"publicly offered securities" following consummation of the
Exchange Offer, the assets of the Trust would not be assets of
the Investing Plans as of such time. If the New Capital
Securities did not qualify as "publicly offered securities", the
foregoing discussion about plan assets in the preceding
paragraphs would also be applicable to the New Capital
Securities.
Government plans and certain church plans (as defined in
Sections 3(32) and 3(33) of ERISA, respectively), are not subject
to ERISA, and are also not subject to the prohibited transaction
provisions under Section 4975 of the Code. However, state laws or
regulations governing the investment and management of the assets
of such plans may contain fiduciary and prohibited transaction
requirements similar to those under ERISA and the Code discussed
above. Accordingly, fiduciaries of governmental or church plans,
in consultation with their advisors, should consider the impact
of their respective state pension codes on investments in the New
Capital Securities, and the considerations discussed above, to
the extent applicable.
The foregoing discussion is general in nature and is not
intended to be all inclusive. Thus, any Plans or other entities
whose assets include Plan assets subject to ERISA or Section 4975
of the Code proposing to acquire New Capital Securities or New
Capital Securities should consult with their own counsel.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for
its own account in connection with the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with
any resale of such New Capital Securities. This Prospectus, as
it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to
below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities if such Old
Capital Securities were acquired by such Participating Broker-
Dealers for their own accounts as a result of market-making or
other trading activities. The Company, CHL and the Trust have
agreed that this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a
period ending 90 days after the date the Registration Statement
of which this Prospectus is a part is declared effective.
However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of New Capital
Securities received in exchange for Old Capital Securities
pursuant to the Exchange Offer must notify the Company, CHL and
the Trust, or cause the Company, CHL and the Trust to be
notified, on or prior to the Expiration Date, that it is a
Participating Broker-Dealer. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or
may be delivered to the Exchange Agent at one of the addresses
set forth herein under "The Exchange Offer - Exchange Agent."
See "The Exchange Offer - Resales of New Capital Securities."
The Company will not receive any proceeds from any sale of
New Capital Securities by broker-dealers. New Capital Securities
received by Participating Broker-Dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the
New Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in the
form of commissions or concessions from any such broker-dealer
and/or the purchasers of any such New Capital Securities.
Any Participating Broker-Dealer that resells New Capital
Securities that were received by it for its own account pursuant
to the Exchange Offer may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such
resale of the New Capital Securities and any commissions or
concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter
of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of
the New Capital Securities will be passed upon for the Trust by
Morris Nichols Arsht & Tunnell, special Delaware counsel to the
Company, CHL and the Trust. The validity of the New Debentures
and the New Guarantees will be passed upon for CHL and the
Company by Fried, Frank, Harris, Shriver & Jacobson (a
partnership which includes professional corporations). Edwin
Heller (whose professional corporation retired as a partner of
Fried, Frank, Harris, Shriver & Jacobson in September 1996) is of
counsel to Fried, Frank, Harris, Shriver & Jacobson and is a
director of the Company. Fried, Frank, Harris, Shriver & Jacobson
will rely on the opinion of Morris Nichols Arsht & Tunnell as to
matters of Delaware law.
INDEPENDENT AUDITORS
The consolidated financial statements of the Company
appearing in the Company's Annual Report on Form 10-K for the
year ended February 28, 1997, have been audited by Grant Thornton
LLP, independent auditors, as set forth in their report thereon,
included therein and incorporated herein by reference.
INDEX OF CERTAIN TERMS
Page
Agent's Message...............................................27
book-entry confirmation.......................................27
Beneficial Owner..............................................60
Business Day..................................................36
Capital Securities............................................i
Change in 1940 Act Law........................................38
CHL...........................................................i
Code..........................................................vi, 56
Commission ...................................................iv
Common Securities ............................................ i
Company ...................................................... i
Counsel ......................................................55
Creditor......................................................42
Declaration ..................................................23
Delaware Trustee .............................................23
Depositor.....................................................30
Direct Action ................................................15
Direct Participants ..........................................60
Distribution Date ............................................36
Distribution Rate ............................................10
Distributions ................................................ii
DOL ..........................................................61
DOL Regulation ...............................................61
DTC ..........................................................15
Eligible Institution .........................................29
ERISA ........................................................vi, 61
Exchange Act ................................................. v
Exchange Agent ............................................... 8
Exchange Offer ............................................... i
Expiration Date ..............................................iii, 7, 26
Extension Period .............................................ii
Financial Institution ........................................58
financing entity .............................................49
Global Certificates ..........................................36
Global Securities ............................................15
Guarantees ................................................... i
income tax ...................................................56
Indenture ....................................................45
Indenture Event of Default ...................................48
Indenture Trustee ............................................45
Indirect Participants ........................................60
Initial Holder ...............................................56
Initial Purchasers ........................................... i
interest .....................................................45
Interest Payment Date ........................................45
Investment Company Event .....................................38
IRS ..........................................................57
Letter of Transmittal ........................................ i
Liquidation Distribution .....................................40
Maturity Advancement .........................................38
New Capital Securities ....................................... i
New Debentures ............................................... i
New Debt Guarantee ........................................... i
New Guarantees ............................................... i
New Securities ............................................... i
New Trust Guarantee .......................................... i
1940 Act .....................................................24
1996 Debentures ..............................................ii
Non-US Holder ................................................58
NYSE ......................................................... v
Offering ..................................................... 4
Offerings ....................................................ii
OID ..........................................................iii
Old Capital Securities ....................................... i
Old Debentures ............................................... i
Old Debt Guarantee ........................................... i
Old Securities ............................................... i
Old Trust Guarantee .......................................... i
Participants .................................................60
Participating Broker-Dealers ................................. v
Paying Agent .................................................43
Plans ........................................................61
PORTAL .......................................................19
Prime mortgages ..............................................22
Property Account .............................................23
Property Trustee .............................................23
Prospectus ................................................... i
PTE ..........................................................vi, 61
Qualified Institutional Buyers ...............................24
Redemption Price .............................................38
Registration Rights Agreement ................................ i
Registration Statement ....................................... i
Regular Trustees .............................................23
Rule 144A ....................................................iv
Rule 3a-5 ....................................................41
Securities Act ............................................... i
Senior Indebtedness ..........................................48
Shelf Registration Statement ................................. 9
Special Event ................................................37
Stated Maturity ..............................................11
Sub-prime loans ..............................................22
Successor Securities .........................................43
Targeted Consummation Date ...................................24
Tax Event ....................................................38
Trust ........................................................ i
Trust Act ....................................................23
Trust Enforcement Event ......................................40
Trust Guarantee .............................................. i
Trust Guarantee Payments .....................................16
Trust Indenture Act ..........................................18
Trust Securities ............................................. i
Trust Securities Guarantee Trustee ...........................23
Trustees .....................................................23
U.S. Person ..................................................24
US Holder ....................................................57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. 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 Delaware General Corporation Law.
Article SIXTH of the Certificate of Incorporation of CCI
provides that CCI may indemnify its directors and officers to the
full extent permitted by the laws of the State of Delaware.
Article VIII of CCI's Bylaws provides that CCI shall indemnify
its directors and officers, and persons serving as directors and
officers of CHL at the request of CCI, against any threatened,
pending or completed action, suit or proceeding or investigation
brought against such directors and officers by reason of the fact
that such persons were such directors or officers, provided that
such persons acted in good faith and in a manner which they
reasonably believed to be in or not opposed to the best interests
of CCI; except that in the case of actions brought by or in the
right of CCI to procure a judgment in its favor, no
indemnification is permitted in respect of any claim, issue or
matter as to which any such director or officer shall have been
adjudged to be liable to CCI unless the court in which the action
was brought determines that such person is entitled to
indemnification. CCI's Bylaws further contemplate that the
indemnification provisions permitted thereunder are not exclusive
of any rights to which such directors and officers are otherwise
entitled by means of Bylaw provisions, agreements, vote of
stockholders or disinterested directors or otherwise. CCI has
entered into indemnity agreements with certain of its directors
and executive officers (including the directors and executive
officers of CHL), whereby such individuals are indemnified by CCI
up to an aggregate limit of $5,000,000 for any claims made
against such individual based on any act, omission or breach of
duty committed while acting as a director or officer, except,
among other things, cases involving dishonesty or improper
personal benefit. CCI also maintains an insurance policy
pursuant to which its directors and officers (including the
directors and executive officers of CHL) are insured against
certain liabilities which might arise out of their relationship
with CCI as directors and officers.
Article SEVENTH of the Certificate of Incorporation of CCI
provides that a director of CCI shall have no personal liability
to CCI or its stockholders for monetary damages for breach of his
fiduciary duty of care as a director to the full extent permitted
by the Delaware General Corporation Law, as it may be amended
from time to time.
Item 21. Exhibits and Financial Statement Schedules.
Number Description Page No.
4.1 Certificate of Trust of Countrywide Capital III,
dated May 28, 1997
4.2 Declaration of Trust of Countrywide Capital III,
dated May 28, 1997
4.3 Amended and Restated Declaration of Trust of
Countrywide Capital III, dated as of June 4,
1997
4.4 Indenture, dated as of June 4, 1997, among
Countrywide Home Loans, Inc., as Issuer,
Countrywide Credit Industries, Inc., as
Guarantor, and The Bank of New York, as Trustee
4.5 Form of New Capital Security (included in
Exhibit 4.3 above)
4.6 Form of New Debenture (included in Exhibit 4.4
above)
4.7 Guarantee Agreement, dated as of June 4, 1997, between
Countrywide Credit Industries, Inc. and The Bank of New
York, as trustee for the benefit of the holders
of Trust Securities
4.8 Registration Rights Agreement, dated as of June
4, 1997, among Countrywide Capital III,
Countrywide Credit Industries, Inc., Countrywide
Home Loans, Inc., and certain Initial Purchasers
5.1 Opinion of Morris, Nichols, Arsht & Tunell as to
the validity of the New Capital Securities
5.2 Opinion of Fried, Frank, Harris, Shriver &
Jacobson as to the validity of the New
Debentures and the New Debt Guarantee
8.1 Opinion of Fried, Frank, Harris, Shriver &
Jacobson as to certain United States federal
income tax matters
12.1 Statement regarding computation of ratio of
earnings to fixed charges of Countrywide Credit
Industries, Inc. (Incorporated by reference to
Exhibit 12.1 to the Quarterly Report on Form 10-Q
of Countrywide Credit Industries, Inc. for the
fiscal quarter ended May 31, 1997)
23.1 Consent of Grant Thornton LLP
23.2 Consent of Morris, Nichols, Arsht & Tunell
(included in Exhibit 5.1)
23.3 Consent of Fried, Frank, Harris, Shriver &
Jacobson (included in Exhibit 5.2)
23.4 Consent of Fried, Frank, Harris, Shriver &
Jacobson (included in Exhibit 8.1)
24.1 Powers of Attorney (included on signature pages)
25.1 Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939, as amended, of The
Bank of New York, as Indenture Trustee under the
Indenture (bound separately)
25.2 Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939, as amended, of The
Bank of New York, as Property Trustee under the
Amended and Restated Declaration of Trust of
Countrywide Capital III (bound separately)
25.3 Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939, as amended, of The
Bank of New York, as Trust Guarantee Trustee
under the Trust Securities Guarantee of
Countrywide Credit Industries, Inc. for the
benefit of the holders of Capital Securities
(bound separately)
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Registered Holders
99.4 Form of Instructions to Registered Holders
99.5 Form of Letter to Clients
Item 22. Undertakings.
(a) The undersigned, Countrywide Capital III, CHL and the
Company (collectively, the "Registrants"), hereby undertake:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
hereof) which, individually of 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 a prospectus filed with the
Securities and Exchange Commission (the "Commission")
pursuant to Rule 424(b) under the Securities Act of 1933, as
amended (the "Securities Act") if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that the undertakings set forth in
paragraphs (1)(i) and (ii) above do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Company pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) Each of the undersigned Registrants hereby undertakes
that, for purposes of determining any liability under the
Securities Act, each filing of CCI's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the Registrants pursuant to the
provisions permitted under Item 20 above or otherwise, the
Registrants have been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrants of
expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted against the Registrants
by such director, officer or controlling person in connection
with the securities being registered hereby, the Registrants
will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
(d) The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time if was declared
effective.
(2) For the purpose of determining any liability under
the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned Registrants hereby undertake to respond
to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other
equally prompt means. This undertaking includes information
contained in documents filed subsequent to the effective date of
this Registration Statement through the date of responding to the
request.
(f) The undersigned Registrants hereby undertake to supply
by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Countrywide Capital III certifies that it has duly caused this
Registration Statement on Form S-4 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of
Calabasas, State of California, on the 2nd day of October, 1997.
Countrywide Capital III
By:Countrywide Credit Industries,
Inc., as Sponsor
By: /s/ Angelo R. Mozilo
---------------------------------
Angelo R. Mozilo
Executive Vice President and
Vice Chairman of the Board of
Directors
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-4 and has duly caused this Registration
Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Calabasas,
State of California, on the 2nd day of October, 1997.
Countrywide Home Loans, Inc.
By:Countrywide Credit Industries,
Inc., as Sponsor
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 powers of substitution and resubstitution, for and in
his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this
Registration Statement, and any registration statement related to
the offering contemplated by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting
until 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 Registration Statement on Form S-4 has been signed by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ David S. Loeb Director October 2,
- ---------------------------------------- 1997
David S. Loeb
/s/ Angelo R. Mozilo Chairman of the October 2,
- ---------------------------------------- Board of Directors 1997
Angelo R. Mozilo and Chief Executive
Officer (Principal
Executive Officer);
Director
/s/ Stanford L. Kurland President and Chief October 2,
- ---------------------------------------- Operating Officer; 1997
Stanford L. Kurland Director
/s/ Thomas K. McLaughlin Managing Director October 2,
- ---------------------------------------- and Chief Financial 1997
Thomas K. McLaughlin Officer (Principal
Financial and
Accounting Officer)
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-4 and has duly caused this
Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Calabasas, State of
California, on the 2nd day Of October, 1997.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: 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 powers of substitution and
resubstitution, for and in his name, place and stead, in any and all capacities,
to sign any or all amendments (including post-effective amendments) to this
Registration Statement, and any registration statement related to the offering
contemplated by this Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, 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 Registration
Statement on Form S-4 has been signed by the following persons in the capacities
and on the dates indicated.
SIGNATURE TITLE DATE
/s/ David S. Loeb Chairman of the October 2,
- ---------------------------------------- Board of Directors 1997
David S. Loeb and President
(Principal Executive
Officer); Director
/s/ Angelo R. Mozilo Executive Vice October 2,
- ---------------------------------------- President and Vice 1997
Angelo R. Mozilo Chairman of the
Board of Directors;
Director
/s/ Carlos M. Garcia Managing Director -- October 2,
- ---------------------------------------- Finance, Chief 1997
Carlos M. Garcia Financial Officer
and Chief
Accounting Officer
(Principal Financial
and Accounting
Officer)
/s/ Robert J. Donato Director October 2,
- ---------------------------------------- 1997
Robert J. Donato
/s/ Ben M. Enis Director October 2,
- ---------------------------------------- 1997
Ben M. Enis
/s/ Edwin Heller Director October 2,
- ---------------------------------------- 1997
Edwin Heller
/s/ Harley W. Snyder Director October 2,
- ---------------------------------------- 1997
Harley W. Snyder
EXHIBIT INDEX
NUMBER DESCRIPTION PAGE
NO.
4.1 Certificate of Trust of Countrywide Capital III,
dated May 28, 1997
4.2 Declaration of Trust of Countrywide Capital III,
dated May 28, 1997
4.3 Amended and Restated Declaration of Trust of
Countrywide Capital III, dated as of June 4, 1997
4.4 Indenture, dated as of June 4, 1997, among
Countrywide Home Loans, Inc., as Issuer,
Countrywide Credit Industries, Inc., as Guarantor,
and The Bank of New York, as Trustee
4.5 Form of New Capital Security (included in Exhibit 4.3
above)
4.6 Form of New Debenture (included in Exhibit 4.4 above)
4.7 Guarantee Agreement, dated as of June 4, 1997, between
Countrywide Credit Industries, Inc. and The Bank of New
York, as trustee for the benefit of the holders of
Trust Securities
4.8 Registration Rights Agreement, dated as of June 4, 1997,
among Countrywide Capital III, Countrywide Credit
Industries Inc., Countrywide Home Loans, Inc., and
certain Initial Purchasers
5.1 Opinion of Morris, Nichols, Arsht & Tunell as to the
validity of the New Capital Securities
5.2 Opinion of Fried, Frank, Harris, Shriver & Jacobson
as to the validity of the New Debentures and the
New Debt Guarantee
8.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson
as to certain United States federal income tax matters
12.1 Statement regarding computation of ratio of
earnings to fixed charges of Countrywide Credit
Industries, Inc. (Incorporated by reference to
Exhibit 12.1 to the Quarterly Report on Form 10-Q
of Countrywide Credit Industries, Inc. for the
fiscal quarter ended May 31, 1997)
23.1 Consent of Grant Thornton LLP
23.2 Consent of Morris, Nichols, Arsht & Tunell
(included in Exhibit 5.1)
23.3 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5.2)
23.4 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 8.1)
24.1 Powers of Attorney (included on signature pages)
25.1 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of The Bank of
New York, as Indenture Trustee under the Indenture
(bound separately)
25.2 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of The Bank of
New York, as Property Trustee under the Amended and
Restated Declaration of Trust of Countrywide Capital III
(bound separately)
25.3 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of The Bank of
New York, as Trust Guarantee Trustee under the Trust
Securities Guarantee of Countrywide Credit Industries,
Inc. for the benefit of the holders of Capital Securities
(bound separately)
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Registered Holders
99.4 Form of Instructions to Registered Holders
99.5 Form of Letter to Clients
EXHIBIT 4.1
CERTIFICATE OF TRUST
OF
COUNTRYWIDE CAPITAL III
This Certificate of Trust of Countrywide Capital III (the "Trust") dated
May 28, 1997, is being duly executed and filed by the undersigned, as trustees,
to form a business trust pursuant to the Delaware Business Trust Act, 12 Del. C.
(S) 3801, et seq. The undersigned, as trustees, do hereby certify as follows:
1. The name of the business trust being formed hereby is "Countrywide
Capital III."
2. The name and business address of the trustee of the Trust which has its
principal place of business in the State of Delaware is as follows:
The Bank of New York (Delaware)
400 White Clay Center, Route 273
Newark, Delaware 19711
3. This Certificate of Trust shall be effective as of the date of filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
Dated: May 28, 1997 /s/Sandor E. Samuels
-----------------------------------
Sandor E. Samuels, as Trustee
/s/Thomas Keith McLaughlin
-----------------------------------
Thomas Keith McLaughlin, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Trustee
By: /s/Melissa Beneduce
-----------------------------------
Name: Melissa Beneduce
Title: Assistant Vice President
EXHIBIT 4.2
DECLARATION OF TRUST
OF
COUNTRYWIDE CAPITAL III
THIS DECLARATION OF TRUST (this "Declaration"), dated and effective as of
May 28, 1997, by the undersigned trustees (together with all other Persons from
time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), Countrywide Credit Industries,
Inc., a Delaware corporation, as trust sponsor (the "Sponsor"), and by the
holders, from time to time, of undivided beneficial interests in the Trust to be
issued pursuant to this Declaration;
W I T N E S S E T H:
WHEREAS, the Trustees and the Sponsor desire to establish a trust (the
"Trust") pursuant to the Delaware Business Trust Act for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures (as hereinafter defined) of the Debenture Issuer (as
hereinafter defined);
NOW THEREFORE, it being the intention of the parties hereto that the Trust
constitute a business trust under the Delaware Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of undivided beneficial
interests in the assets of the Trust, subject to the provisions of this
Declaration.
ARTICLE I.
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions. Capitalized terms used in this Declaration but
not defined in the preamble above have the respective meanings assigned thereto
in this Section 1.1. A term defined anywhere in this Declaration has the same
meaning throughout.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Business Day" means, with respect to any series of Securities, any day
other than a day on which federal or state banking institutions in the Borough
of Manhattan, The City of New York, are authorized or obligated by law,
executive order or regulation to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. (S)3801, et seq, as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Common Security" means a security representing a common undivided
beneficial interest in the assets of the Trust with such terms as may be set out
in any amendment to this Declaration.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii)
the Trust's Affiliates; and (b) any Holder.
"Debenture Issuer" means Countrywide Home Loans, Inc., a New York
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as the issuer of the Debentures.
"Debentures" means the resettable rate debentures to be issued by the
Debenture Issuer and purchased with the proceeds of the Securities, and the
debentures to be issued in exchange therefor.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Security" means a security representing a preferred undivided
beneficial interest in the assets of the Trust with such terms as may be set out
in any amendment to this Declaration.
"Preferred Security Certificate" means a certificate representing a
Preferred Security.
"Regular Trustee" means any Trustee other than the Delaware Trustee.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor legislation.
"Sponsor" means Countrywide Credit Industries, Inc., a Delaware
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as Sponsor of the Trust.
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
SECTION 1.2. Interpretation. Each definition in this Declaration includes
the singular and the plural, and references to the neuter gender include the
masculine and feminine where appropriate. Terms which relate to accounting
matters shall be interpreted in accordance with generally accepted accounting
principles in effect from time to time. References to any statute mean such
statute as amended at that time and include any successor legislation. The word
"or" is not exclusive, and the words "herein," "hereof" and "hereunder" refer to
this Declaration as a whole. The headings to the Articles and Sections are for
convenience of reference and shall not affect the meaning or interpretation of
this Declaration. Reference to Articles, Sections and Exhibits means the
Articles, Sections and Exhibits of this Declaration. The Exhibits are hereby
incorporated by reference into, and shall be deemed a part of, this Declaration.
ARTICLE II.
ORGANIZATION
SECTION 2.1. Name. The Trust created by this Declaration is named
"Countrywide Capital III." The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 2.2. Office. The address of the principal office of the Trust is
c/o Countrywide Credit Industries, Inc., 4500 Park Granada, Calabasas, CA 91302.
At any time, the Regular Trustees may designate another principal office.
SECTION 2.3. Purpose. The exclusive purposes and functions of the Trust
are (a) to issue and sell Securities and use the proceeds from such sale to
acquire the Debentures and (b) except as otherwise limited herein, to engage in
only those other activities necessary or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments or pledge
any of its assets.
SECTION 2.4. Authority. Subject to the limitations provided in this
Declaration, the Regular Trustees shall have exclusive and complete authority to
carry out the purposes of the Trust. An action taken by the Regular Trustees in
accordance with their powers shall constitute the act of, and serve to bind, the
Trust. In dealing with the Regular Trustees acting on behalf of the Trust, no
Person shall be required to inquire into the authority of the Regular Trustees
to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Regular Trustees as set forth in
this Declaration.
SECTION 2.5. Title to Property of the Trust. Legal title to all assets of
the Trust shall be vested in the Trust.
SECTION 2.6. Powers of the Regular Trustees. The Regular Trustees shall
have the exclusive power and authority to cause the Trust to engage in the
following activities:
(a) to issue and sell the Preferred Securities and the Common Securities
in accordance with this Declaration; provided, however, that the Trust may issue
no more than two series of Preferred Securities and no more than one series of
Common Securities, and, provided further, there shall be no interests in the
Trust other than the Securities;
(b) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and provide for reasonable compensation for such services;
(c) to incur expenses which are necessary or incidental to carry out any
of the purposes of this Declaration;
(d) to execute and enter into purchase agreements and other related
agreements to provide for the sale of the securities;
(e) to execute and enter into a registration rights agreement and other
related agreements; and
(f) to execute all other documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
SECTION 2.7. Filing of Certificate of Trust. On or after the effective
date of this Declaration, the Trustees shall cause the Certificate of Trust for
the Trust in the form attached hereto as Exhibit A to be filed with the
Secretary of State of the State of Delaware.
SECTION 2.8. Duration of Trust. The Trust, absent termination pursuant to
the provisions of Section 5.2, shall have existence for [thirty-five] years from
the date hereof.
ARTICLE III.
TRUSTEES
SECTION 3.1. Trustees. The number of Trustees shall initially be three,
and thereafter the number of Trustees shall be such number as shall be fixed
from time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided
that the number of Trustees shall in no event be less than three; and provided
further that one Trustee, in the case of a natural person, shall be a person who
is resident of the State of Delaware or which, if not a natural person, has its
principal place of business in the State of Delaware and meets the requirements
of applicable Delaware law (the "Delaware Trustee").
Except as expressly set forth in this Declaration, any power of the
Regular Trustees may be exercised by, or with the consent of, a majority of the
Regular Trustees; provided that if there are two or fewer Regular Trustees, all
powers of the Regular Trustees shall be exercised by, or with the consent of,
all of the Regular Trustees.
The initial Regular Trustees shall be:
Sandor E. Samuels
Thomas Keith McLaughlin
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
SECTION 3.2. Delaware Trustee. Notwithstanding any other provisions of
this Declaration, the Delaware Trustee, in its capacity as Delaware Trustee,
shall not be entitled to exercise any of the powers, nor shall the Delaware
Trustee have any of the duties and responsibilities, of the Regular Trustees
described in this Declaration. The Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
SECTION 3.3. Execution of Documents. (a) The Regular Trustees are
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to cause the Trust to execute pursuant
to Section 2.6.
(b) The Regular Trustees may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 their
power for the purposes of signing any documents which the Regular Trustees have
power and authority to cause the Trust to execute pursuant to Section 2.6.
ARTICLE IV.
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
Holders might properly be paid.
SECTION 4.2. Fiduciary Duty. (a) To the extent that, at law or in equity,
an Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law in equity, are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and Covered Persons, or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering, in each case, the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interest and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of, or factors
affecting, the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 4.3. Indemnification. (a) To the fullest extent permitted by
applicable law, the Sponsor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Declaration, except that no Indemnified Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Indemnified Person by reason of gross negligence or willful misconduct
with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the Sponsor
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Sponsor of an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be determined that the Indemnified
Person is not entitled to be indemnified as authorized in Section 4.3(a).
SECTION 4.4. Other Businesses. Any Covered Person, the Sponsor and the
Delaware Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust; the Trust and the Holders shall have no
rights by virtue of this Declaration in and to such independent ventures or the
income or profits derived therefrom; and the pursuit of any such venture, even
if competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor or the Delaware Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee may
engage or be interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act on any committee or body of holders
of securities or other obligations of the Sponsor or its Affiliates.
ARTICLE V.
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1. Amendments. At any time before the issue of any
Securities, this Declaration may be amended by, and only by, a written
instrument executed by a majority of the Regular Trustees and the Sponsor.
SECTION 5.2. Termination of Trust. (a) The Trust shall terminate and
be of no further force or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor or the revocation of the Sponsor's
Certificate of Incorporation;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust; or
(iv) before the issuance of any Securities, with the consent of at
least a majority of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 5.2(a), the Trustees shall file a Certificate of Cancellation for the
Trust with the Secretary of State of the State of Delaware.
SECTION 5.3. Governing Law. This Declaration and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware and all rights and remedies shall be governed by such laws
without regard to principles of conflict of laws.
SECTION 5.4. Successors and Assigns. Whenever in this Declaration any of
the parties hereto is named or referred to, the successors and assigns of such
party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit
of their respective successors and assigns, whether or not so expressed.
SECTION 5.5. Partial Enforceability. If any provision of this Declaration,
or the application of such provision to any Person or circumstance, shall be
held invalid, the remainder of this Declaration, or the application of such
provision to any Person or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 5.6. Counterparts. This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
IN WITNESS WHEREOF, the undersigned has caused this Declaration of Trust
of Countrywide Capital III to be executed as of the day and year first above
written.
TRUSTEES:
/s/Sandor E. Samuels
----------------------------------------
Sandor E. Samuels, as Trustee
/s/Thomas Keith McLaughlin
----------------------------------------
Thomas Keith McLaughlin, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/Melissa Beneduce
----------------------------------------
Name: Melissa Beneduce
Title: Assistant Vice President
SPONSOR:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: /s/Sandor E. Samuels
----------------------------------------
Name: Sandor E. Samuels
Title: Managing Director, Legal, General
Counsel & Secretary
EXHIBIT A
CERTIFICATE OF TRUST
OF
COUNTRYWIDE CAPITAL III
This Certificate of Trust of Countrywide Capital III (the "Trust") dated
May __, 1997, is being duly executed and filed by the undersigned, as trustees,
to form a business trust pursuant to the Delaware Business Trust Act, 12 Del. C.
(S) 3801, et seq. The undersigned, as trustees, do hereby certify as follows:
1. The name of the business trust being formed hereby is "Countrywide
Capital III."
2. The name and business address of the trustee of the Trust which has its
principal place of business in the State of Delaware is as follows:
The Bank of New York (Delaware)
400 White Clay Center, Route 273
Newark, Delaware 19711
3. This Certificate of Trust shall be effective as of the date of filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
Dated: May , 1997 ----------------------------------------
Sandor E. Samuels, as Trustee
----------------------------------------
Thomas Keith McLaughlin, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Trustee
By:_____________________________
Name:
Title:
EXHIBIT 4.3
- ------------------------------------------------------------------------------
AMENDED AND RESTATED DECLARATION OF TRUST
of
Countrywide Capital III
Dated as of June 4, 1997
- ------------------------------------------------------------------------------
CROSS REFERENCE TABLE*
Section of Trust
Indenture Act of Section of
1939, AS AMENDED AGREEMENT
- ---------------- ---------
310(a).....................................................................6.3
310(b)..........................................................6.3(c); 6.3(d)
310(c)............................................................Inapplicable
311(a)..................................................................2.2(b)
311(b)..................................................................2.2(b)
311(c)............................................................Inapplicable
312(a)..................................................................2.2(a)
312(b)..................................................................2.2(b)
312(c)............................................................Inapplicable
313(a).....................................................................2.3
313(b).....................................................................2.3
313(c).....................................................................2.3
313(d).....................................................................2.3
314(a).....................................................................2.4
314(b)............................................................Inapplicable
314(c).....................................................................2.5
314(d)............................................................Inapplicable
314(e).....................................................................2.5
314(f)............................................................Inapplicable
315(a).........................................................3.9(b); 3.10(a)
315(b)..................................................................2.7(a)
315(c)..................................................................3.9(a)
315(d)..................................................................3.9(b)
316(a).....................................................2.6; 7.6(b); 7.7(c)
316(b)............................................................Inapplicable
316(c)............................................................Inapplicable
317(a)....................................................................3.16
317(b)............................................................Inapplicable
318(a)..................................................................2.1(c)
TABLE OF CONTENTS*
PAGE
----
ARTICLE 1
INTERPRETATION AND DEFINITIONS.......................1
SECTION 1.1 Interpretation and Definitions.............................2
"Affiliate"................................................2
"Authorized Officer".......................................2
"Beneficial Owners"........................................2
"Business Day".............................................3
"Business Trust Act".......................................3
"Capital Security".........................................3
"Capital Security Certificate".............................3
"Cedel"....................................................3
"Certificate"..............................................3
"Certificate of Trust".....................................3
"Closing Date".............................................3
"Code".....................................................3
"Commission"...............................................4
"Common Securities Holder".................................4
"Common Security"..........................................4
"Common Security Certificate"..............................4
"Corporate Trust Office"...................................4
"Covered Person"...........................................4
"Debenture Issuer".........................................4
"Debenture Issuer Indemnified Person"......................5
"Debenture Trustee"........................................5
"Debentures"...............................................5
"Debt Guarantee"...........................................5
"Defaulted Distributions"..................................5
"Delaware Trustee".........................................5
"Depositary"...............................................5
- ---------------
* This Table of Contents does not constitute part of the Agreement and shall
not have any bearing upon the interpretation of any of its terms or
provisions.
"Depositary Participant"...................................5
"Direct Action"............................................5
"Distribution".............................................6
"Distribution Date"........................................6
"Distribution Rate"........................................6
"DWAC".....................................................6
"ERISA"....................................................6
"ERISA Plan"...............................................6
"Euroclear"................................................6
"Exchange Act".............................................6
"Fiduciary Indemnified Person".............................6
"Fiscal Year"..............................................7
"Fitch"....................................................7
"Global Security"..........................................7
"Guarantor"................................................7
"Holder"...................................................7
"Indemnified Person".......................................7
"Indenture"................................................7
"Indenture Event of Default"...............................7
"Initial Purchasers".......................................8
"Investment Company".......................................8
"Investment Company Act"...................................8
"Investment Company Event".................................8
"Legal Action".............................................8
"Liquidation"..............................................8
"Liquidation Distribution".................................8
"List of Holders"..........................................8
"Majority in Liquidation Amount"...........................8
"Moody's"..................................................9
"New Capital Securities"...................................9
"New Capital Security Certificate".........................9
"New York Stock Exchange"..................................9
"Officers' Certificate"....................................9
"Paying Agent"............................................10
"Person"..................................................10
"PORTAL Market"...........................................10
"Private Placement Legend"................................10
"Property Account"........................................10
"Property Trustee"........................................10
"Pro Rata"................................................10
"Qualified Institutional Buyer"...........................10
"Quorum"..................................................10
"Redemption/Distribution Notice"..........................11
"Redemption Price"........................................11
"Registration Rights Agreement"...........................11
"Regular Trustee".........................................11
"Regulation S"............................................11
"Regulation S Global Security"............................11
"Related Party"...........................................11
"Responsible Officer".....................................11
"Restricted Global Security"..............................12
"Restricted Period".......................................12
"Restricted Security".....................................12
"Rule 144A"...............................................12
"Rule 3a-5"...............................................12
"Rule 3a-7"...............................................12
"S&P".....................................................12
"Securities"..............................................12
"Securities Act"..........................................13
"Security Register".......................................13
"Security Registrar"......................................13
"Special Event"...........................................13
"Special Record Date".....................................13
"Sponsor".................................................13
"Successor Delaware Trustee"..............................13
"Successor Entity"........................................13
"Successor Property Trustee"..............................13
"Successor Security"......................................13
"Super Majority"..........................................13
"Tax Event"...............................................14
"10% in Liquidation Amount"...............................14
"Transfer Restricted Securities"..........................14
"Transfer Restricted Securities Certificate"..............14
"Treasury Regulations"....................................14
"Trust"...................................................14
"Trust Enforcement Event".................................15
"Trust Guarantee".........................................15
"Trust Indenture Act".....................................15
"Trustee" or "Trustees"...................................15
ARTICLE 2
TRUST INDENTURE ACT...........................15
SECTION 2.1. Trust Indenture Act; Application..........................15
SECTION 2.2. Lists of Holders of Securities............................16
SECTION 2.3. Reports by the Property Trustee...........................16
SECTION 2.4. Periodic Reports to the Property Trustee..................16
SECTION 2.5. Evidence of Compliance with Conditions Precedent..........17
SECTION 2.6. Trust Enforcement Events; Waiver..........................17
SECTION 2.7. Trust Enforcement Event; Notice...........................19
ARTICLE 3
ORGANIZATION...............................20
SECTION 3.1. Name and Organization.....................................20
SECTION 3.2. Office....................................................20
SECTION 3.3. Purpose...................................................20
SECTION 3.4. Authority.................................................20
SECTION 3.5. Title to Property of the Trust............................21
SECTION 3.6. Powers and Duties of the Regular Trustees.................21
SECTION 3.7. Prohibition of Actions by the Trust and the Trustees......24
SECTION 3.8. Powers and Duties of the Property Trustee.................26
SECTION 3.9. Certain Duties and Responsibilities of the Property Trustee.
28
SECTION 3.10. Certain Rights of Property Trustee........................30
SECTION 3.11. Delaware Trustee..........................................34
SECTION 3.12. Execution of Documents....................................34
SECTION 3.13. Not Responsible for Recitals or Issuance of Securities....34
SECTION 3.14. Duration of Trust.........................................34
SECTION 3.15. Mergers...................................................34
SECTION 3.16. Property Trustee May File Proofs of Claim.................37
ARTICLE 4
SPONSOR.................................38
SECTION 4.1. Responsibilities of the Sponsor...........................38
SECTION 4.2. Indemnification and Expenses of the Trustees..............39
ARTICLE 5
COMMON SECURITIES HOLDER.........................39
SECTION 5.1. Sponsor's Purchase of Common Securities...................39
SECTION 5.2. Covenants of the Common Securities Holder.................39
ARTICLE 6
TRUSTEES.................................40
SECTION 6.1. Number of Trustees........................................40
SECTION 6.2. Delaware Trustee; Eligibility.............................40
SECTION 6.3. Property Trustee; Eligibility.............................40
SECTION 6.4. Qualifications of Regular Trustees and Delaware Trustee
Generally..............................................42
SECTION 6.5. Initial Regular Trustees..................................42
SECTION 6.6. Appointment, Removal and Resignation of Trustees..........42
SECTION 6.7. Vacancies among Trustees..................................44
SECTION 6.8. Effect of Vacancies.......................................44
SECTION 6.9. Meetings..................................................44
SECTION 6.10. Merger, Conversion, Consolidation or Succession to Business.
45
SECTION 6.11. Delegation of Power.......................................45
ARTICLE 7
THE SECURITIES..............................45
SECTION 7.1. General Provisions Regarding Securities...................45
SECTION 7.2. Distributions.............................................48
SECTION 7.3. Redemption of Securities..................................50
SECTION 7.4. Redemption Procedures.....................................51
SECTION 7.5. Voting Rights of Capital Securities.......................53
SECTION 7.6. Voting Rights of Common Securities........................55
SECTION 7.7. Paying Agent..............................................57
SECTION 7.8. Transfer of Securities....................................57
SECTION 7.9. Mutilated, Destroyed, Lost or Stolen Certificates.........58
SECTION 7.10. Deemed Security Holders...................................58
SECTION 7.11. Global Securities.........................................59
SECTION 7.12. Restrictive Legend........................................61
SECTION 7.13. Special Transfer Provisions...............................63
ARTICLE 8
DISSOLUTION AND TERMINATION OF TRUST...................67
SECTION 8.1. Dissolution and Termination of Trust......................67
SECTION 8.2. Liquidation Distribution Upon Dissolution of the Trust....68
ARTICLE 9
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, DELAWARE TRUSTEES OR OTHERS..........................69
SECTION 9.1. Liability.................................................69
SECTION 9.2. Exculpation...............................................70
SECTION 9.3. Fiduciary Duty............................................70
SECTION 9.4. Indemnification...........................................71
SECTION 9.5. Outside Businesses........................................75
ARTICLE 10
ACCOUNTING................................76
SECTION 10.1. Fiscal Year...............................................76
SECTION 10.2. Certain Accounting Matters................................76
SECTION 10.3. Banking...................................................77
SECTION 10.4. Withholding...............................................77
ARTICLE 11
AMENDMENTS AND MEETINGS.........................78
SECTION 11.1. Amendments................................................78
SECTION 11.2. Meetings of the Holders of Securities; Action by Written
Consent................................................80
ARTICLE 12
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE...........................82
SECTION 12.1. Representations and Warranties of the Property Trustee....82
SECTION 12.2. Representations and Warranties of the Delaware Trustee....83
ARTICLE 13
MISCELLANEOUS..............................84
SECTION 13.1. Notices...................................................84
SECTION 13.2. Governing Law.............................................84
SECTION 13.3. Intention of the Parties..................................85
SECTION 13.4. Headings..................................................85
SECTION 13.5. Successors and Assigns....................................85
SECTION 13.6. Partial Enforceability....................................85
SECTION 13.7. Counterparts..............................................86
AMENDED AND RESTATED DECLARATION OF TRUST
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"),
dated as of June 4, 1997, by and among Countrywide Credit Industries, Inc., a
Delaware corporation, as sponsor (the "Sponsor"), and Eric P. Sieracki, Sandor
E. Samuels and Thomas Keith McLaughlin, as the initial Regular Trustees, The
Bank of New York, a New York banking corporation, as the initial Property
Trustee and The Bank of New York (Delaware), a Delaware corporation, as the
initial Delaware Trustee, not in their individual capacities but solely as
Trustees, and the holders, from time to time, of undivided beneficial ownership
interests in the Trust to be issued pursuant to this Declaration.
WHEREAS, Countrywide Capital III (the "Trust"), a business trust
under the Business Trust Act (as defined herein), has been created pursuant to a
Declaration of Trust, dated as of May 28, 1997, (the "Original Declaration") and
a Certificate of Trust (the "Certificate of Trust") filed with the Secretary of
State of the State of Delaware on May 28, 1997; and
WHEREAS, the exclusive purposes of the Trust shall be to issue and
sell certain securities representing undivided beneficial ownership interests in
the assets of the Trust, to invest the proceeds from such sales in the
Debentures (as defined herein) issued by the Debenture Issuer (as defined
herein) and the Debt Guarantee (as defined herein) of the Sponsor endorsed
thereon and to engage in only those activities necessary or incidental thereto;
and
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees hereby declare that all assets contributed to the Trust be held in
trust for the benefit of the Holders, from time to time, of the Securities
representing undivided beneficial ownership interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE 1.
INTERPRETATION AND DEFINITIONS
SECTION 1.1. INTERPRETATION AND DEFINITIONS.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections,
Recitals and Exhibits are to Articles and Sections of, or Recitals and Exhibits
to, this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa
and a reference to any masculine form of a term shall include the feminine form
of a term, as applicable.
(g) the following terms have the following meanings:
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is expressly
authorized to bind such Person.
"Beneficial Owners" means, for Capital Securities represented by a
Global Security, the Person who acquires an interest in the Capital Securities
which is reflected on the records of the Depositary through the Depositary
Participants.
"Business Day" means any day other than a Saturday or Sunday or a
day on which banking institutions in The City of New York or Los Angeles,
California are authorized or required by law or executive order to remain closed
or a day on which the Corporate Trust Office of the Debenture Trustee, or the
principal corporate trust office of the Property Trustee, is closed for
business.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Capital Security" has the meaning specified in Section 7.1(a).
"Capital Security Certificate" means a definitive certificate in
fully registered form representing a Capital Security, substantially in the form
of Exhibit A, in the case of Transfer Restricted Securities or Exhibit B, in the
case of New Capital Securities.
"Cedel" means Cedel, S.A.
"Certificate" means a Common Security Certificate or a Capital
Security Certificate.
"Certificate of Trust" has the meaning specified in the Recitals
hereto.
"Closing Date" means the date on which the Capital Securities are
issued and sold.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
"Commission" means the Securities and Exchange Commission or any
successor federal agency performing comparable functions.
"Common Securities Holder" means Countrywide Credit Industries,
Inc., or any successor thereto, in its capacity as purchaser and holder of all
of the Common Securities issued by the Trust.
"Common Security" has the meaning specified in Section 7.1(a).
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security, substantially in the form
of Exhibit C hereto.
"Corporate Trust Office" means the office of the Debenture Trustee
at which the corporate trust business of the Debenture Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 101 Barclay Street, Floor 21 West,
New York, New York 10286, Attention: Corporate Trust Administration; telecopy
no. (212) 815-5915.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Countrywide Home Loans, Inc., or any
successor thereto, in its capacity as issuer of the Debentures under the
Indenture.
"Debenture Issuer Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee or any Affiliate thereof; or (d) any officer, employee or agent
of the Trust or its Affiliates.
"Debenture Trustee" means The Bank of New York, in its capacity as
trustee under the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Debentures" means (i) the 8.05% Junior Subordinated Debentures due
June 15, 2027, Series A, and (ii) the 8.05% Junior Subordinated Debentures due
June 15, 2027, Series B, to be issued in exchange therefor, in each case to be
issued by the Debenture Issuer and to be held by the Property Trustee.
"Debt Guarantee" means the guarantee by the Guarantor of principal
of, and premium, if any, and interest on the Debentures pursuant to the
Indenture.
"Defaulted Distributions" has the meaning specified in
Section 7.2(c).
"Delaware Trustee" has the meaning set forth in Section 6.2.
"Depositary" means, with respect to Securities issuable in whole or
in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities.
"Depositary Participant" means a member of, or participant in,
the Depositary.
"Direct Action" has the meaning specified in Section 3.8(e).
"Distribution" means a distribution payable to Holders of Securities
in accordance with Section 7.2.
"Distribution Date" has the meaning specified in Section 7.2(c).
"Distribution Rate" has the meaning specified in Section 7.2(a).
"DWAC" means Deposit and Withdrawal At Custodian Service.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Plan" means an employee benefit plan subject to ERISA or an
individual retirement account or plan subject to Section 4975 of the Code.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Extension Period" has the meaning specified in the Indenture.
"Fiduciary Indemnified Person" has the meaning specified in
Section 9.4(b).
"Fiscal Year" has the meaning specified in Section 10.1.
"Fitch" means Fitch Investors Service, Inc. or any successor
thereto.
"Global Security" means a fully registered, global Capital
Security Certificate.
"Guarantor" means Countrywide Credit Industries, Inc., a Delaware
corporation, in its capacity as guarantor of the Debentures under the Indenture
and/or the Securities under the Trust Guarantee.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act; provided, however, that in determining whether the
Holders of the requisite liquidation amount of Capital Securities have voted on
any matter provided for in this Declaration, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Capital
Securities remain in the form of one or more Global Securities and if the
Depositary which is the holder of such Global Securities has sent an omnibus
proxy to the Trust assigning voting rights to Depositary Participants to whose
accounts the Capital Securities are credited on the record date, the term
"Holders" shall mean such Depositary Participants acting at the direction of
Beneficial Owners.
"Indemnified Person" means a Debenture Issuer Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the Indenture, dated as of June 4, 1997, among the
Debenture Issuer, the Guarantor and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures and the Debt Guarantee are
to be issued.
"Indenture Event of Default" means an "Event of Default" as
defined in the Indenture.
"Initial Purchasers" means Lehman Brothers Inc., Countrywide
Securities Corporation, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Salomon Brothers Inc.
"Investment Company" means an "investment company" as defined in the
Investment Company Act and the regulations promulgated thereunder.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Investment Company Event" means the Regular Trustees shall have
received an opinion of counsel, rendered by a law firm having a recognized
national securities practice, to the effect that, as a result of the occurrence
of a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act,
which Change in 1940 Act Law becomes effective on or after the Closing Date.
"Legal Action" has the meaning specified in Section 3.6(g).
"Liquidation" has the meaning specified in Section 8.2(a).
"Liquidation Distribution" has the meaning specified in Section
8.2(a).
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the
terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities, voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"New Capital Securities" has the meaning specified in Section
7.1(a).
"New Capital Security Certificate" means a Capital Security
Certificate in the form of Exhibit B.
"New York Stock Exchange" means The New York Stock Exchange, Inc.
or any successor thereto.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person on behalf of such
Person. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer on behalf of such Person in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer
and on behalf of such Person, such condition or covenant has been complied with;
provided, that the term "Officers' Certificate," when used with reference to
Regular Trustees who are natural persons, shall mean a certificate signed by two
of the Regular Trustees which otherwise satisfies the foregoing requirements.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof or any other entity of
whatever nature.
"PORTAL Market" means the Private Offerings, Resales and Trading
through Automated Linkages (PORTAL) Market of the NASDAQ Stock Market, Inc.
"Private Placement Legend" has the meaning specified in Section
2.20 of the Indenture.
"Property Account" has the meaning specified in Section 3.8(c).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3.
"Pro Rata" means pro rata to each Holder of Securities according to
the aggregate liquidation amount of the Securities held by the relevant Holder
in relation to the aggregate liquidation amount of all Securities outstanding.
"Qualified Institutional Buyer" or "QIB" has the meaning specified
in Rule 144A under the Securities Act.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Redemption/Distribution Notice" has the meaning set forth in
Section 7.4(a).
"Redemption Price" means the amount for which the Securities will be
redeemed, which amount will equal the redemption price paid by the Debenture
Issuer to repay or redeem the Debentures held by the Trust plus an amount equal
to accrued and unpaid Distributions on such Securities through the date of their
redemption.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, among the Sponsor, the Debenture Issuer, the
Trust and the Initial Purchasers for the benefit of themselves and the Holders,
as the same may be amended from time to time in accordance with the terms
thereof.
"Regular Trustee" means any Trustee other than the Property Trustee
and the Delaware Trustee.
"Regulation S" means Regulation S under the Securities Act and any
successor regulation thereto.
"Regulation S Global Security" means any Global Security or
Securities evidencing Securities that are to be traded pursuant to Regulation S.
"Related Party" means, with respect to the Sponsor, any direct or
wholly owned subsidiary of the Sponsor or any Person that owns, directly or
indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee,
any officer within the Corporate Trust Office of the Property Trustee, including
any vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Property Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Restricted Global Security" means any Global Security or Securities
evidencing Capital Securities that are to be traded pursuant to Rule 144A.
"Restricted Period" has the meaning specified in Section 7.13(g).
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3), as amended from time to time or any successor rule, under the
Securities Act.
"Rule 144A" means Rule 144A, as amended from time to time or any
successor rule, under the Securities Act.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act or any
successor rule thereunder.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act or any
successor rule thereunder.
"S&P" means Standard & Poor's Ratings Group or any successor
thereto.
"Securities" means the Common Securities and the Capital
Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Security Register" has the meaning specified in Section 7.8(a).
"Security Registrar" has the meaning specified in Section 7.8(a).
"Special Event" means a Tax Event or an Investment Company Event.
"Special Record Date" has the meaning specified in Section 7.2(d).
"Sponsor" means Countrywide Credit Industries, Inc., or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
6.6(b).
"Successor Entity" has the meaning specified in Section
3.15(b)(i).
"Successor Property Trustee" has the meaning specified in
Section 6.6(b).
"Successor Security" has the meaning specified in Section
3.15(b)(i)b.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" means the receipt by the Regular Trustees of an opinion
of counsel, rendered by a law firm having a recognized national tax practice, to
the effect that, as a result of (a) any amendment to, or change (including any
announced proposed change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such proposed change, pronouncement or decision is announced on or
after the Closing Date, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days after the date thereof, subject to the
United States federal income tax with respect to interest accrued or received on
the Debentures, (ii) the Trust is, or will be within 90 days of the date
thereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges or (iii) interest payable on the Debentures is not,
or within 90 days of the date thereof will not be deductible, in whole or in
part, by the Debenture Issuer for United States federal income tax purposes.
"10% in Liquidation Amount" means, except as provided in the terms
of the Capital Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities, voting separately as a class, who are the record owners of
10% or more of the aggregate liquidation amount (including accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Transfer Restricted Securities" has the meaning specified in
Section 7.1(a).
"Transfer Restricted Securities Certificate" means a Capital
Security Certificate in the form of Exhibit A.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust" has the meaning set forth in the Recitals hereto.
"Trust Enforcement Event" in respect of the Securities means an
Indenture Event of Default has occurred and is continuing in respect of the
Securities.
"Trust Guarantee" means the Guarantee Agreement, dated as of June 4,
1997, of the Guarantor in respect of the Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
ARTICLE 2.
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the Trust's classification as a grantor trust for United States
federal income tax purposes and shall not affect the nature of the Securities as
equity securities representing undivided beneficial ownership interests in the
assets of the Trust.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES.
(a) Unless the Property Trustee acts as Security Registrar, each of
the Sponsor and the Regular Trustees on behalf of the Trust shall provide the
Property Trustee (i), except while the Capital Securities are represented by one
or more Global Securities, at least one Business Day prior to the date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders of the Securities
("List of Holders") as of the record date relating to the payment of such
Distributions, and (ii) at any other time, within 30 days of receipt by the
Trust of a written request from the Property Trustee for a List of Holders as of
a date no more than 15 days before such List of Holders is given to the Property
Trustee; provided that neither the Sponsor nor the Regular Trustees on behalf of
the Trust shall be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Property Trustee by the Sponsor and the Regular Trustees on behalf of the
Trust. The Property Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to
it or which it receives in the capacity as Paying Agent (if acting in such
capacity), provided that the Property Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under,
and shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of
the Trust Indenture Act.
SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE.
Within 60 days after May 15 of each year (commencing with the year
of the first anniversary of the issuance of the Capital Securities), the
Property Trustee shall provide to the Holders of the Capital Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Property Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO THE PROPERTY TRUSTEE.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6. TRUST ENFORCEMENT EVENTS; WAIVER.
(a) The Holders of a Majority in Liquidation Amount of the Capital
Securities may, by vote or written consent, on behalf of the Holders of all of
the Capital Securities, waive any past Trust Enforcement Event in respect of the
Capital Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
(i) is not waivable under the Indenture, the Trust
Enforcement Event under the Declaration shall also not
be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the
Debentures (a "Super Majority") to be waived under
the Indenture, the related Trust Enforcement Event
under the Declaration may only be waived by the vote
or written consent of the Holders of at least the
proportion in liquidation amount of the Capital
Securities that the relevant Super Majority
represents of the aggregate principal amount of the
Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Trust Enforcement Event with respect
to the Capital Securities arising therefrom shall be deemed to have been cured,
for every purpose of this Declaration and the Capital Securities, but no such
waiver shall extend to any subsequent or other Trust Enforcement Event with
respect to the Capital Securities or impair any right consequent thereon. Any
waiver by the Holders of the Capital Securities of a Trust Enforcement Event
with respect to the Capital Securities shall also be deemed to constitute a
waiver by the Holders of the Common Securities of any such Trust Enforcement
Event with respect to the Common Securities for all purposes of this Declaration
without any further act, vote, or consent of the Holders of the Common
Securities.
(a) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote or written consent, on behalf of the Holders of all of
the Common Securities, waive any past Trust Enforcement Event in respect of the
Common Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have
waived such Trust Enforcement Event under the
Declaration as provided below in this Section 2.6(b),
the Trust Enforcement Event under the Declaration shall
also not be waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived under the Indenture, except where the
Holders of the Common Securities are deemed to have
waived such Trust Enforcement Event under the
Declaration as provided below in this Section 2.6(b),
the Trust Enforcement Event under the Declaration may
only be waived by the vote or written consent of the
Holders of at least the proportion in liquidation
amount of the Common Securities that the relevant
Super Majority represents of the aggregate principal
amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any Trust Enforcement Event with respect to the Common Securities and the
consequences thereof until all Trust Enforcement Events with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Trust Enforcement Events with respect to the Capital Securities have been
so cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the Holders of the Capital Securities and only the
Holders of the Capital Securities will have the right to direct the Property
Trustee with respect to certain matters under this Declaration. The foregoing
provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Subject
to the foregoing provisions of this Section 2.6(b), upon such cure, waiver or
other elimination, any such default shall cease to exist and any Trust
Enforcement Event with respect to the Common Securities arising therefrom shall
be deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other Trust Enforcement Event with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Indenture Event of Default by the Property
Trustee at the direction of the Holders of the Capital Securities constitutes a
waiver of the corresponding Trust Enforcement Event with respect to the Capital
Securities under this Declaration. The foregoing provisions of this Section
2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and
such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.
SECTION 2.7. TRUST ENFORCEMENT EVENT; NOTICE.
(a) The Property Trustee shall, within 90 days after the occurrence
of a Trust Enforcement Event, transmit by mail, first class postage prepaid, to
the Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Indenture Event of Default, not including any periods of grace provided for
therein and irrespective of the giving of any notice provided therein); provided
that, except for a default in the payment of principal of (or premium, if any)
or interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 7.1(1) and 7.1(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible
Officer of the Property Trustee charged with the
administration of this Declaration shall have actual
knowledge.
ARTICLE 3.
ORGANIZATION
SECTION 3.1. NAME AND ORGANIZATION.
The Trust hereby continued is named "Countrywide Capital III" as
such name may be modified from time to time by the Regular Trustees following
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
SECTION 3.2. OFFICE.
The address of the principal office of the Trust is c/o Countrywide
Credit Industries, Inc., 4500 Park Granada, Calabasas, California 91302. On ten
Business Days' written notice to the Holders of Securities, the Regular Trustees
may designate another principal office.
SECTION 3.3. PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the gross proceeds from such sale to acquire the
Debentures and the Debt Guarantee and (b) except as otherwise limited herein, to
engage in only those other activities necessary or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified as a
grantor trust for United States federal income tax purposes.
It is the intention of the Common Securities Holder that the Trust
be classified as a grantor trust for United States federal income tax purposes
under Subpart E of Subchapter J of the Code, pursuant to which the owners of the
Capital Securities and the Common Securities will be treated as the owners of
undivided interests in the Debentures for United States federal income tax
purposes, and such owners will include directly in their gross income the
income, deductions and credits of the Trust as if the Trust did not exist. By
the acceptance of this Trust, each of the Trustees, the Sponsor, the Holders of
the Capital Securities and Common Securities and the Capital Securities
Beneficial Owners agrees that he, she or it will not take any position for
United States federal income tax purposes contrary to the classification of the
Trust as a grantor trust.
SECTION 3.4. AUTHORITY.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee on
behalf of the Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting on behalf of
the Trust, no Person shall be required to inquire into the authority of the
Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration. Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
SECTION 3.5. TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the Debentures,
the Debt Guarantee and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial ownership interest in the assets
of the Trust.
SECTION 3.6. POWERS AND DUTIES OF THE REGULAR TRUSTEES.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Capital Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than two series of Capital Securities (which will
consist exclusively of the Transfer Restricted Securities and the New Capital
Securities) and no more than one series of Common Securities, and, provided
further, that there shall be no interests in the Trust other than the
Securities, and the issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Transfer Restricted Securities and Common
Securities on the Closing Date and issuances of New Capital Securities in
exchange for Transfer Restricted Securities as contemplated by the Registration
Rights Agreement;
(b) in connection with the issue and sale of the Capital Securities,
at the direction of the Sponsor, to:
(i) prepare and issue an offering memorandum and/or execute
and file with the Commission one or more registration
statements on the applicable forms prepared by the
Sponsor and the Debenture Issuer, including any
amendments thereto, pertaining, in each case, to the
Capital Securities, the Trust Guarantee, the Debentures
and the Debt Guarantee;
(ii) if deemed necessary or desirable by the Sponsor, execute
and file an application, prepared by the Sponsor, to the
New York Stock Exchange or any other national securities
exchange or the NASDAQ Stock Market's National Market or
the PORTAL Market for listing of any Capital Securities,
the Trust Guarantee, the Debentures and the Debt
Guarantee;
(iii) if deemed necessary or desirable by the Sponsor, execute
and file with the Commission a registration statement on
Form 8-A, including any amendments thereto, prepared by
the Sponsor and the Debenture Issuer, relating to the
registration of the Capital Securities, under Section
12(b) of the Exchange Act;
(iv) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be
necessary, in order to qualify or register all or part
of the Capital Securities in any State or other
jurisdiction in which the Sponsor has determined to
qualify or register such Capital Securities for sale;
(v) execute and enter into a purchase agreement and other
related agreements providing for the sale of the Capital
Securities to the Initial Purchasers; and
(vi) execute and enter into the Registration Rights
Agreement.
(c) to acquire the Debentures with the proceeds of the sale of the
Capital Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Capital Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular Trustees
shall consult with the Sponsor and the Property Trustee before taking or
refraining from taking any action in relation to any such Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions (and other distributions upon dissolution, winding-up or
termination), voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of this Declaration and the
Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants to conduct only those services that the Regular Trustees have
authority to conduct directly, and to pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures as authorized by the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with applicable law, that
the Regular Trustees determine in their discretion to be necessary or desirable
in carrying out the purposes and functions of the Trust as set out in Section
3.3 or the activities of the Trust as set out in this Section 3.6, including,
but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified as a grantor trust
for United States federal income tax purposes; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax
purposes.
(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust;
(q) to call a meeting of the Holders of the Securities if so
directed by Holders in accordance with Section 11.2; and
(r) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees shall exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE
Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds
to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets;
(vi) possess any power or otherwise act in such a way as to
vary the terms of the Securities in any way whatsoever
(except to the extent expressly authorized in this
Declaration or by the terms of the Securities);
(vii) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other
than the Securities; or
(viii)other than as provided in this Declaration or by the
terms of the Securities, (A) direct the time, method and
place of exercising any trust or power conferred upon
the Debenture Trustee with respect to the Debentures,
(B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul
any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any
amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required
unless the Trust shall have received an opinion of
counsel to the effect that such modification will not
cause more than an insubstantial risk that the Trust
will be deemed an Investment Company required to be
registered under the Investment Company Act, or the
Trust will not be classified as a grantor trust for
United States federal income tax purposes;
(ix) take any action inconsistent with the status of the
Trust as a grantor trust for United States federal
income tax purposes; or
(x) revoke any action previously authorized or approved by
vote of the Holders of the Capital Securities.
SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE.
(a) The legal title to the Debentures and the Debt Guarantee shall
be owned by and held of record in the name of the Property Trustee in trust for
the benefit of the Trust and the Holders of the Securities. The right, title and
interest of the Property Trustee to the Debentures and the Debt Guarantee shall
vest automatically in each Person who may hereafter be appointed as Property
Trustee in accordance with Section 6.6. Such vesting and cessation of title
shall be effective whether or not conveyancing documents with regard to the
Debentures or the Debt Guarantee have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures or the Debt Guarantee to the Regular Trustees or to
the Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Account") in the
name of and under the exclusive control of the
Property Trustee on behalf of the Holders of the
Securities and, upon the receipt of payments of funds
made in respect of the Debentures or the Debt
Guarantee held by the Property Trustee, deposit such
funds into the Property Account and make payments to
the Holders of the Securities from the Property
Account in accordance with Section 7.2 and upon
liquidation, redemption or otherwise. Funds in the
Property Account shall be held uninvested and without
liability for interest thereon until disbursed in
accordance with this Declaration. The Property
Account shall be an account that is maintained with a
banking institution the rating on whose long-term
unsecured indebtedness is at least equal to the
rating assigned to the Capital Securities by a
"nationally recognized statistical rating
organization", within the meaning of Rule 436(g)(2)
under the Securities Act;
(ii) exchange one series of Debentures for the other series
of Debentures in connection with the exchange of
Transfer Restricted Securities for New Capital
Securities as contemplated by Section 3.6(a);
(iii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the
Capital Securities and the Common Securities to the
extent the Debentures are redeemed or mature; and
(iv) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as
so directed and as shall be necessary or appropriate
to effect the distribution of the Debentures and the
Debt Guarantee to Holders of Securities upon the
occurrence of a Special Event or upon liquidation of
the Trust.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities.
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with either a Trust Enforcement Event of which a
Responsible Officer of the Property Trustee has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act; provided however, that if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay interest, principal or other required payments on the Debentures on the
date such interest, principal or other payment is otherwise payable (or in the
case of redemption, on the redemption date, and the Guarantor does not make such
payments, to the extent required, under the Debt Guarantee), then, on or after
the respective due date specified in the Debentures, a Holder of Capital
Securities may directly institute a proceeding against the Debenture Issuer or
the Guarantor, respectively, for enforcement of payment to such Holder of the
principal of or interest on Debentures having a principal amount equal to the
aggregate liquidation amount of the Capital Securities of such Holder (a "Direct
Action").
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders
of Securities pursuant to the terms of the Securities;
or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section
6.6.
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures and the Debt
Guarantee under the Indenture and, if a Trust Enforcement Event actually known
to a Responsible Officer of the Property Trustee occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures and the Debt Guarantee subject to the
rights of the Holders pursuant to the terms of such Securities.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.
The Property Trustee shall exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY
TRUSTEE.
(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing of all Trust Enforcement Events that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Property Trustee. In case a Trust Enforcement Event has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and
after the curing or waiving of all such Trust
Enforcement Events that may have occurred:
a. the duties and obligations of the Property
Trustee shall be determined solely by the
express provisions of this Declaration and the
Property Trustee shall not be liable except for
the performance of such duties and obligations
as are specifically set forth in this
Declaration, and no implied covenants or
obligations shall be read into this Declaration
against the Property Trustee; and
b. in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may
conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any certificates or
opinions furnished to the Property Trustee and
conforming to the requirements of this
Declaration; but in the case of any such
certificates or opinions that by any provision
hereof are specifically required to be
furnished to the Property Trustee, the Property
Trustee shall be under a duty to examine the
same to determine whether or not they conform
to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer
of the Property Trustee, unless it shall be proved that
the Property Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it without
negligence, in good faith in accordance with the
direction of the Holders of not less than a Majority in
Liquidation Amount of the Securities relating to the
time, method and place of conducting any proceeding for
any remedy available to the Property Trustee, or
exercising any trust or power conferred upon the
Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise
of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured
to it under the terms of this Declaration or
indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not
reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe-keeping and physical preservation of
the Debentures, the Debt Guarantee and the Property
Account shall be to deal with such property in a
similar manner as the Property Trustee deals with
similar property for its own account, subject to the
protections and limitations on liability afforded to
the Property Trustee under this Declaration and the
Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the Debt Guarantee or
the payment of any taxes or assessments levied thereon
or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may
otherwise agree with the Sponsor. Money held by the
Property Trustee need not be segregated from other funds
held by it except in relation to the Property Account
maintained by the Property Trustee pursuant to Section
3.8(c)(i) and except to the extent otherwise required by
law; and
(ix) the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the
Sponsor with their respective duties under this
Declaration, nor shall the Property Trustee be liable
for any default or misconduct of the Regular Trustees or
the Sponsor.
SECTION 3.10. CERTAIN RIGHTS OF PROPERTY TRUSTEE.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall
be fully protected in acting or refraining from
acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or
document believed by it to be genuine and to have
been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or
omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall
be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument
(including any financing or continuation statement or
any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its
choice or other experts and the advice or opinion of
such counsel and experts with respect to legal
matters or advice within the scope of such experts'
area of expertise shall be full and complete
authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion;
such counsel may be counsel to the Sponsor or any of
its Affiliates, and may include any of its
employees. The Property Trustee shall have the right
at any time to seek instructions concerning the
administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any
Holder, unless such Holder shall have provided to the
Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the
costs, expenses (including reasonable attorneys' fees
and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying
with such request or direction, including such
reasonable advances as may be requested by the
Property Trustee; provided that, nothing contained in
this Section 3.10(a) shall be taken to relieve the
Property Trustee, upon the occurrence of an Indenture
Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit;
(viii)the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees
or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders
of the Securities, and the signature of the Property
Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third
party shall be required to inquire as to the
authority of the Property Trustee to so act or as to
its compliance with any of the terms and provisions
of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or
its agent's taking such action;
(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder,
the Property Trustee (i) may request instructions
from the Holders of the Securities which instructions
may only be given by the Holders of the same
proportion in liquidation amount of the Securities as
would be entitled to direct the Property Trustee
under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other
action until such instructions are received, and
(iii) shall be protected in conclusively relying on
or acting in or accordance with such instructions;
(xi) If no Trust Enforcement Event has occurred and is
continuing and the Property Trustee is required to
decide between alternative courses of action,
construe ambiguous provisions in this Declaration or
is unsure of the application of any provision of this
Declaration, and the matter is not one on which
Holders of Capital Securities are entitled under the
Declaration to vote, then the Property Trustee may,
but shall be under no duty to, take such action as is
directed by the Company and, if not so directed,
shall take such action as it deems advisable and in
the best interests of the Holders of the Securities
and will have no liability except for its own bad
faith, negligence or willful misconduct;
(xii) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any
obligation to take any action that is discretionary
under the provisions of this Declaration; and
(xiii)the Property Trustee shall not be liable for any action
taken, suffered or omitted to be taken by it without
negligence, in good faith and reasonably believed by it
to be authorized or within the discretion, rights or
powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11. DELAWARE TRUSTEE.
Notwithstanding any other provision of this Declaration other than
Section 6.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
SECTION 3.12. EXECUTION OF DOCUMENTS.
(a) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6, provided, that the registration statements referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by or on behalf of
a majority of the Regular Trustees; and
(b) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Securities, the Debentures, the Debt Guarantee or the
Indenture.
SECTION 3.14 DURATION OF TRUST.
The Trust shall exist until terminated pursuant to the provisions of
Article 8 hereof.
SECTION 3.15 MERGERS.
(a) The Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor and with the
consent of the Regular Trustees or, if there are more than two, a majority of
the Regular Trustees and without the consent of the Holders of the Securities,
the Delaware Trustee or the Property Trustee, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, that:
(i) such successor entity (the "Successor Entity"), if not
the Trust, either:
a. expressly assumes all of the obligations of the
Trust with respect to the Capital Securities; or
b. substitutes for the Securities other securities
having substantially the same terms as the
Capital Securities (the "Successor Securities")
so long as the Successor Securities rank the
same as the Capital Securities rank in priority
with respect to Distributions and payments upon
Liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of such
Successor Entity that possesses the same powers and
duties as the Property Trustee as the holder of the
Debentures and the Debt Guarantee;
(iii) the Capital Securities or any Successor Securities
continue to be listed or quoted, or any Successor
Securities will be listed or quoted upon notification
of issuance, on any national securities exchange or
with any other organization on or through which the
Capital Securities are then listed or quoted
immediately prior to the effective date of such merger,
consolidation,amalgamation, replacement, conveyance,
transfer or lease;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities)
to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and
privileges of the Holders of the Capital Securities
(including any Successor Securities) in any material
respect (other than with respect to any dilution of
the Holders' percentage interest in the Successor
Entity);
(vi) such Successor Entity has a purpose identical to that
of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease the Sponsor
has received an opinion of independent counsel to the
Trust experienced in such matters to the effect that:
a. such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences
and privileges of the Holders of the Capital
Securities (including any Successor Securities)
in any material respect (other than with
respect to any dilution of the Holders'
percentage interest in the Successor Entity);
b. following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or
lease neither the Trust nor the Successor Entity
will be required to register as an Investment
Company; and
c. following such merger, consolidation, amalgamation
or replacement or lease, the Trust (or the
Successor Entity) will continue to be classified
as a grantor trust for United States federal
income tax purposes;
(viii) the Sponsor or any permitted successor or assignee owns
all of the Common Securities of such Successor Entity
and the Guarantor guarantees the obligations of such
Successor Entity under the Successor Securities at
least to the extent provided by the Trust Guarantee;
and
(ix) such Successor Entity expressly assumes all of the
obligations of the Trust with respect to the Trustees.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in aggregate liquidation amount of the
Capital Securities, consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or Successor Entity to be classified as other than a grantor trust for
United States federal income tax purposes and each Holder of the Capital
Securities not to be treated as owning an undivided beneficial interest in the
Debentures and the Debt Guarantee.
SECTION 3.16. PROPERTY TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other similar judicial proceeding relative to the Trust or any other obligor
upon the Securities or the property of the Trust or of such other obligor or
their creditors, the Property Trustee (irrespective of whether any Distributions
on the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount Securities, such portion of the
liquidation amount as may be specified in the terms of such Securities) and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or compensation affecting
the Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
ARTICLE 4.
SPONSOR
SECTION 4.1. RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare an offering memorandum and/or to prepare for filing
by the Trust with the Commission one or more registration statements on the
applicable forms, including any amendments thereto, pertaining, in each case, to
the Capital Securities, the Trust Guarantee, the Debentures and the Debt
Guarantee;
(b) to determine the States or other jurisdictions in which to take
appropriate action to qualify or register for sale all or part of the Capital
Securities and to do any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with the applicable
laws of any such States or other jurisdictions;
(c) to prepare any filing by the Trust of an application to the New
York Stock Exchange or any other national securities exchange or the NASDAQ
Stock Market's National Market or the PORTAL Market for listing, if such filing
is determined to be necessary or desirable by the Sponsor;
(d) to prepare any filing by the Trust with the Commission of a
registration statement on Form 8-A, including any amendments thereto, relating
to the registration of the Capital Securities under Section 12 of the Exchange
Act if such filing is determined to be necessary or desirable by the Sponsor;
(e) to negotiate the terms of a purchase agreement and other related
agreements providing for the sale of the Capital Securities to the Initial
Purchasers; and
(f) to negotiate the terms of the Registration Rights Agreement.
SECTION 4.2. INDEMNIFICATION AND EXPENSES OF THE TRUSTEES.
The Debenture Issuer agrees to indemnify the Property Trustee and
the Delaware Trustee for, and to hold each of them harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part of the
Property Trustee or the Delaware Trustee, as the case may be, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending either of them against
any claim or liability in connection with the exercise or performance of any of
their respective powers or duties hereunder; the provisions of this Section 4.2
shall survive the resignation or removal of the Delaware Trustee or the Property
Trustee or the termination of this Declaration.
ARTICLE 5.
COMMON SECURITIES HOLDER
SECTION 5.1. SPONSOR'S PURCHASE OF COMMON SECURITIES.
On the Closing Date the Sponsor will acquire Common Securities in an
amount at least equal to 3% of the capital of the Trust, at the same time as the
Capital Securities are sold. The aggregate stated liquidation amount of Common
Securities outstanding at any time shall be not less than 3% of the capital of
the Trust.
SECTION 5.2. COVENANTS OF THE COMMON SECURITIES HOLDER.
For so long as the Capital Securities and the Common Securities
remain outstanding, the Common Securities Holder covenants (i) to maintain,
directly or indirectly, 100% ownership of the Common Securities, PROVIDED,
HOWEVER, that any permitted successor of the Guarantor under the Debt Guarantee
may succeed to the Sponsor's ownership of such Common Securities, (ii) to timely
perform its duties as sponsor of the Trust, (iii) to use its reasonable efforts
to cause the Trust (A) to remain a business trust classified as a grantor trust
except in connection with the distribution of the Debentures and Debt Guarantee
to the Holders of the Capital Securities and the Common Securities in
liquidation of the Trust, the redemption of all Capital Securities and Common
Securities of the Trust or certain mergers, consolidations or amalgamations,
each as permitted by this Declaration, and (B) to continue not to be treated as
an association taxable as a corporation for United States federal income tax
purposes and (iv) to use its reasonable efforts to cause each Holder of Capital
Securities and Common Securities to be treated as owning an undivided beneficial
interest in the Debentures and Debt Guarantee.
ARTICLE 6.
TRUSTEES
SECTION 6.1. NUMBER OF TRUSTEES.
The number of Trustees initially shall be five, and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in Liquidation
Amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities or by written consent in lieu of such meeting provided
that, if the Property Trustee does not also act as Delaware Trustee, the number
of Trustees shall be at least three (3); and provided further that (1) the
Delaware Trustee, in the case of a natural person, shall be a person who is a
resident of the State of Delaware or that, if not a natural person, is an entity
which has its principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law; (2) at least one Regular Trustee is an
employee or officer of, or is affiliated with, the Sponsor; and (3) one Trustee
shall be the Property Trustee for so long as this Declaration is required to
qualify as an indenture under the Trust Indenture Act, and such Trustee may also
serve as Delaware Trustee if it meets the applicable requirements.
SECTION 6.2. DELAWARE TRUSTEE; ELIGIBILITY.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware;
or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable
law, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
SECTION 6.3. PROPERTY TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State
or Territory thereof or of the District of Columbia,
or a corporation or other Person permitted by the
Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws
to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S.
dollars ($50,000,000), and subject to supervision or
examination by federal, State, Territorial or
District of Columbia authority. If such corporation
publishes reports of condition at least annually,
pursuant to law or to the requirements of the
supervising or examining authority referred to above,
then for the purposes of this Section 6.3(a)(ii), the
combined capital and surplus of such corporation
shall be deemed to be its combined capital and
surplus as set forth in its most recent report of
condition so published; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7 and to
the extent Rule 3a-7 requires a Trust having certain
qualifications to hold title to the "eligible assets"
(as defined in Rule 3a-7) of the Trust, the Property
Trustee shall possess those qualifications.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 6.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 6.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Indenture, the Debentures, the Debt Guarantee and the Trust
Guarantee shall be deemed to be specifically described in this Declaration for
purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
SECTION 6.4. QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE
TRUSTEE GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 6.5. INITIAL REGULAR TRUSTEES.
The initial Regular Trustees shall be:
Eric P. Sieracki, Sandor E. Samuels and Thomas Keith McLaughlin, the
business address of each of whom is 4500 Park Granada, Calabasas, California
91302.
SECTION 6.6. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 6.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in Liquidation Amount of the
Common Securities voting as a class at a meeting of the
Holders of the Common Securities.
(b) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 6.6(a) until a successor Trustee possessing the
qualifications to act as Property Trustee under Section 6.3(a) (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor. The Trustee that acts as Delaware Trustee
shall not be removed in accordance with Section 6.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 6.2 and
6.4 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his or its
successor shall have been appointed, until his death or its dissolution or until
his or its removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which resignation shall
take effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
a. until a Successor Property Trustee has been
appointed and has accepted such appointment by
instrument executed by such Successor Property
Trustee and delivered to the Trust, the Sponsor
and the resigning Property Trustee; or
b. until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to
the Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted
such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 6.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee,
as the case may be, shall have been appointed and accepted appointment as
provided in this Section 6.6 within 60 days after delivery to the Sponsor and
the Trust of an instrument of resignation or removal, the resigning or removed
Property Trustee or Delaware Trustee, as applicable, may petition any court of
competent jurisdiction for appointment of a Successor Property Trustee or
Successor Delaware Trustee, as applicable. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 6.7. VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is
increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.6.
SECTION 6.8. EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 6.9. MEETINGS.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice
of such meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.
SECTION 6.10. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Property Trustee, the Delaware
Trustee or any Regular Trustee that is not a natural person, may be merged or
converted or with such Trustee may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Trustee, shall be the successor of such Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
SECTION 6.11. DELEGATION OF POWER.
The Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
ARTICLE 7.
THE SECURITIES
SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Regular Trustees shall on behalf of the Trust issue a class
of capital securities representing undivided beneficial ownership interests in
the assets of the Trust (the "Transfer Restricted Securities"), a class of
capital securities to be issued only in exchange for the Transfer Restricted
Securities (the "New Capital Securities," and, together with the Transfer
Restricted Securities, the "Capital Securities"), and one class of common
securities representing undivided beneficial ownership interests in the assets
of the Trust (the "Common Securities").
(i) Capital Securities. The Capital Securities of the
Trust have an aggregate liquidation amount with
respect to the assets of the Trust of $200,000,000
and a liquidation amount with respect to the assets
of the Trust of $1,000 per Capital Security. The
Transfer Restricted Capital Securities are hereby
designated for identification purposes only as the
8.05% Subordinated Capital Income Securities, Series
A, of the Trust and the New Capital Securities are
hereby designated for identification purposes only as
the 8.05% Subordinated Capital Income Securities,
Series B, of the Trust. The Transfer Restricted
Capital Security Certificates and the New Capital
Security Certificates evidencing the Capital
Securities, respectively, shall be substantially in
the form of Exhibits A and B to the Declaration, with
such changes and additions thereto or deletions
therefrom as may be required by ordinary usage,
custom or practice or to conform to the rules of any
securities exchange on which the Capital Securities
are listed or quoted.
(ii) Common Securities. The Common Securities of the
Trust have an aggregate liquidation amount with
respect to the assets of the Trust of $6,200,000 and
a liquidation amount with respect to the assets of
the Trust of $1,000 per Common Security. The Common
Securities are hereby designated for purposes of
identification only as the Common Securities of the
Trust. The Common Security Certificates evidencing
the Common Securities shall be substantially in the
form of Exhibit C to the Declaration, with such
changes and additions thereto or deletions therefrom
as may be required by ordinary usage, custom or
practice.
(b) Payment of Distributions on, and amounts payable on liquidation,
redemption or otherwise with respect to, the Securities, as applicable, shall be
made Pro Rata based on the liquidation amount of such Securities; provided,
however, that if on any Distribution Date or redemption date an Indenture Event
of Default shall have occurred and be continuing, no payment of any Distribution
on, or Redemption Price of, any of the Common Securities, and no other payment
on account of the redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the outstanding Capital Securities for all
distribution periods terminating on or prior thereto, or in the case of the
Redemption Price the full amount of such Redemption Price on all of the
outstanding Capital Securities then called for redemption, shall have been made
or provided for, and all funds available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions on, or Redemption
Price of, the Capital Securities then due and payable. The Trust shall issue no
securities or other interests in the assets of the Trust other than the Capital
Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case a Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Securities may be listed, or to conform to usage.
A Capital Security Certificate shall not be valid until
authenticated by the manual signature of an Authorized Officer of the Property
Trustee. Such signature shall be conclusive evidence that the Capital Security
Certificate has been authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Capital Security Certificates for
original issue. The aggregate number of Capital Securities outstanding at any
time shall not exceed the liquidation amount set forth in Section 7.1(a)(i).
The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Capital Security Certificates. An authenticating
agent may authenticate Capital Security Certificates whenever the Property
Trustee may do so. Each reference in this Declaration to authentication by the
Property Trustee includes authentication by such agent. An authenticating agent
has the same rights as the Property Trustee to deal with the Sponsor or an
Affiliate of the Sponsor.
(d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable beneficial ownership interests in the assets of the Trust.
(f) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the terms of the Securities, the Trust
Guarantee, the Debt Guarantee, the Indenture and the Debentures.
(g) The holders of the Securities shall have no preemptive rights.
SECTION 7.2. DISTRIBUTIONS.
(a) Holders of Securities shall be entitled to receive cumulative
cash distributions (the "Distributions") at a rate per annum equal to 8.05% of
the stated liquidation amount of $1,000 per Security (the "Distribution Rate").
At all times, the Distribution Rate, the Distribution Dates and
other payment dates for the Securities will correspond to the interest rate,
interest payment dates and payment dates on the Debentures.
(b) (i) Distributions will be payable semi-annually, in arrears, on
June 15 and December 15 of each year, commencing December 15, 1997, and upon
redemption, when, as and if available for payment, by the Property Trustee,
except as otherwise described below. Distributions are payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Trust has funds available for the payment of such
Distributions in the Property Account. The amount of distributions payable for
any semi-annual distribution period shall be computed (i) for any full 180-day
semi-annual distribution period, on the basis of a 360-day year of twelve 30-day
months and (ii) for any period shorter than a full 180-day semi-annual
distribution period for which Distributions are computed, on the basis of the
actual number of days elapsed in such 180-day semi-annual period (assuming each
full month elapsed in such period consists of 30 days). Subject to Section
7.1(b), Distributions shall be made on the Capital Securities and the Common
Securities on a Pro Rata basis.
(c) Distributions on the Securities (other than on a redemption
date) shall be payable to the Holders thereof as they appear on the Security
Register as of the close of business on the relevant record dates. While the
Capital Securities are represented by one or more Global Securities, the
relevant record dates will be the close of business on the Business Day prior to
the relevant Distribution Dates, unless otherwise provided in this Declaration
or unless a different regular record date is established or provided for the
corresponding interest payment date on the Debentures. The relevant record dates
for the Common Securities shall be the same as for the Capital Securities. If
the Capital Securities shall not continue to remain represented by one or more
Global Securities, the relevant record dates for the Capital Securities shall be
selected by the Regular Trustees and shall be at least one Business Day prior to
the relevant payment dates. At all times, the Distribution payment dates shall
correspond to the interest payment dates on the Debentures. Distributions
payable on any Securities that are not punctually paid on any Distribution Date,
as a result of the Debenture Issuer having failed to make a payment under the
Debentures or the Guarantor having failed to make a payment under the Debt
Guarantee, in each case when due (taking into account any Extension Period)
("Defaulted Distributions"), shall cease to be payable to the Person in whose
name such Securities are registered on the relevant record date, and such
Defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with Sections 7.2(d) and 7.2(e). In the event that any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any additional Distributions
or other payments in respect of any such delay), except that, if such Business
Day is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date such payment was originally payable (each date on which
Distributions are payable in accordance with the foregoing, a "Distribution
Date"). Applicable Distributions on the Securities will be deferred by the Trust
during any Extension Period. Distributions that are not paid on the applicable
Distribution Date (including Distributions deferred during any Extension Period)
will accumulate and compound semi-annually at the rate of 8.05% per annum, to
the extent permitted by applicable law.
(d) The Regular Trustees may elect to make payment of any Defaulted
Distributions to the Persons in whose names the Securities are registered at the
close of business on a special record date for the payment of such Defaulted
Distributions (a "Special Record Date"), which shall be fixed in the following
manner. The Regular Trustees shall notify the Property Trustee in writing of the
amount of Defaulted Distributions proposed to be paid on each Security and the
date of the proposed payment (based upon the proposed amounts and dates of
payment of correlative payments with respect to the Debentures held by the
Property Trustee), such amount when received to be held in trust in the Property
Account Persons entitled to such Defaulted Distributions as in this Section
7.2(d) provided. Thereupon the Property Trustee shall fix a Special Record Date
for the payment of such Defaulted Distributions which shall be not more than 15
days and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Property Trustee of the notice of the
proposed payment. The Property Trustee shall promptly notify the Regular
Trustees and the Debenture Issuer of such Special Record Date and, at the
expense of the Debenture Issuer, shall cause notice of the proposed payment of
such Defaulted Distributions and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Distributions and the Special
Record Date therefor having been so mailed, such Defaulted Distributions, to the
extent funds are then available therefor in the Property Account, shall be paid
to the Persons in whose names the Securities are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following paragraph (e).
(e) The Regular Trustees may cause payment of any Defaulted
Distributions to be made in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and, if so listed, upon such notice as may be required by such exchange, if,
after notice given by the Regular Trustees to the Property Trustee of the
proposed payment pursuant to this Section 7.2(e), such manner of payment shall
be deemed practicable by the Property Trustee.
(f) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata among the Holders of the Securities.
SECTION 7.3. REDEMPTION OF SECURITIES.
(a) Upon the repayment or redemption of the Debentures held by the
Trust, whether at the stated maturity of the Debentures or upon earlier
redemption as provided in the Indenture, the proceeds from such repayment or
redemption will be simultaneously applied Pro Rata (subject to Section 7.1(b))
to redeem Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so repaid or redeemed at the
Redemption Price. The Debentures are not redeemable at the option of the
Debenture Issuer, other than in certain circumstances following a Special Event
as described in Section 7.3(c). Holders shall be given not less than 30 nor more
than 60 days notice of such redemption in accordance with Section 7.4 below.
(b) On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Securities will no longer be deemed to be
outstanding and (ii) Certificates representing Securities will be deemed to
represent the Debentures having an aggregate principal amount equal to the
stated liquidation amount of, and bearing accrued and unpaid interest equal to
accrued and unpaid Distributions on, such Securities until such Certificates are
presented to the Sponsor or its agent for transfer or reissuance.
(c) If, at any time, a Special Event shall have occurred and be
continuing, the Regular Trustees may, within 90 days following the occurrence of
such Special Event, elect to dissolve the Trust upon not less than 30 nor more
than 60 days' notice and, after paying or making reasonable provision to pay all
claims and obligations of the Trust in accordance with Section 3808(e) of the
Business Trust Act, cause the Debentures and the Debt Guarantee to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
If an Investment Company Event shall have occurred and be continuing, the
Debenture Issuer has the option to redeem the Debentures, in whole but not in
part (and thereby cause a mandatory redemption of the Securities), at any time
within 90 days following the occurrence of such Investment Company Event at a
redemption price equal to 100% of the aggregate principal amount thereof, plus
accrued and unpaid interest to the date of redemption. In addition, if a Tax
Event shall have occurred and be continuing and in the opinion of counsel,
rendered by a law firm having a recognized national tax practice, there would in
all cases, after effecting the dissolution of the Trust and the distribution of
the Debentures and the Debt Guarantee to the holders of the Securities in
exchange therefor upon liquidation of the Trust, be more than an insubstantial
risk that the Tax Event would continue to exist, then the Debenture Issuer will
have the right (a) to shorten the stated maturity of the Debentures to a date
not earlier than December 15, 2011 such that, in the opinion of such counsel,
after advancing the stated maturity of the Debentures, interest paid on the
Debentures will be deductible by the Debenture Issuer for United States federal
income tax purposes or (b) to redeem the Debentures, in whole but not in part
(and thereby cause a mandatory redemption of the Securities), at any time within
90 days following the occurrence of a Tax Event at a redemption price equal to
100% of the aggregate principal amount thereof, plus accrued and unpaid interest
to the date of redemption.
SECTION 7.4. REDEMPTION PROCEDURES.
(a) Notice of any redemption of Debentures, or notice of the
distribution of Debentures by the Trust in exchange for the Securities (either,
a "Redemption/Distribution Notice"), will be given by the Trust by mail to each
Holder of Securities to be redeemed or exchanged at least 30 days but not more
than 60 days before the date fixed for redemption or exchange thereof which, in
the case of a redemption, will be the date fixed for redemption of the
Debentures. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this Section
7.4(a), a Redemption/Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to Holders of
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Securities at the address of each such Holder appearing in the
Security Register. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the validity
of the redemption or exchange proceedings with respect to any other Holder.
(b) Subject to the Trust's fulfillment of the notice requirements
set forth in Section 7.4(a) above, if Securities are to be redeemed, then (i)
with respect to Capital Securities represented by one or more Global Securities,
by 12:00 noon, New York City time, on the redemption date, provided the
Debenture Issuer or the Guarantor has paid the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
Debentures, the Property Trustee will deposit irrevocably with the Depositary or
its nominee (or successor Clearing Agency or its nominee) funds sufficient to
pay the applicable Redemption Price for all the Capital Securities held by the
Depositary and will give the Depositary irrevocable instructions and authority
to pay the Redemption Price to the Holders of the Capital Securities and (ii)
with respect to Capital Securities not represented by one or more Global
Securities, provided the Debenture Issuer or the Guarantor has paid the Property
Trustee a sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Trust will irrevocably deposit with the Paying
Agent for such Capital Securities funds sufficient to pay the applicable
Redemption Price and will give the Paying Agent irrevocable instructions and
authority to pay the Redemption Price to the Holders thereof upon surrender of
their certificates evidencing the Capital Securities and, upon such surrender,
the Paying Agent shall pay the applicable Redemption Price to such Holders by
check mailed to their respective addresses appearing on the Security Register on
the redemption date. In the event any date fixed for redemption of Securities is
not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date such payment was originally payable. If payment of the
Redemption Price in respect of any Securities is improperly withheld or refused
and not paid either by the Property Trustee or by the Guarantor pursuant to the
Trust Guarantee, Distributions on such Securities will continue to accrue at the
then applicable rate from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the Redemption Price. For these
purposes, the applicable Redemption Price shall not include Distributions which
are being paid to Holders who were Holders on a relevant record date. Upon
satisfaction of the foregoing conditions, then immediately prior to the close of
business on the date of such deposit or payment, Distributions will cease to
accrue on the Securities called for redemption and all rights of Holders of such
Securities so called for redemption will cease, except the right of the Holders
of such Securities to receive the Redemption Price, but without interest on such
Redemption Price, and from and after the date fixed for redemption, such
Securities will cease to be outstanding.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have been
called for redemption.
(c) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Sponsor or any of its
subsidiaries (including the Debenture Issuer) may at any time and from time to
time purchase outstanding Capital Securities by tender, in the open market or by
private agreement.
SECTION 7.5. VOTING RIGHTS OF CAPITAL SECURITIES.
(a) Except as provided under Section 11.1 and this Article 7 and as
otherwise required by the Business Trust Act, the Trust Indenture Act and other
applicable law, the Holders of the Capital Securities shall have no voting
rights.
(b) Subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in Section 7.5(d) below, the
Holders of a Majority in Liquidation Amount of the Capital Securities shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee, or to direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as holder of the Debentures
and the Debt Guarantee, to (i) exercise the remedies available to it under the
Indenture and the Debt Guarantee, (ii) consent to any amendment or modification
of the Indenture or the Debentures where such consent shall be required or (iii)
waive any past default and its consequences that is waivable under Section 7.13
of the Indenture; provided, however, that if an Indenture Event of Default has
occurred and is continuing, then the Holders of 25% of the aggregate liquidation
amount of the Capital Securities may direct the Property Trustee to declare the
principal of and interest on the Debentures due and payable; provided, further,
that where a consent or action under the Indenture would require the consent or
act of the Holders of more than a majority of the aggregate principal amount of
Debentures affected thereby, only the Holders of the percentage of the aggregate
stated liquidation amount of the Capital Securities which is at least equal to
the percentage required under the Indenture may direct the Property Trustee to
give such consent to take such action.
(c) If the Property Trustee fails to enforce its rights under the
Debentures or the Debt Guarantee after Holders of a Majority in Liquidation
Amount of Capital Securities have so directed the Property Trustee, a Holder of
Capital Securities may institute a legal proceeding directly against the
Debenture Issuer or the Guarantor, respectively, to enforce the Property
Trustee's rights under the Indenture without first instituting any legal
proceeding against the Property Trustee or any other person or entity. In
addition, if a Trust Enforcement Event has occurred and is continuing and such
event is attributable to the failure of the Debenture Issuer to make any
interest, principal or other required payments when due on the Debentures on the
date such interest, principal or other payment is otherwise payable (including
any redemption date) and the Guarantor does not make such payments, to the
extent required, under the Debt Guarantee, then a Holder of Capital Securities
may directly institute a Direct Action against the Debenture Issuer or the
Guarantor, respectively, on or after the respective due date specified in the
Debentures.
(d) The Property Trustee shall notify all Holders of the Capital
Securities of any notice of any Indenture Event of Default which it receives
from the Debenture Issuer with respect to the Debentures. Such notice shall
state that such Indenture Event of Default also constitutes a Trust Enforcement
Event. Except with respect to directing the time, method, and place of
conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 7.5(b)(i) through
7.5(b)(iii) above unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that the Trust will not fail to be
classified as a grantor trust for United States federal income tax purposes, as
a result of such action, and each Holder will be treated as owning an undivided
beneficial ownership interest in the Debentures and the Debt Guarantee.
(e) In the event the consent of the Property Trustee, as the holder
of the Debentures, is required under the Indenture with respect to any amendment
or modification of the Indenture, the Property Trustee shall request the
direction of the Holders of the Securities with respect to such amendment or
modification and shall vote with respect to such amendment or modification as
directed by a Majority in Liquidation Amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the Holders of more than a majority of the
aggregate principal amount of the Debentures, the Property Trustee may only give
such consent at the direction of the Holders of at least the same proportion in
aggregate stated liquidation amount of the Securities. The Property Trustee
shall not take any such action in accordance with the directions of the Holders
of the Securities unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes, as a
result of such action, and each Holder will be treated as owning an undivided
beneficial ownership interest in the Debentures.
(f) A waiver of an Indenture Event of Default with respect to the
Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.
(g) Any required approval or direction of Holders of Capital
Securities may be given at a separate meeting of Holders of Capital Securities
convened for such purpose, at a meeting of all of the Holders of Securities or
pursuant to written consent. The Regular Trustees shall cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Capital Securities. Each such notice shall
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such Holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.
(h) No vote or consent of the Holders of Capital Securities shall be
required for the Trust to redeem and cancel Capital Securities or distribute
Debentures in accordance with the Declaration.
(i) Notwithstanding that Holders of Capital Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Securities that are owned at such time by the Guarantor, the Trustees or any
Affiliate of the Guarantor or any Trustees, shall, for purposes of such vote or
consent, be treated as if such Securities were not outstanding.
(j) Holders of the Capital Securities shall have no rights to
appoint or remove the Trustees, who may be appointed, removed or replaced solely
by the Common Securities Holder.
SECTION 7.6. VOTING RIGHTS OF COMMON SECURITIES.
(a) Except as provided under Section 6.1(b), this Section 7.6 or
Section 11.1 or as otherwise required by the Business Trust Act, the Trust
Indenture Act or other applicable law or provided by the Declaration, the
Holders of the Common Securities shall have no voting rights.
(b) The Holders of the Common Securities shall be entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 and only after all Trust Enforcement
Events with respect to the Capital Securities have been cured, waived, or
otherwise eliminated and subject to the requirement of the Property Trustee
obtaining a tax opinion in certain circumstances set forth in this Section
7.6(c), the Holders of a Majority in Liquidation Amount of the Common Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as holder of the Debentures
and the Debt Guarantee, to (i) exercise the remedies available to it under the
Indenture and the Debt Guarantee or (ii) consent to any amendment or
modification of the Indenture or the Debentures where such consent shall be
required; provided, however, that where a consent or action under the Indenture
would require the consent or act of the Holders of more than a majority of the
aggregate principal amount of Debentures affected thereby, only the Holders of
the percentage of the aggregate stated liquidation amount of the Common
Securities which is at least equal to the percentage required under the
Indenture may direct the Property Trustee to have such consent or take such
action. Except with respect to directing the time, method, and place of
conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 7.6(c)(i) or
7.6(c)(ii) above unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that, as a result of such action, for
United States federal income tax purposes the Trust will not fail to be
classified as a grantor trust and each Holder will be treated as owning an
undivided beneficial ownership interest in the Debentures.
(d) If the Property Trustee fails to enforce its rights under the
Debentures after Holders of a Majority in Liquidation Amount of the Common
Securities have so directed the Property Trustee as provided in Section 7.6(c),
a Holder of Common Securities may directly institute a legal proceeding directly
against the Debenture Issuer or the Guarantor, respectively, to enforce the
Property Trustee's rights under the Indenture without first instituting any
legal proceeding against the Property Trustee or any other person or entity. In
addition, if a Trust Enforcement Event has occurred and is continuing and such
event is attributable to the failure of the Debenture Issuer to make any
interest, principal or other required payments when due under the Indenture and
the Guarantor does not make such payments, to the extent required, under the
Debt Guarantee, then a Holder of Common Securities may directly institute a
Direct Action against the Debenture Issuer or the Guarantor, respectively, on or
after the respective due date specified in the Debentures.
(e) A waiver of an Indenture Event of Default with respect to the
Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.
(f) Any required approval or direction of Holders of Common
Securities may be given at a separate meeting of Holders of Common Securities
convened for such purpose, at a meeting of all of the Holders of Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Trust Common Securities are entitled to vote, or of
any matter on which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such Holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.
(g) No vote or consent of the Holders of the Common Securities will
be required for the Trust to redeem and cancel Common Securities or to
distribute Debentures in accordance with the Declaration.
SECTION 7.7. PAYING AGENT.
In the event that any Capital Securities are not in book-entry only
form, the Trust shall maintain in the Borough of Manhattan, City of New York,
State of New York, an office or agency where the Capital Securities may be
presented for payment (the "Paying Agent"). The Trust may appoint the Paying
Agent and may appoint one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Trust may change any Paying Agent without prior notice to the
Holders. The Trust shall notify the Property Trustee of the name and address of
any Paying Agent not a party to this Declaration. If the Trust fails to appoint
or maintain another entity as Paying Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent. The Property
Trustee shall initially act as Paying Agent for the Capital Securities and the
Common Securities. In the event the Property Trustee shall no longer be the
Paying Agent, the Regular Trustees shall appoint a successor (which shall be a
bank or trust company acceptable to the Regular Trustees and the Guarantor) to
act as Paying Agent. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Property Trustee and the Guarantor.
SECTION 7.8. TRANSFER OF SECURITIES.
(a) The Trust shall cause to be kept at the Corporate Trust Office
of the Property Trustee a register (the register maintained in such office being
herein sometimes referred to as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Trust shall provide for the
registration of Securities and of transfers of Securities. The Property Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.
(b) Upon surrender for registration of transfer of any Security at
an office or agency of the Trust designated for such purpose, the Trust shall
execute, and the Property Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like aggregate principal amount.
(c) At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Trust shall execute, and the Property Trustee shall authenticate and deliver,
the Securities which the Holder making the exchange is entitled to receive.
(d) Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Trust or the Property
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Trust and the Security Registrar duly executed, by
the Holder thereof or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration of transfer
or exchange of Securities, but the Trust may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities.
SECTION 7.9. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them, the Sponsor and
the Trust harmless, then, in the absence of notice that such Certificate shall
have been acquired by a bona fide purchaser, any Regular Trustee on behalf of
the Trust shall execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 7.9, the Regular Trustees may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section 7.9 shall
constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 7.10. DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the Security Register of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 7.11. GLOBAL SECURITIES.
The Transfer Restricted Securities shall be, and the New Capital
Securities may be, issued as Global Securities; if Capital Securities are to be
issued in the form of one or more Global Securities, then the Trust shall
execute and the Property Trustee shall authenticate and deliver one or more
Global Securities that (i) shall represent and shall be denominated in an amount
equal to the aggregate liquidation amount of all of the Capital Securities to be
issued in the form of Global Securities and not yet canceled, (ii) shall be
registered in the name of the Depositary for such Global Security or Global
Securities or the nominee of such Depositary, and (iii) shall be delivered by
the Property Trustee to such Depositary or pursuant to such Depositary's
instructions. Global Securities shall bear a legend substantially to the
following effect:
"This Capital Security is a Global Security within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Depositary"), or a
nominee of the Depositary. This Capital Security is exchangeable for Capital
Securities registered in the name of a Person other than the Depositary or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Capital Security (other than a transfer of this Capital
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Capital Security Certificate is presented by an
authorized representative of the Depositary to Countrywide Capital III or its
agent for registration of transfer, exchange or payment, and any Security
Certificate issued is registered in the name of Cede & Co. or such other name as
registered by an authorized representative of the Depositary (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depositary), 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."
Capital Securities not represented by a Global Security issued in
exchange for all or a part of a Global Security pursuant to this Section 7.11
shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect Participants or
otherwise, shall instruct the Property Trustee. Upon execution and
authentication, the Property Trustee shall deliver such Capital Securities not
represented by a Global Security to the persons in whose names such definitive
Capital Securities are so registered.
At such time as all interests in Global Securities have been
redeemed, repurchased or canceled, such Global Securities shall be, upon receipt
thereof, canceled by the Property Trustee in accordance with standing procedures
of the Depositary. At any time prior to such cancellation, if any interest in
Global Securities is exchanged for Capital Securities not represented by a
Global Security, redeemed, canceled or transferred to a transferee who receives
Capital Securities not represented by a Global Security therefor or any Capital
Security not represented by a Global Security is exchanged or transferred for
part of a Global Security, the principal amount of such Global Securities shall,
in accordance with the standing procedures of the Depositary, be reduced or
increased, as the case may be, and an endorsement shall be made on such Global
Securities by the Property Trustee to reflect such reduction or increase.
The Trust and the Property Trustee may for all purposes, including
the making of payments due on the Capital Securities, deal with the Depositary
as the authorized representative of the Holders for the purposes of exercising
the rights of Holders hereunder. The rights of the owner of any beneficial
interest in a Global Security shall be limited to those established by law and
agreements between such owners and depository participants or Euroclear and
Cedel; provided, that no such agreement shall give any rights to any Person
against the Trust or the Property Trustee without the written consent of the
parties so affected. Multiple requests and directions from and votes of the
Depositary as Holder of Capital Securities in global form with respect to any
particular matter shall not be deemed inconsistent to the extent they do not
represent an amount of Capital Securities in excess of those held in the name of
the Depositary or its nominee.
If at any time the Depositary for any Capital Securities represented
by one or more Global Securities notifies the Trust that it is unwilling or
unable to continue as Depositary for such Capital Securities or if at any time
the Depositary for such Capital Securities shall no longer be eligible under
this Section 7.11, the Trust shall appoint a successor Depositary with respect
to such Capital Securities. If a successor Depositary for such Capital
Securities is not appointed by the Trust within 90 days after the Trust receives
such notice or becomes aware of such ineligibility, the Trust's election that
such Capital Securities be represented by one or more Global Securities shall no
longer be effective and the Trust shall execute, and the Property Trustee will
authenticate and deliver, Capital Securities in definitive registered form, in
any authorized denominations, in an aggregate liquidation amount equal to the
aggregate liquidation amount of the Global Security or Global Securities
representing such Capital Securities in exchange for such Global Security or
Capital Securities.
The Trust may at any time and in its sole discretion determine that
the Capital Securities issued in the form of one or more Global Securities shall
no longer be represented by a Global Security or Global Securities. In such
event the Trust shall execute, and the Property Trustee, shall authenticate and
deliver, Capital Securities in definitive registered form, in any authorized
denominations, in an aggregate liquidation amount equal to the principal amount
of the Global Security or Global Securities representing such Capital
Securities, in exchange for such Global Security or Global Securities.
Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in Section 7.8), Global Securities may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
Interests of beneficial owners in a Global Security may be
transferred or exchanged for Capital Securities not represented by a Global
Security and Capital Securities not represented by a Global Security may be
transferred or exchanged for Global Securities in accordance with rules of the
Depositary and the provisions of Section 7.13.
Any Capital Security in global form may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Declaration as may be required by the
Depositary or by the National Association of Securities Dealers, Inc. in order
for the Capital Securities to be tradable on the PORTAL Market or as may be
required for the Capital Securities to be tradable on any other market developed
for trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with Regulation S or with the
rules and regulations of any securities exchange upon which the Capital
Securities may be listed or traded or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Capital Securities are subject.
SECTION 7.12. RESTRICTIVE LEGEND.
(a) Each Global Security and Capital Security not represented by a
Global Security that constitutes a Restricted Security shall bear the following
legend (the "Private Placement Legend") on the face thereof until two years
after the later of the date of original issue and the last date on which the
Sponsor or any affiliate of the Sponsor was the owner of such Capital Securities
(or any predecessor thereto) (the "Resale Restriction Termination Date"), unless
otherwise agreed by the Trust and the Holder thereof:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES
FOR THE BENEFIT OF THE ISSUER OF THIS SECURITY THAT: (I) IT HAS ACQUIRED A
"RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY
PRIOR TO THE LATER OF THE DATE WHICH IS TWO YEARS AFTER THE DATE OF
ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR
ANY PREDECESSOR) EXCEPT (A) TO COUNTRYWIDE HOME LOANS, INC., (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(D) OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (III) IT
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM
IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE.
ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSES
(II)(D) AND (E) IS SUBJECT TO THE RIGHT OF THE ISSUER AND THE PROPERTY
TRUSTEE FOR SUCH SECURITY TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM
AND SUBSTANCE."
Any Capital Security (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms may, upon satisfaction of the requirements of
Section 7.12(b) and surrender of such Capital Security for exchange to the
Security Registrar in accordance with the provisions of Section 7.12(b), be
exchanged for a new Capital Security or Capital Securities, of like tenor and
aggregate liquidation amount, which shall not bear the restrictive legend
required by this Section 7.12(a).
(a) Upon any sale or transfer of any Restricted Security (including
any interest in a Global Security) (i) that is effected pursuant to an effective
registration statement under the Securities Act or (ii) in connection with which
the Property Trustee receives certificates and other information (including an
opinion of counsel, if requested) reasonably acceptable to the Sponsor and the
Property Trustee to the effect that such security will no longer be subject to
the resale restrictions under federal and state securities laws, then (A) in the
case of a Restricted Security in definitive form, the Security Registrar shall
permit the holder thereof to exchange such Restricted Security for a security
that does not bear the legend set forth in Section 7.12(a), and shall rescind
any such restrictions on transfer and (B) in the case of Restricted Securities
represented by a Global Security, such Capital Securities shall no longer be
subject to the restrictions contained in the legend set forth in Section 7.12(a)
(but still subject to the other provisions hereof). In addition, any Capital
Security (or security issued in exchange or substitution therefor) as to which
the restrictions on transfer described in the legend set forth in Section
7.12(a) have expired by their terms, may, upon surrender thereof (in accordance
with terms of this Declaration) together with such certifications and other
information (including an opinion of counsel having substantial experience in
practice under the Securities Act and otherwise reasonably acceptable to the
Sponsor, addressed to the Sponsor and the Property Trustee and in form
acceptable to the Sponsor, to the effect that the transfer of such Restricted
Security has been made in compliance with Rule 144 or such successor provision)
acceptable to the Sponsor and the Property Trustee as either of them may
reasonably require, be exchanged for a new Capital Security or Capital
Securities of like tenor and aggregate liquidation amount, which shall not bear
the restrictive legends set forth in Section 7.12(a).
SECTION 7.13. SPECIAL TRANSFER PROVISIONS.
(a) At any time at the request of the Beneficial Owner of a Capital
Security in global form, such Beneficial Owner shall be entitled to obtain a
definitive Capital Security upon written request to the Property Trustee in
accordance with the standing instructions and procedures existing between the
Depositary and the Property Trustee for the issuance thereof. Any transfer of a
beneficial interest in a Capital Security in global form which cannot be
effected through book-entry settlement must be effected by the delivery to the
transferee (or its nominee) of a definitive Capital Security or Securities
registered in the name of the transferee (or its nominee) on the books
maintained by the Security Registrar. With respect to any such transfer, the
Property Trustee shall cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Property Trustee, the
aggregate liquidation amount of the Global Security to be reduced and, following
such reduction, the Property Trustee shall cause definitive Capital Securities
in the appropriate aggregate liquidation amount in the name of such transferee
(or its nominee) and bearing such restrictive legends as may be required by this
Declaration to be delivered. In connection with any such transfer, the Property
Trustee may request such representations and agreements relating to the
restrictions on transfer of such Capital Securities from such transferee (or
such transferee's nominee) as the Property Trustee may reasonably require.
(b) So long as the Capital Securities are eligible to be held as
Global Securities, or unless otherwise required by law, upon any transfer of a
definitive Capital Security to a QIB in accordance with Rule 144A, unless
otherwise requested by the transferor, and upon receipt of the definitive
Capital Security being so transferred, together with a certification from the
transferor that the transferor reasonably believes the transferee is a QIB (or
other evidence satisfactory to the Property Trustee), the Property Trustee shall
make an endorsement on the Restricted Global Security to reflect an increase in
the aggregate liquidation amount of the Restricted Global Security, and the
Property Trustee shall cancel such definitive Capital Security and cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Property Trustees, the aggregate liquidation amount of
Capital Securities represented by the Restricted Global Security to be increased
accordingly.
(c) So long as the Capital Securities are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
definitive Capital Security in accordance with Regulation S, if requested by the
transferor, and upon receipt of the definitive Capital Security or Capital
Securities being so transferred, together with a certification from the
transferor that the transfer was made in accordance with Rule 903 or 904 of
Regulation S or Rule 144 under the Securities Act (or other evidence
satisfactory to the Property Trustee), the Property Trustee shall make an
endorsement on the Regulation S Global Security to reflect an increase in the
aggregate liquidation amount of the Capital Securities represented by the
Regulation S Global Security, the Property Trustee shall cancel such definitive
Capital Security or Capital Securities and cause, in accordance with the
standing instructions and procedures existing between the Depositary and the
Property Trustee, the aggregate liquidation amount of Capital Securities
represented by the Regulation S Global Security to be increased accordingly.
(d) If a holder of a beneficial interest in the Restricted Global
Security wishes at any time to exchange its interest in the Restricted Global
Security for an interest in the Regulation S Global Security, or to transfer its
interest in the Restricted Global Security to a Person who wishes to take
delivery thereof in the form of an interest in the Regulation S Global Security,
such holder may, subject to the rules and procedures of the Depositary and to
the requirements set forth in the following sentence, exchange or cause the
exchange or transfer or cause the transfer of such interest for an equivalent
beneficial interest in the Regulation S Global Security. Upon receipt by the
Property Trustee, as transfer agent of (1) instructions given in accordance with
the Depositary's procedures from or on behalf of a holder of a beneficial
interest in the Restricted Global Security, directing the Property Trustee (via
DWAC), as transfer agent, to credit or cause to be credited a beneficial
interest in the Regulation S Global Security in an amount equal to the
beneficial interest in the Restricted Global Security to be exchanged or
transferred, (2) a written order given in accordance with the Depositary's
procedures containing information regarding the Euroclear or Cedel account to be
credited with such increase and the name of such account and (3) a certificate
given by the holder of such beneficial interest stating that the exchange or
transfer of such interest has been made pursuant to and in accordance with Rule
903 or Rule 904 of Regulation S or Rule 144 under the Securities Act (or other
evidence satisfactory to the Property Trustee), the Property Trustee, as
transfer agent, shall promptly deliver appropriate instructions to the
Depositary (via DWAC), its nominee, or the custodian for the Depositary, as the
case may be, to reduce or reflect on its records a reduction of the Restricted
Global Security by the aggregate liquidation amount of the beneficial interest
in such Restricted Global Security to be so exchanged or transferred from the
relevant participant, and the Property Trustee, as transfer agent, shall
promptly deliver appropriate instructions (via DWAC) to the Depositary, its
nominee, or the custodian for the Depositary, as the case may be, concurrently
with such reduction, to increase or reflect on its records an increase of the
aggregate liquidation amount of such Regulation S Global Security by the
aggregate liquidation amount of the beneficial interest in such Restricted
Global Security to be so exchanged or transferred, and to credit or cause to be
credited to the account of the Person specified in such instructions (who may be
Morgan Guaranty Trust Company of New York, Brussels office, as operator of
Euroclear or Cedel or another agent member of Euroclear or Cedel, or both, as
the case may be, acting for and on behalf of them) a beneficial interest in such
Regulation S Global Security equal to the reduction in the aggregate liquidation
amount of such Restricted Global Security.
(e) If a holder of a beneficial interest in the Regulation S Global
Security wishes at any time to exchange its interest in the Regulation S Global
Security for an interest in the Restricted Global Security, or to transfer its
interest in the Regulation S Global Security to a Person who wishes to take
delivery thereof in the form of an interest in the Restricted Global Security,
such holder may, subject to the rules and procedures of Euroclear or Cedel and
the Depositary, as the case may be, and to the requirements set forth in the
following sentence, exchange or cause the exchange or transfer or cause the
transfer of such interest for an equivalent beneficial interest in the
Restricted Global Security. Upon receipt by the Property Trustee, as transfer
agent of (l) instructions given in accordance with the procedures of Euroclear
or Cedel and the Depositary, as the case may be, from or on behalf of a
beneficial owner of an interest in the Regulation S Global Security directing
the Property Trustee, as transfer agent, to credit or cause to be credited a
beneficial interest in the Restricted Global Security in an amount equal to the
beneficial interest in the Regulation S Global Security to be exchanged or
transferred, (2) a written order given in accordance with the procedures of
Euroclear or Cedel and the Depositary, as the case may be, containing
information regarding the account with the Depositary to be credited with such
increase and the name of such account and (3) prior to the expiration of the
Restricted Period, a certificate given by the holder of such beneficial interest
and stating that the person transferring such interest in such Regulation S
Global Security reasonably believes that the person acquiring such interest in
the Restricted Global Security is a QIB and is obtaining such beneficial
interest in a transaction meeting the requirements of Rule 144A and any
applicable securities laws of any State of the United States or any other
jurisdiction (or other evidence satisfactory to the Property Trustee), the
Property Trustee, as transfer agent, shall promptly deliver (via DWAC)
appropriate instructions to the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, to reduce or reflect on its records a
reduction of the Regulation S Global Security by the aggregate liquidation
amount of the beneficial interest in such Regulation S Global Security to be
exchanged or transferred, and the Property Trustee, as transfer agent, shall
promptly deliver (via DWAC) appropriate instructions to the Depositary, its
nominee, or the custodian for the Depositary, as the case may be, concurrently
with such reduction, to increase or reflect on its records an increase of the
liquidation amount of the Restricted Global Security by the aggregate
liquidation amount of the beneficial interest in the Regulation S Global
Security to be so exchanged or transferred, and to credit or cause to be
credited to the account of the Person specified in such instructions a
beneficial interest in the Restricted Global Security equal to the reduction in
the aggregate liquidation amount of the Regulation S Global Security. After the
expiration of the Restricted Period, the certification requirement set forth in
clause (3) of the second sentence of this Section 7.13(e) will no longer apply
to such exchanges and transfers.
(f) Any beneficial interest in one of the Global Securities that is
transferred to a Person who takes delivery in the form of an interest in the
other Global Security will, upon transfer, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions and other
procedures applicable to beneficial interests in such other Global Security for
as long as it remains such an interest.
(g) Prior to or on the 40th day after the later of the commencement
of the offering of the Capital Securities and the Closing Date (the "Restricted
Period"), beneficial interests in a Regulation S Global Security may only be
held through Morgan Guaranty Trust Company of New York, Brussels office, as
operator of Euroclear or Cedel or another agent member of Euroclear and Cedel
acting for and on behalf of them, unless delivery is made through the Restricted
Global Security in accordance with the certification requirements hereof. During
the Restricted Period, interests in the Regulation S Global Security, may be
exchanged for interests in the Restricted Global Security or for definitive
Securities only in accordance with the certification requirements described
above.
(h) Capital Securities may not be acquired by any Person who is, or
who in acquiring such Capital Securities is using the assets of, an ERISA Plan
unless Capital Securities are acquired pursuant to and in accordance with an
applicable exemption, including but not limited to: (i) Prohibited Transaction
Class Exemption 90-1 ("PTE 90-1"), regarding investments by insurance company
pooled separate accounts, (ii) Prohibited Transaction Class Exemption 91-38
("PTE 91-38") regarding investments by bank collective investment funds, (iii)
Prohibited Transaction Class Exemption 84-14 ("PTE 84-14"), regarding
transactions effected by qualified professional asset managers, (iv) Prohibited
Transaction Class Exemption 96-23 ("PTE 96-23"), regarding transactions effected
by in-house asset managers, or (v) Prohibited Transaction Class Exemption 95-60
("PTE 95-60"), regarding investments by insurance company general accounts. The
acquisition of Capital Securities by any Person who is, or who in acquiring such
Capital Securities is using the assets of, an ERISA Plan shall be deemed to
constitute a representation by such Person to the Trust that (i) such Person is
eligible for exemptive relief available pursuant to an applicable exemption,
including but not limited to, PTE 90-1, PTE 91-38, PTE 84-14, PTE 96-23 or PTE
95-60 with respect to the acquisition and holding of such Capital Securities,
and (ii) none of Countrywide Home Loans, Inc., Countrywide Credit Industries,
Inc., Countrywide Financial Services, Inc. or Countrywide Securities Corporation
is a "fiduciary", within the meaning of Section 3(21) of ERISA and the
regulations thereunder, with respect to such Person's interest in the Capital
Securities or the Debentures.
ARTICLE 8.
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1. DISSOLUTION AND TERMINATION OF TRUST.
(a) The Trust shall dissolve upon the earliest of:
(i) the bankruptcy of the Sponsor or the Debenture
Issuer;
(ii) the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor; and the
revocation of the charter of the Sponsor or the
Debenture Issuer and the expiration of 90 days after the
date of revocation without a reinstatement thereof;
(iii) the entry of a decree of judicial dissolution of the
Sponsor, the Debenture Issuer or the Trust;
(iv) the time when all of the Securities shall have been
called for redemption and the amounts then due thereon
shall have been paid to the Holders thereof in
accordance with the terms of the Securities;
(v) upon the election of the Regular Trustees, following the
occurrence and continuation of a Special Event pursuant
to which the Trust is dissolved in accordance with the
terms of the Securities, and all of the Debentures and
the Debt Guarantee are distributed to the Holders of the
Securities in exchange for all of the Securities; or
(vi) the time when all of the Regular Trustees and the
Sponsor shall have consented to termination of the Trust
provided such action is taken before the issuance of any
Securities.
(b) In addition to the provisions of Section 8.1(a), the Sponsor
shall have the right, at any time, to dissolve the Trust and, after causing
payment or reasonable provision for payment to be made with respect to all
claims and obligations of the Trust in accordance with Section 3808(e) of the
Business Trust Act, cause the Debentures and the Debt Guarantee to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
(c) As soon as practicable following completion of any the winding
up and liquidation of the Trust, the Trustees shall terminate the Trust by
filing a certificate of cancellation with the Secretary of State of the State of
Delaware.
(d) The provisions of Section 3.9, Section 4.2 and Article 10 shall
survive the termination of the Trust.
SECTION 8.2. LIQUIDATION DISTRIBUTION UPON DISSOLUTION OF THE
TRUST.
(a) In the event of any voluntary or involuntary dissolution,
winding-up and liquidation of the Trust (each a "Liquidation"), the Holders of
the Capital Securities on the date of the Liquidation will be entitled to
receive, out of the assets of the Trust available for distribution to Holders of
Securities, after paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act, distributions in cash or other immediately available funds in an
amount equal to the aggregate of the stated liquidation amount of $1,000 per
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such Liquidation, Debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with a distribution
rate identical to the distribution rate of, and accrued and unpaid distributions
equal to accumulated and unpaid distributions on, such Securities shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
(b) If, upon any such Liquidation, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis. The
Holders of the Common Securities will be entitled to receive distributions upon
any such Liquidation Pro Rata with the Holders of the Capital Securities except
that if an Indenture Event of Default has occurred and is continuing, the
Capital Securities shall have a preference over the Common Securities with
regard to such distributions.
ARTICLE 9.
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, DELAWARE TRUSTEES OR OTHERS
SECTION 9.1. LIABILITY.
(a) Except as expressly set forth in this Declaration and the terms
of the Securities, the Sponsor:
(i) shall not be personally liable for the return of any
portion of the capital contributions (or any return
thereon) of the Holders of the Securities which shall be
made solely from assets of the Trust; and
(ii) shall not be required to pay to the Trust or to any
Holder of Securities any deficit upon dissolution of the
Trust or otherwise.
(b) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Common Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware; provided,
however, the Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Capital Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 9.2. EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 9.3. FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to an other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires,
including its own interests, and shall have no duty or
obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express
standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 9.4. INDEMNIFICATION.
(a) (i) The Debenture Issuer shall indemnify, to the
full extent permitted by law, any Debenture Issuer
Indemnified Person who was or is a party or is
threatened to be made a party to any threatened,
pending or completed action, suit or proceeding,
whether civil, criminal, administrative or
investigative (other than an action by or in the
right of the Trust) by reason of the fact that such
Person is or was a Debenture Issuer Indemnified
Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement
actually and reasonably incurred by such Person in
connection with such action, suit or proceeding if he
acted in good faith and in a manner such Person
reasonably believed to be in or not opposed to the
best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable
cause to believe such Person's conduct was unlawful.
The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the Debenture
Issuer Indemnified Person did not act in good faith
and in a manner which such Person reasonably believed
to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that such
Person's conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Debenture Issuer
Indemnified Person who was or is a party or is
threatened to be made a party to any threatened,
pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor
by reason of the fact that such Person is or was a
Debenture Issuer Indemnified Person against expenses
(including attorneys' fees) actually and reasonably
incurred by such Person in connection with the
defense or settlement of such action or suit if he
acted in good faith and in a manner such Person
reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such
indemnification shall be made in respect of any
claim, issue or matter as to which such Debenture
Issuer Indemnified Person shall have been adjudged to
be liable to the Trust unless and only to the extent
that the Court of Chancery of Delaware or the court
in which such action or suit was brought shall
determine upon application that, despite the
adjudication of liability but in view of all the
circumstances of the case, such Person is fairly and
reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court
shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of
this Section (unless ordered by a court) shall be made
by the Debenture Issuer only as authorized in the
specific case upon a determination that indemnification
of the Debenture Issuer Indemnified Person is proper in
the circumstances because such Person has met the
applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by
the Regular Trustees by a majority vote of a quorum
consisting of such Regular Trustees who were not parties
to such action, suit or proceeding, (2) if such a quorum
is not obtainable, or, even if obtainable, if a quorum
of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (3) by
the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees) reasonably
incurred by a Debenture Issuer Indemnified Person in
defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 9.4(a)
shall be paid by the Debenture Issuer in advance of
the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on
behalf of such Debenture Issuer Indemnified Person to
repay such amount if it shall ultimately be
determined that such Person is not entitled to be
indemnified by the Debenture Issuer as authorized in
this Section 9.4(a). Notwithstanding the foregoing,
no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by
the Regular Trustees by a majority vote of a quorum
of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if
a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the
Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security
Holder at the time such determination is made, such
Debenture Issuer Indemnified Person acted in bad
faith or in a manner that such Person did not believe
to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding,
that such Debenture Issuer Indemnified Person
believed or had reasonable cause to believe such
Person's conduct was unlawful. In no event shall any
advance be made in instances where the Regular
Trustees, independent legal counsel or the Common
Security Holder reasonably determine that such Person
deliberately breached such Person's duty to the Trust
or its Common or Capital Security Holders.
(v) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other
paragraphs of this Section 9.4(a) shall not be deemed
exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or
disinterested directors of the Debenture Issuer or
Capital Security Holders of the Trust or otherwise,
both as to action in such Person's official capacity
and as to action in another capacity while holding
such office. All rights to indemnification under
this Section 9.4(a) shall be deemed to be provided by
a contract between the Debenture Issuer and each
Debenture Issuer Indemnified Person who serves in
such capacity at any time while this Section 9.4(a)
is in effect. Any repeal or modification of this
Section 9.4(a) shall not affect any rights or
obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any Person who is or
was a Debenture Issuer Indemnified Person against any
liability asserted against such Person and incurred
by such Person in any such capacity, or arising out
of such Person's status as such, whether or not the
Debenture Issuer would have the power to indemnify
such Person against such liability under the
provisions of this Section 9.4(a).
(vii) For purposes of this Section 9.4(a), references to "the
Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a
consolidation or merger, so that any Person who is or
was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request
of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall
stand in the same position under the provisions of this
Section 9.4(a) with respect to the resulting or
surviving entity as such Person would have with respect
to such constituent entity if its separate existence had
continued.
(viii)The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 9.4(a)
shall, unless otherwise provided when authorized or
ratified, continue as to a Person who has ceased to be a
Debenture Issuer Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators
of such a Person. The obligation to indemnify as set
forth in this Section 9.4(a) shall survive the
satisfaction and discharge of this Declaration.
(b) The Debenture Issuer agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee
and the Delaware Trustee and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents of
the Property Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to
hold each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 9.4(a) shall
survive the satisfaction and discharge of this Declaration.
SECTION 9.5. OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the activities of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the activities of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE 10.
ACCOUNTING
SECTION 10.1. FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 10.2. CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Capital Securities, such financial information, if any,
as may be required by any national securities exchange or other organization on
or through which the Capital Securities are listed or quoted.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, an annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any State or local taxing
authority.
SECTION 10.3. BANKING.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Debentures held by the Property Trustee shall be made directly
to the Property Account and no other funds of the Trust shall be deposited in
the Property Account. The sole signatories for such accounts shall be designated
by the Regular Trustees; provided, however, that the Property Trustee shall
designate the signatories for the Property Account.
SECTION 10.4. WITHHOLDING.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual distributions made, the Trust may reduce subsequent distributions by
the amount of such withholding.
ARTICLE 11.
AMENDMENTS AND MEETINGS
SECTION 11.1. AMENDMENTS.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by the Sponsor and (i) the Regular
Trustees (or, if there are more than two Regular Trustees, a majority of the
Regular Trustees) and (ii) by the Property Trustee if the amendment affects the
rights, powers, duties, obligations or immunities of the Property Trustee; and
(iii) by the Delaware Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that
such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or
immunities of the Property Trustee, the Property Trustee
shall have first received:
a. an Officers' Certificate from each of the Trust
and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
b. an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this
Declaration (including the terms of the
Securities); and
(iii) to the extent the result of such amendment would be to:
a. cause the Trust to be classified other than as
a grantor trust for United States federal
income tax purposes;
b. reduce or otherwise adversely affect the powers of
the Property Trustee in contravention of the Trust
Indenture Act; or
c. cause the Trust to be deemed to be an Investment
Company required to be registered under the
Investment Company Act.
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would (i) adversely affect the powers,
preferences or special rights of the Securities, whether by way of amendment to
the Declaration or otherwise or (ii) result in the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of this Declaration,
then the holders of the Securities voting together as a single class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of at least a Majority in
Liquidation Amount of the Securities affected thereby; provided that, if any
amendment or proposal referred to in clause (i) above would adversely affect
only the Capital Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of a Majority in
Liquidation Amount of such class of Securities. Notwithstanding the foregoing,
however, no amendment of this Declaration shall impair or affect the right of
any Holder of Securities to receive payment of Distributions and other payments
upon redemption or otherwise on or after their respective due dates, or to
institute suit for the enforcement of any such payment on or after such
respective due dates without the consent of such Holder.
(d) Section 7.5(c) and this Section 11.1 shall not be amended
without the consent of all of the Holders of the Securities.
(e) Article 5 shall not be amended without the consent of the
Holders of a Majority in Liquidation Amount of the Common Securities.
(f) The rights of the Holders of the Common Securities under Article
6 to increase or decrease the number of, and appoint and remove Trustees shall
not be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities.
(g) Notwithstanding Section 11.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change
in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory
authority which amendment does not have a material
adverse effect on the rights, preferences or privileges
of the Holders; or
(v) to modify, eliminate and add to any provision of this
Declaration to ensure that the Trust will be
classified as a grantor trust for U.S. federal income
tax purposes at all times that any Securities are
outstanding or to ensure that the Trust will not be
required to register as an Investment Company under
the Investment Company Act; provided, however, that
such modification, elimination or addition would not
adversely affect in any material respect the rights,
privileges or preferences of any Holder of the
Securities.
SECTION 11.2. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY
WRITTEN CONSENT.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any securities exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in Liquidation Amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat
at least 7 days and not more than 60 days before the
date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any
securities exchange on which the Capital Securities
are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the
Holders of Securities. Any action that may be taken
at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing
setting forth the action so taken is signed by the
Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount
that would be necessary to authorize or take such
action at a meeting at which all Holders of
Securities having a right to vote thereon were
present and voting. Prompt notice of the taking of
action without a meeting shall be given to the
Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may
specify that any written ballot submitted to the
Security Holders for the purpose of taking any action
without a meeting shall be returned to the Trust
within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder
of Securities is entitled to participate, including
waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the
Holder of Securities executing such proxy. Except as
otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders of the
Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or
the listing rules of any securities exchange on which
the Capital Securities are then listed for trading,
otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions
relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice,
action by consent without a meeting, the
establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE 12.
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF THE PROPERTY
TRUSTEE.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Declaration;
(b) the Property Trustee satisfies the requirements set forth in
Section 6.3(a);
(c) the execution, delivery and performance by the Property Trustee
of this Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee, and it constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(d) the execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with or constitute a breach of the
articles of association or incorporation, as the case may be, or the by-laws (or
other similar organizational documents) of the Property Trustee; and
(e) no consent, approval or authorization of, or registration with
or notice to, any State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.
SECTION 12.2. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE
TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee satisfies the requirements set forth in
Section 6.2 and has the power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration and, if it
is not a natural person, is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization;
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law);
and
(c) no consent, approval or authorization of, or registration with
or notice to, any State or federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration.
ARTICLE 13.
MISCELLANEOUS
SECTION 13.1. NOTICES.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Property Trustee, the Delaware Trustee and the Holders of
the Securities): Countrywide Capital III, c/o Countrywide Credit Industries,
Inc., 4500 Park Granada, Calabasas, California 91302, Attention: Sandor E.
Samuels.
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Regular Trustees, the Property Trustee and the Holders of the Securities):
(c) if given to the Property Trustee, at its Corporate Trust Office
(or such other address as the Property Trustee may give notice of to the Regular
Trustees, the Delaware Trustee and the Holders of the Securities).
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Property Trustee, the Delaware
Trustee and the Trust): 4500 Park Granada, Calabasas, California 91302,
Attention: Corporate Secretary.
(e) if given to any other Holder, at the address set forth on the
Security Register of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed or mailed by first class mail, postage prepaid
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 13.2. GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws of the State of Delaware or any other
jurisdiction that would call for the application of the law of any jurisdiction
other than the State of Delaware; provided, however, that there shall not be
applicable to the Trust, the Trustees or this Declaration any provision of the
laws (statutory or common) of the State of Delaware pertaining to trusts that
relate to or regulate, in a manner inconsistent with the terms hereof (a) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (b) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (c) the necessity
for obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (d) fees or other sums
payable to the trustees, officers, agents or employees of a trust, (e) the
allocation of receipts and expenditures to income or principal, (f) restrictions
or limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner of
holding or investing trust assets or (g) the establishment of fiduciary or other
standards of responsibility or limitations on the acts or powers of trustees
that are inconsistent with the limitations or liabilities or authorities and
powers of the Trustees as set forth or referenced in this Declaration. Section
3540 of Title 12 of the Delaware Code shall not apply to the Trust.
SECTION 13.3. INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted in a manner consistent with
such classification.
SECTION 13.4. HEADINGS.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 13.5. SUCCESSORS AND ASSIGNS.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 13.6. PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 13.7. COUNTERPARTS.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
COUNTRYWIDE CREDIT INDUSTRIES, INC.,
as Sponsor and Common Securities Holder
By: /S/ STANFORD L. KURLAND
----------------------------------
Name: Stanford L. Kurland
Title: Senior Managing Director
THE BANK OF NEW YORK,
as Property Trustee
By: /S/ VIVIAN GEORGES
----------------------------------
Name: Vivian Georges
Title:Assistant Vice President
THE BANK OF NEW YORK (Delaware),
as Delaware Trustee
By: /S/ MARY JANE MORRISSEY
----------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
/S/ ERIC P. SIERACKI, AS REGULAR TRUSTEE
-----------------------------------------
Eric P. Sieracki, as Regular Trustee
/S/ SANDOR E. SAMUELS
-----------------------------------------
Sandor E. Samuels, as Regular Trustee
/S/ THOMAS KEITH MCLAUGHLIN
-----------------------------------------
Thomas Keith McLaughlin, as Regular
Trustee
EXHIBIT A
This Capital Security is a Global Security within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Depositary"), or a
nominee of the Depositary. This Capital Security is exchangeable for Capital
Securities registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Capital Security (other than a transfer of this Capital
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depository to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Capital Security Certificate is presented by an
authorized representative of the Depositary to Countrywide Capital III or its
agent for registration of transfer, exchange or payment, and any Capital
Security Certificate issued is registered in the name of Cede & Co. or such
other name as registered by an authorized representative of the Depositary (and
any payment hereon is made to Cede & Co. or to such other entity as is requested
by an authorized representative of the Depositary), 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.
CERTIFICATE NO. 1 NUMBER OF CAPITAL
SECURITIES:
CUSIP NO. $ LIQUIDATION AMOUNT
-------- ---------
CERTIFICATE EVIDENCING CAPITAL SECURITIES
OF
COUNTRYWIDE CAPITAL III
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER SECURITY)
Countrywide Capital III, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of securities of the Trust
representing undivided beneficial ownership interests in the assets of the Trust
designated the 8.05% Subordinated Capital Income Securities, Series A
(liquidation amount $1,000 per Security) (the "Capital Securities"). The Capital
Securities are transferable on the register of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in the Declaration (as defined below). The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust, dated as of June 4, 1997 (as the same may be
amended from time to time (the "Declaration"), among Countrywide Credit
Industries, Inc., a Delaware corporation, as Sponsor (the "Sponsor") Eric P.
Sieracki, Sandor E. Samuels and Thomas Keith McLaughlin, as Regular Trustees,
The Bank of New York, a New York banking corporation, as Property Trustee, and
The Bank of New York (Delaware), a Delaware corporation, as Delaware Trustee,
the terms of which are incorporated by reference herein. Capitalized terms used
herein but not defined shall have the meaning given to them in the Declaration.
The Holder is entitled to the benefits of the Trust Guarantee to the extent
described therein. The Sponsor will provide a copy of the Declaration, the Trust
Guarantee and the Indenture to a Holder without charge upon written request to
the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of undivided indirect beneficial ownership interests in the
Debentures and the Debt Guarantee.
Capital Securities may not be acquired by any Person who is, or who
in acquiring such Capital Securities is using the assets of, an ERISA Plan
unless Capital Securities are acquired pursuant to and in accordance with an
applicable exemption, including but not limited to: (i) Prohibited Transaction
Class Exemption 90-1 ("PTE 90-1"), regarding investments by insurance company
pooled separate accounts, (ii) Prohibited Transaction Class Exemption 91-38
("PTE 91-38"), regarding investments by bank collective investment funds, (iii)
Prohibited Transaction Class Exemption 84-14 ("PTE 84-14"), regarding
transactions effected by qualified professional asset managers, (iv) Prohibited
Transaction Class Exemption 96-23 ("PTE 96-23"), regarding transactions effected
by in-house asset managers, or (v) Prohibited Transaction Class Exemption 95-60
("PTE 95-60"), regarding investments by insurance company general accounts. The
acceptance of this Certificate by any Person who is, or who in acquiring this
Certificate is using the assets of, an ERISA Plan shall be deemed to constitute
a representation by such Person to the Trust that (i) such Person is eligible
for exemptive relief available pursuant to an applicable exemption, including
but not limited to, PTE 90-1, PTE 91-38, PTE 84-14, PTE 96-23 or PTE 95-60 with
respect to the acquisition and holding of the Capital Securities represented by
this Certificate, and (ii) none of Countrywide Home Loans Inc., Countrywide
Credit Industries, Inc., Countrywide Financial Services, Inc. or Countrywide
Securities Corporation is a "fiduciary", within the meaning of Section 3(21) of
ERISA and the regulations thereunder, with respect to such Person's interest in
the Capital Securities or the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this day
of , 1997.
COUNTRYWIDE CAPITAL III
By:
----------------------------------
Name:
Title: Regular Trustee
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK
Dated: By:
-------- ----------------------------------
Name:
Title:
In connection with any transfer of this Capital Security occurring
prior to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act covering resales of this Capital Security (which effectiveness shall not
have been suspended or terminated at the date of the transfer) and (ii) two
years after the later of the date of original issue and the last date on which
the Sponsor or any affiliate of the Sponsor was the owner of such Capital
Securities (or any predecessor thereto) (the "Resale Restriction Termination
Date"), the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer:
[CHECK ONE]
(1) [ ] to Countrywide Home Loans, Inc. or a subsidiary thereof; or
(2) [ ] pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
(3) [ ] outside the United States to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of 1933,
as amended; or
(4) [ ] pursuant to the exemption from registration provided by Rule 144
under the Securities Act of 1933, as amended; or
(5) [ ] pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(6) [ ] pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustees will refuse to register any of
the Securities evidenced by this certificate in the name of any Person other
than the registered Holder thereof; provided, however, that if box (3), (4) or
(6) is checked, the Sponsor or the Trustees may require, prior to registering
any such transfer of the Capital Securities, in its sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3)) and other information as the Trustees or the Sponsor has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
If none of the foregoing boxes is checked, the Trustees or Registrar shall not
be obligated to register this Capital Security in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.8 of the Indenture shall have
been satisfied.
Dated: Signed:
-------- ----------------------------------
(Sign exactly as name appears on
the other side of this Capital
Security)
Signature Guarantee:
Note: Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Security Registrar, which requirements
include membership or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Security Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Capital Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Sponsor as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
NOTICE: To be executed by an executive
officer
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Capital Security outside the United States as a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act and is aware that the
sale to it is being made in reliance on Regulation S.
Dated:
NOTICE: To be executed by an executive
officer
EXHIBIT B
This Capital Security is a Global Security within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Depositary"), or a
nominee of the Depositary. This Capital Security is exchangeable for Capital
Securities registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Capital Security (other than a transfer of this Capital
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Capital Security Certificate is presented by an
authorized representative of the Depositary to Countrywide Capital III or its
agent for registration of transfer, exchange or payment, and any Capital
Security Certificate issued is registered in the name of Cede & Co. or such
other name as registered by an authorized representative of the Depositary (and
any payment hereon is made to Cede & Co. or to such other entity as is requested
by an authorized representative of the Depositary), 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.
CERTIFICATE NO. 1 NUMBER OF CAPITAL
SECURITIES:
CUSIP NO. $ LIQUIDATION
-------- ------
AMOUNT
CERTIFICATE EVIDENCING CAPITAL SECURITIES
OF
COUNTRYWIDE CAPITAL III
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES B
(LIQUIDATION AMOUNT $1,000 PER SECURITY)
Countrywide Capital III, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of securities of the Trust
representing undivided beneficial ownership interests in the assets of the Trust
designated 8.05% Subordinated Capital Income the Securities, Series B
(liquidation amount $1,000 per Security) (the "Capital Securities"). The Capital
Securities are transferable on the register of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in the Declaration (as defined below). The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust, dated as of June 4, 1997 (as the same may be
amended from time to time (the "Declaration"), among Countrywide Credit
Industries, Inc., as Sponsor (the "Sponsor"), Eric P. Sieracki, Sandor E.
Samuels and Thomas Keith McLaughlin, as Regular Trustees, The Bank of New York,
a New York banking corporation, as Property Trustee, and The Bank of New York
(Delaware), a Delaware corporation, as Delaware Trustee, the terms of which are
incorporated by reference herein. Capitalized terms used herein but not defined
shall have the meaning given to them in the Declaration. The Holder is entitled
to the benefits of the Trust Guarantee to the extent described therein. The
Sponsor will provide a copy of the Declaration, the Trust Guarantee and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of undivided indirect beneficial ownership interests in the
Debentures and the Debt Guarantee.
Capital Securities may not be acquired by any Person who is, or who
in acquiring such Capital Securities is using the assets of, an ERISA Plan
unless Capital Securities are acquired pursuant to and in accordance with an
applicable exemption, including but not limited to: (i) Prohibited Transaction
Class Exemption 90-1 ("PTE 90-1"), regarding investments by insurance company
pooled separate accounts, (ii) Prohibited Transaction Class Exemption 91-38
("PTE 91-38"), regarding investments by bank collective investment funds, (iii)
Prohibited Transaction Class Exemption 84-14 ("PTE 84-14"), regarding
transactions effected by qualified professional asset managers, (iv) Prohibited
Transaction Class Exemption 96-23 ("PTE 96-23"), regarding transactions effected
by in-house asset managers, or (v) Prohibited Transaction Class Exemption 95-60
("PTE 95-60"), regarding investments by insurance company general accounts. The
acceptance of this Certificate by any Person who is, or who in acquiring this
Certificate is using the assets of, an ERISA Plan shall be deemed to constitute
a representation by such Person to the Trust that (i) such Person is eligible
for exemptive relief available pursuant to an applicable exemption, including
but not limited to, PTE 90-1, PTE 91-38, PTE 84-14, PTE 96-23 or PTE 95-60 with
respect to the acquisition and holding of the Capital Securities represented by
this Certificate, and (ii) none of Countrywide Home Loans Inc., Countrywide
Credit Industries, Inc., Countrywide Financial Services, Inc. or Countrywide
Securities Corporation is a "fiduciary", within the meaning of Section 3(21) of
ERISA and the regulations thereunder, with respect to such Person's interest in
the Capital Securities or the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this day
of , .
COUNTRYWIDE CAPITAL III
By:
----------------------------
Name:
Title: Regular Trustee
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK
Dated: By:
----------- ----------------------------
Name:
Title:
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NO. 1 NUMBER OF COMMON SECURITIES:
---
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
COUNTRYWIDE CAPITAL III
COMMON SECURITIES
(LIQUIDATION AMOUNT $1,000 PER COMMON SECURITY)
Countrywide Capital III, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that Countrywide
Credit Industries, Inc. (the "Holder") is the registered owner of
common securities of the Trust representing an undivided beneficial
ownership interest in the assets of the Trust designated the Common Securities
(liquidation amount $1,000 per Common Security) (the "Common Securities"). The
Common Securities are not transferable and any attempted transfer thereof shall
be void. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust, dated as of June 4, 1997 (as the
same may be amended from time to time, the "Declaration"), among Countrywide
Credit Industries, Loans, Inc. a Delaware corporation, as Sponsor, Eric P.
Sieracki, Sandor E. Samuels and Thomas Keith McLaughlin, as Regular Trustees,
The Bank of New York, a New York banking corporation, as Property Trustee, and
The Bank of New York (Delaware) a Delaware corporation, as Delaware Trustee, the
terms of which are incorporated by reference herein. The Holder is entitled to
the benefits of the Trust Guarantee to the extent described therein. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Sponsor will provide a copy of the Declaration, the Trust
Guarantee and the Indenture to a Holder without charge upon written request to
the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of an undivided indirect beneficial ownership interest in the
Debentures and the Debt Guarantee.
IN WITNESS WHEREOF, the Trust has executed this certificate this
day of , 1997.
- ---- -------
COUNTRYWIDE CAPITAL III
By:
----------------------------------------
Name:
Title: Regular Trustee
EXHIBITS
Exhibit A Form of Capital Security Certificate, Series A
Exhibit B Form of Capital Security Certificate, Series B
Exhibit C Form of Common Security Certificate
- --------
* _____ This Cross-Reference Table does not constitute part of the Agreement
and shall not have any bearing upon the interpretation of any of its terms
or provisions.
EXHIBIT 4.4
COUNTRYWIDE HOME LOANS, INC.
Issuer
COUNTRYWIDE CREDIT INDUSTRIES, INC.
Guarantor
AND
THE BANK OF NEW YORK
Trustee
INDENTURE
Dated as of June 4, 1997
$206,200,000
8.05% Junior Subordinated Debentures due June 15, 2027
TABLE OF CONTENTS*
Page
ARTICLE I
Definitions and Other Provisions of General Application
SECTION 1.1 Interpretation and Definitions..........................2
SECTION 1.2 Compliance Certificates and Opinions...................13
SECTION 1.3 Form of Documents Delivered to Trustee.................13
SECTION 1.4 Acts of Holders; Record Dates..........................13
SECTION 1.5 Notices, Etc. to Trustee and the Company...............14
SECTION 1.6 Notice to Holders; Waiver..............................15
SECTION 1.7 Conflict with Trust Indenture Act......................15
SECTION 1.8 Effect of Headings and Table of Contents...............16
SECTION 1.9 Separability Clause....................................16
SECTION 1.10 Benefits of Indenture..................................16
SECTION 1.11 Governing Law..........................................16
SECTION 1.12 Legal Holidays.........................................16
SECTION 1.13 Acknowledgment of Rights...............................16
SECTION 1.14 Assignment.............................................17
ARTICLE II
General Terms and Conditions of the Debt Securities
SECTION 2.1 Designation and Principal Amount.......................17
SECTION 2.2 Forms of Securities....................................17
SECTION 2.3 Maturity...............................................18
SECTION 2.4 Interest...............................................18
SECTION 2.5 Ranking................................................19
SECTION 2.6 Denominations..........................................20
SECTION 2.7 Forms..................................................20
SECTION 2.8 Special Transfer Provisions............................20
SECTION 2.9 Unconditional Guarantee................................24
SECTION 2.10 INTENTIONALLY DELETED..................................26
SECTION 2.11 Execution, Authentication, Delivery and
Dating.................................................26
SECTION 2.12 Temporary Securities...................................26
SECTION 2.13 Registration; Registration of Transfer and
Exchange...............................................27
SECTION 2.14 Mutilated, Destroyed, Lost and Stolen
Securities.............................................28
SECTION 2.15 Payment of Interest; Interest Rights
Preserved..............................................29
SECTION 2.16 Persons Deemed Owners..................................30
SECTION 2.17 Cancellation...........................................30
SECTION 2.18 CUSIP Numbers..........................................31
SECTION 2.19 Global Securities......................................31
SECTION 2.20 Restrictive Legend.....................................33
ARTICLE III
Redemption of the Debt Securities
SECTION 3.1 Optional Redemption; Shortening of Stated
Maturity...............................................36
SECTION 3.2 Election to Redeem; Notice to Trustee..................36
SECTION 3.3 INTENTIONALLY DELETED..................................36
SECTION 3.4 INTENTIONALLY DELETED..................................37
SECTION 3.5 Notice of Redemption...................................37
SECTION 3.6 Deposit of Redemption Price............................37
SECTION 3.7 Debt Securities Payable on Redemption Date.............37
SECTION 3.8 INTENTIONALLY DELETED..................................38
SECTION 3.9 No Sinking Fund........................................38
ARTICLE IV
Intentionally Deleted
ARTICLE V
Extension of Interest Payment Period
SECTION 5.1 Extension of Interest Payment Period...................38
SECTION 5.2 Notice of Extension....................................39
ARTICLE VI
Satisfaction and Discharge; Defeasance
SECTION 6.1 Satisfaction and Discharge of Indenture................39
SECTION 6.2 Defeasance and Discharge...............................40
SECTION 6.3 Covenant Defeasance....................................40
SECTION 6.4 Conditions to Defeasance or Covenant
Defeasance.............................................41
SECTION 6.5 Application of Trust Money.............................42
SECTION 6.6 Indemnity for U.S. Government Obligations..............42
ARTICLE VII
Remedies
SECTION 7.1 Events of Default......................................42
SECTION 7.2 Acceleration of Maturity; Rescission and
Annulment..............................................44
SECTION 7.3 Collection of Indebtedness and Suits for
Enforcement by Trustee.................................44
SECTION 7.4 Trustee May File Proofs of Claim.......................45
SECTION 7.5 Trustee May Enforce Claims Without
Possession of Securities...............................45
SECTION 7.6 Application of Money Collected.........................46
SECTION 7.7 Limitation on Suits....................................46
SECTION 7.8 Unconditional Right of Holders to Receive
Principal and Interest.................................47
SECTION 7.9 Restoration of Rights and Remedies.....................47
SECTION 7.10 Rights and Remedies Cumulative.........................47
SECTION 7.11 Delay or Omission Not Waiver...........................47
SECTION 7.12 Control by Holders.....................................48
SECTION 7.13 Waiver of Past Defaults................................48
SECTION 7.14 Undertaking for Costs..................................49
SECTION 7.15 Waiver of Stay or Extension Laws.......................49
SECTION 7.16 Capital Security Holders Rights........................49
ARTICLE VIII
The Trustee
SECTION 8.1 Certain Duties and Responsibilities....................49
SECTION 8.2 Notice of Defaults.....................................50
SECTION 8.3 Certain Rights of Trustee..............................50
SECTION 8.4 Trustee Not Responsible for Recitals or
Issuance of Securities.................................51
SECTION 8.5 Trustee May Hold Securities............................51
SECTION 8.6 Money Held in Trust....................................52
SECTION 8.7 Compensation; Reimbursement; and Indemnity.............52
SECTION 8.8 Disqualification; Conflicting Interests................53
SECTION 8.9 Corporate Trustee Required; Eligibility................53
SECTION 8.10 Resignation and Removal; Appointment of
Successor..............................................53
SECTION 8.11 Acceptance of Appointment by Successor.................55
SECTION 8.12 Merger, Conversion, Consolidation or
Succession to Business.................................55
SECTION 8.13 Preferential Collection of Claims Against
Company................................................55
ARTICLE IX
Holders' Lists and Reports by Trustee and Company
SECTION 9.1 Company to Furnish Trustee Names and
Addresses of Holders...................................56
SECTION 9.2 Preservation of Information; Communications
to Holders.............................................56
SECTION 9.3 Reports by Trustee. ..................................56
SECTION 9.4 Reports by the Guarantor...............................57
ARTICLE X
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 10.1 Company or Guarantor May Consolidate, etc.,
on Certain Terms.......................................57
SECTION 10.2 Successor Corporation to be Substituted................58
SECTION 10.3 Opinion of Counsel to be Given Trustee.................58
ARTICLE XI
Supplemental Indentures
SECTION 11.1 Supplemental Indentures Without Consent of
Holders................................................58
SECTION 11.2 Supplemental Indentures with Consent of
Holders................................................59
SECTION 11.3 Execution of Supplemental Indentures...................60
SECTION 11.4 Effect of Supplemental Indentures......................60
SECTION 11.5 Conformity with Trust Indenture Act....................61
SECTION 11.6 Reference in Securities to Supplemental
Indentures.............................................61
ARTICLE XII
Covenants; Representations and Warranties
SECTION 12.1 Payment of Principal and Interest......................61
SECTION 12.2 Maintenance of Office or Agency........................61
SECTION 12.3 Money for Security Payments to Be Held in
Trust..................................................62
SECTION 12.4 Statement by Officers as to Default....................63
SECTION 12.5 Existence..............................................63
SECTION 12.6 INTENTIONALLY DELETED..................................63
SECTION 12.7 INTENTIONALLY DELETED..................................63
SECTION 12.8 Additional Covenants...................................63
SECTION 12.9 Waiver of Certain Covenants............................64
SECTION 12.10 Restrictions on Payments and Distributions.............64
SECTION 12.11 Listing or Quotation of Debentures.....................65
ARTICLE XIII
Subordination of Securities
SECTION 13.1 Securities Subordinate to Senior
Indebtedness...........................................65
SECTION 13.2 Default on Senior Indebtedness.........................66
SECTION 13.3 Liquidation; Dissolution; Bankruptcy...................66
SECTION 13.4 Subrogation............................................68
SECTION 13.5 Trustee to Effectuate Subordination....................69
SECTION 13.6 Notice by the Company and the Guarantor................69
SECTION 13.7 Rights of the Trustee; Holders of Senior
Indebtedness...........................................70
SECTION 13.8 Subordination May Not be Impaired......................71
EXHIBITS
Exhibit A Form of Debentures
Exhibit B Form of New Debentures
- --------
* This Table of Contents shall not, for any purpose, be deemed to be part
of the Indenture.
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of June 4, 1997*
Trust Indenture Indenture
Act Section Section
------------------- ------------
ss. 310 (a)(1) 8.9
(a)(2) 8.9
(a)(5) 8.9
(b) 8.8, 8.10
ss. 311 (a) 8.13
(b) 8.13
ss. 312 (a) 9.1
(b) 9.2
(c) 9.2
ss. 313 (a) 9.3
(b) 9.3
(c) 9.3
(d) 9.3
ss. 314 (a) 9.4
(a)(4) 12.4
(c)(1) 1.2
(c)(2) 1.2
(e) 1.2
ss. 315 (a) 8.1
(b) 8.2
(c) 8.1
(d) 8.1
(e) 7.14
ss. 316 (a)(last sentence) 1.1, "Outstanding"
ss. 316 (a)(1)(A) 7.12
(a)(1)(B) 7.13
(b) 7.8
(c) 1.4(c)
ss. 317 (a)(1) 7.3
(a)(2) 7.4
(b) 12.3
ss.318 (a) 1.7
-------------------------------------
* This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
INDENTURE, dated as of June 4, 1997, among Countrywide Home Loans,
Inc., a New York corporation, (the "Company"), Countrywide Credit Industries,
Inc., a Delaware corporation (the "Guarantor") and The Bank of New York, a New
York banking corporation (the "Trustee"). Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings ascribed to them in the
Amended and Restated Declaration of Trust among the Guarantor, as sponsor, Eric
P. Sieracki, Sandor E. Samuels and Thomas Keith McLaughlin, as Regular Trustees,
The Bank of New York, a New York banking corporation, as Property Trustee, and
The Bank of New York (Delaware), as Delaware Trustee, dated as of June 4, 1997
(the "Declaration"), as in effect on the date hereof, and which is incorporated
herein by reference.
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of its 8.05% Junior Subordinated Debentures due June 15, 2027, Series A
(the "Debentures"), and its 8.05% Junior Subordinated Debentures due June 15,
2027, Series B (the "New Debentures", and with the Debentures, the "Debt
Securities") to be issued in exchange for the Debentures;
WHEREAS, for its lawful corporate purposes, the Guarantor has duly
authorized the execution and delivery of this Indenture and deems it appropriate
to issue its guarantee of the Debt Securities on the terms herein provided (the
"Debt Guarantee" and, together with the Debt Securities, the "Securities");
WHEREAS, Countrywide Capital III (the "Trust") intends to sell
$200,000,000 aggregate liquidation amount of its 8.05% Subordinated Capital
Income Securities, Series A (together with the 8.05% Subordinated Capital Income
Securities, Series B, of the Trust to be issued in exchange therefor as
contemplated by the Declaration, the "Capital Securities"), representing
undivided beneficial ownership interests in the assets of the Trust and proposes
to invest the proceeds from such offering in addition to the proceeds of the
sale of $6,200,000 aggregate liquidation amount of the Common Securities (as
defined), in $206,200,000 aggregate principal amount of the Debentures;
WHEREAS, to provide the terms and conditions upon which the
Securities are to be authenticated, issued and delivered, the Company and the
Guarantor have duly authorized the execution of this Indenture;
WHEREAS, all acts and things necessary to make this Indenture a
valid agreement in accordance to its terms, have been done and performed.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:+
For and in consideration of the premises and the purchase of the
Securities by the Holder thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
Definitions and Other Provisions of General Application
SECTION 1.1 Interpretation and Definitions. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Section have the meanings assigned to
them in this Section and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(d) the words "herein," and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(e) a reference to any Person shall include its successors and
assigns;
(f) a reference to any agreement or instrument shall mean such
agreement or instrument as supplemented, modified, amended or amended and
restated and in effect from time to time;
(g) a reference to any statute, law, rule or regulation, shall
include any amendments thereto applicable to the relevant Person, and any
successor statute, law, rule or regulation;
(h) a reference to any particular rating category shall be deemed to
include any corresponding successor category, or any corresponding rating
category issued by a successor or subsequent rating agency;
(i) all references in this Indenture to Articles, Sections, Recitals
and Exhibits are to Articles, Sections, Recitals and Exhibits to this Indenture,
unless otherwise specified.
"Act," when used with respect to any Holder, has the meaning
specified in Section 1.4.
"Additional Interest" has the meaning specified in Section 2.4(a).
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Debt Securities.
"Board Resolution" means a copy of a resolution certified by the
Secretary or Assistant Secretary of the Company to have been duly adopted by the
Company's Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in The City of New York or Los Angeles,
California are authorized or required by law or executive order to remain closed
or a day on which the Corporate Trust Office of the Trustee, or the principal
corporate trust office of the Property Trustee, is closed for business.
"Capital Securities" has the meaning specified in the Recitals to
this Indenture.
"Cedel" means Cedel, S.A.
"Change in 1940 Act Law" has the meaning set forth in the definition
of "Investment Company Event".
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Indenture,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Indenture containing such reference.
"Commission" means the Securities and Exchange Commission or such
successor agency performing comparable functions.
"Common Securities" has the meaning specified in the Declaration.
"Company" has the meaning specified in the Recitals to this
Indenture.
"Company Order" or "Company Request" means a written request or
order signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President, any Managing Director or any Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee
in The City of New York, at which at any particular time its corporate trust
business shall be administered and which at the date of this Indenture is 101
Barclay Street, Floor 21 West, New York, New York 10286.
"Covenant Defeasance" has the meaning specified in Section 6.3.
"Custodian" means the custodian for the time being for any Global
Security.
"Debentures" has the meaning specified in the Recitals to this
Indenture.
"Debt Guarantee" means the agreement of the Guarantor, in the form
set forth in Section 2.9 hereof, to be endorsed on the Debt Securities
authenticated and delivered under this Indenture.
"Debt Securities" has the meaning specified in the Recitals to
this Indenture.
"Declaration" has the meaning specified in the Recitals to this
Indenture.
"Defaulted Interest" has the meaning specified in Section 2.15.
"Defeasance" has the meaning specified in Section 6.2.
"Defeasance Agent" means another financial institution which is
eligible to act as Trustee under this Indenture and which assumes all of the
obligations of the Trustee necessary to enable the Trustee to act under Sections
6.2 and 6.3. In the event such a Defeasance Agent is appointed, the following
conditions shall apply:
1. The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth
such Defeasance Agent's rights and responsibilities;
2. The Defeasance Agent shall provide verification to the Trustee
acknowledging receipt of sufficient money and/or U.S.
Government Obligations to meet the applicable conditions set
forth in Sections 6.2 and 6.3;
3. The Trustee shall determine whether the Company and the
Guarantor shall be deemed to have been Discharged from its
respective obligations with respect to the Securities.
"Depositary" means, with respect to Securities issuable in whole or
in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities.
"Depositary Participant" means a member of, or participant in,
the Depositary.
"Dissolution Event" means an event pursuant to which the Trust is
dissolved in accordance with the Declaration, and the Securities held by the
Property Trustee are distributed to the holders of the Capital Securities and
Common Securities issued by the Trust pro rata in accordance with the
Declaration.
"DWAC" means Deposit and Withdrawal At Custodian Service.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Plan" means an employee benefit plan subject to ERISA or an
individual retirement account or plan subject to Section 4975 of the Code.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Event of Default" has the meaning specified in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor legislation.
"Extension Period" has the meaning specified in Section 5.1.
"Global Security" or "Global Debt Security" means a Security that
evidences all or part of the Securities and is authenticated and delivered to,
and registered in the name of, the Depositary for such Securities or a nominee
thereof.
"Guarantees" means the Trust Guarantee and the Debt Guarantee.
"Guarantor" has the meaning specified in the Recitals to this
Indenture.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Lehman Brothers Inc., Countrywide
Securities Corporation, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Salomon Brothers Inc.
"Interest Payment Date" has the meaning specified in Section
2.4(a).
"Investment Company" means an "investment company" as defined in the
1940 Act and the regulations promulgated thereunder.
"Investment Company Event" means that the Regular Trustees shall
have received an Opinion of Counsel, rendered by a law firm having a recognized
national securities practice, to the effect that, as a result of the occurrence
of a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the 1940 Act, which Change in
1940 Act Law becomes effective on or after the date of original issuance of the
Capital Securities.
"Maturity," when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Maturity Advancement" has the meaning specified in Section
3.1(a).
"New Debentures" has the meaning specified in the Recitals to
this Indenture.
"1940 Act" means the Investment Company Act of 1940, as amended from
time to time, and any successor legislation.
"1996 Debentures" has the meaning specified in Section 2.5.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, the President, any Managing Director or any Vice President, and by
the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant
Comptroller, the Secretary or an Assistant Secretary, of the Company or the
Guarantor, as the case may be, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 12.4 shall be the
principal executive, financial or accounting officer of the Company. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(ii) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(iii) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who (except
as otherwise expressly provided herein) may be counsel for the Company (and who
(except as otherwise expressly provided herein) may be an employee of the
Company), and who shall be reasonably acceptable to the Trustee. An opinion of
counsel may rely on certificates as to matters of fact.
"Outstanding," when used with respect to Securities, means, as of
the date of determination, all Securities authenticated and delivered under this
Indenture, except: (i) Securities cancelled by the Trustee or delivered to the
Trustee for cancellation; (ii) Securities for whose payment or redemption money
in the necessary amount has been deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holder of
such Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and (iii) Securities which
have been paid pursuant to Section 2.14, or in exchange for or in lieu of which
other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands such Securities are valid
obligations of the Company, provided, however, that in determining whether the
holders of the requisite principal amount of Outstanding Securities are present
at a meeting of holders of Securities for quorum purposes or have consented to
or voted in favor of any request, demand, authorization, direction, notice,
consent, waiver, amendment or modification hereunder, Securities held for the
account of the Company, any of its subsidiaries or any of its affiliates shall
be disregarded and deemed not to be Outstanding, except that in determining
whether the Trustee shall be protected in making such a determination or relying
upon any such quorum, consent or vote, only Securities which the Trustee
actually knows to be so owned shall be so disregarded.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof or any other entity of
whatever nature.
"PORTAL Market" means the Private Offerings, Resales and Trading
through Automated Linkages (PORTAL) Market of the NASDAQ Stock Market, Inc.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.14 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Private Placement Legend" has the meaning specified in Section
2.20 of this Indenture.
"Property Trustee" has the meaning set forth in the Declaration.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Record Date" means a Regular Record Date or a Special Record
Date.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June 4, 1997, among the Company, the Guarantor, the Trust
and the Initial Purchasers for the benefit of themselves and the Holders (as
defined therein) of the Capital Securities, as the same may be amended from time
to time in accordance with the terms thereof.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the Business Day next preceding such Interest Payment Date or
if the Securities are no longer in the form prescribed by Section 2.19, the date
selected by the Company which shall be more than one Business Day but less than
60 Business Days prior to the relevant Interest Payment Date.
"Regular Trustees" has the meaning specified in the Declaration.
"Regulation S" means Regulation S under the Securities Act and any
successor regulation thereto.
"Regulation S Global Security" or "Regulation S Global Debt
Security" means any Global Security or Securities evidencing Securities that
are to be traded pursuant to Regulation S.
"Responsible Officer," when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Global Security" or "Restricted Global Debt Security"
means any Global Security or Securities evidencing Securities that are to be
traded pursuant to Rule 144A.
"Restricted Period" has the meaning specified in Section 2.8(f).
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) of the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities" has the meaning specified in the Recitals to this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 2.13.
"Senior Indebtedness" means, with respect to the Company or the
Guarantor, as the case may be, (i) the principal, premium, if any, and interest
in respect of (A) indebtedness of such obligor for money borrowed and (B)
indebtedness evidenced by securities, debentures, bonds or other similar
instruments issued by such obligor, (ii) all capital lease obligations of such
obligor, (iii) all obligations of such obligor issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such obligor and
all obligations of such obligor under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business),
(iv) all obligations of such obligor for reimbursement on any letter of credit,
any banker's acceptance, any security purchase facility, any repurchase
agreement or similar arrangement, any interest rate swap, any other hedging
arrangement, any obligation under options or any similar credit or other
transaction, (v) all obligations of the type referred to in clauses (i) through
(iv) above of other Persons for the payment of which such obligor is responsible
or liable as obligor, guarantor or otherwise and (vi) all obligations of the
type referred to in clauses (i) through (v) above of other Persons secured by
any lien on any property or asset of such obligor (whether or not such
obligation is assumed by such obligor), except for (1) any such indebtedness
that contains express terms, or is issued under a deed, indenture or other
instrument that contains express terms, providing that it is subordinate or
ranks pari passu with the Debt Securities or the Debt Guarantee, as the case may
be, (2) any indebtedness between or among the Company or the Guarantor or any
Affiliate of the Company or the Guarantor and (3) all other debt securities and
guarantees in respect of those debt securities, in any case issued by the
Company or the Guarantor to any trust (including, without limitation,
Countrywide Capital I, a Delaware statutory business trust), or a trustee of
such trust, partnership or other entity affiliated with the Company or the
Guarantor that is a financing vehicle of the Company or the Guarantor (a
"financing entity") in connection with the issuance by such financing entity of
securities of a similar nature to the Capital Securities or of other securities
that rank pari passu with, or junior to the Capital Securities. Such Senior
Indebtedness shall continue to be Senior Indebtedness and to be entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
"Special Event" means either an Investment Company Event or a Tax
Event.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 2.15.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the date on which the principal, together with any accrued and unpaid interest,
of such Security or such installment of interest is due and payable, as
extended, if applicable, pursuant to Section 5.1 (whether the initial date or,
if pursuant to Section 3.1 the Company elects to accelerate the Stated Maturity,
such earlier date as is chosen by the Company).
"Subsidiary" means with respect to any Person, (i) any corporation
at least a majority of the outstanding voting stock of which is owned, directly
or indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar interests of which shall at the time be owned by such Person, or by one
or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries and (iii) any limited partnership of which such Person or any of
its Subsidiaries is a general partner. For the purposes of this definition,
"voting stock" means shares, interests, participations or other equivalents in
the equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of
such Person, other than shares, interests, participations or other equivalents
having such power by reason of the occurrence of a contingency.
"Tax Event" means the receipt by the Regular Trustees of a Tax
Opinion.
"Tax Opinion" means an Opinion of Counsel, rendered by a law firm
having a recognized national tax practice, to the effect that, as a result of
(a) any amendment to, or change (including any announced proposed change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such proposed
change, pronouncement or decision is announced on or after the date of original
issuance of the Securities, there is more than an insubstantial risk that (i)
the Trust is, or will be within 90 days after the date thereof, subject to
United States federal income tax with respect to interest accrued or received on
the Debentures, (ii) the Trust is, or will be within 90 days after the date
thereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges or (iii) interest payable to the Trust on the
Debentures is not, or within 90 days of the date thereof, will not be
deductible, in whole or in part, by the Company for United States federal income
tax purposes.
"Trust" has the meaning specified in the Recitals to this
Indenture.
"Trust Enforcement Event" has the meaning specified in the
Declaration.
"Trust Guarantee" means the Guarantee Agreement, dated as of June 4,
1997, made by the Guarantor in respect of the Common Securities and the Capital
Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clause (i) or (ii), are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
SECTION 1.2 Compliance Certificates and Opinions. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required under the Trust Indenture Act. Each
such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirement set forth in this Indenture.
SECTION 1.3 Form of Documents Delivered to Trustee. In any case where several
matters are required to be certified by, or covered by an opinion of, any
specified Person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or give an opinion
with respect to some matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such matters
in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under the Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 Acts of Holders; Record Dates. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee at the address specified
in Section 1.5 and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 8.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section 1.4.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 9.1
prior to such first solicitation or vote, as the case may be). With regard to
any record date, only the Holders on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
SECTION 1.5 Notices, Etc. to Trustee and the Company. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at the address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 1.6 Notice to Holders; Waiver. Where this Indenture provides
for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.7 Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act that is required under the Trust Indenture Act to be a part of and govern
this Indenture, the provision of the Trust Indenture Act shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 1.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 1.9 Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.10 Benefits of Indenture. Nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the holders of Senior
Indebtedness, the holders of Capital Securities (to the extent provided therein)
and the Holders of Securities, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 1.11 Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF. THIS INDENTURE IS
SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT THAT ARE REQUIRED TO BE
PART OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY SUCH
PROVISIONS.
SECTION 1.12 Legal Holidays. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Security shall not be a Business
Day, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal of the Securities need not be made
on such date, but may be made on the next succeeding Business Day (except that,
if such Business Day is in the next succeeding calendar year, such Interest
Payment Date, Redemption Date or Stated Maturity, as the case may be, shall be
the immediately preceding Business Day) with the same force and effect as if
made on the Interest Payment Date or Redemption Date, or at the Stated Maturity;
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
SECTION 1.13 Acknowledgment of Rights. The Company and the Guarantor
acknowledge that, with respect to any Securities held by the Trust or a trustee
of such Trust, if the Property Trustee of such Trust fails to enforce its rights
under this Indenture as the holder of Securities held as the assets of the Trust
after the holders of a majority in liquidation amount of the Capital Securities
have so directed the Property Trustee any registered holder of Capital
Securities may institute a legal proceeding directly against the Company or the
Guarantor to enforce such Property Trustee's rights under this Indenture without
first instituting any legal proceeding against such Property Trustee or any
other person or entity. In addition, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest, principal or other required payment on the Securities on the date such
interest, principal or other required payment is otherwise payable, the Company
and the Guarantor acknowledge that a registered holder of Capital Securities may
directly institute a proceeding against the Company and the Guarantor for
enforcement of payment to such holder of the principal, interest or other
required payment on the Securities on or after the respective due dates
specified in the Securities.
SECTION 1.14 Assignment. The Company and the Guarantor will have the
right at all times to assign any of their respective rights or obligations under
this Indenture to a direct or indirect wholly-owned Subsidiary of the Company or
the Guarantor, provided that, in the event of any such assignment, (i) the
Company or the Guarantor, as the case may be, will remain liable for all such
obligations and (ii) the Company shall have received an Opinion of Counsel,
rendered by a law firm having a recognized national tax practice to the effect
that such assignment will not result in a taxable exchange to Holders of Debt
Securities for United States federal income tax purposes. Subject to the
foregoing, the Indenture is binding upon and inures to the benefit of the
parties hereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties hereto.
ARTICLE II
General Terms and Conditions of the Debt Securities
SECTION 2.1 Designation and Principal Amount. There is hereby
authorized (a)(i) a series of Debt Securities designated the "8.05% Junior
Subordinated Debentures due June 15, 2027, Series A" of the Company and (ii) a
Debt Guarantee in respect of such Debt Securities by the Guarantor and (b) (i) a
series of Securities designated the "8.05% Junior Subordinated Debentures due
June 15, 2027, Series B" of the Company and (ii) a Debt Guarantee in respect of
such Debt Securities by the Guarantor. The aggregate principal amount of Debt
Securities which may be authenticated and delivered under this Indenture is
limited to $206,200,000 except for Debt Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities pursuant to Section 2.13 of this Indenture. The New Debentures shall
be issued in exchange for the Debentures in connection with the exchange of
Capital Securities as contemplated by Section 3.6(a) of the Declaration.
SECTION 2.2 Forms of Securities. The Securities and the Trustee's
certificates of authentication shall be in substantially the forms set forth in
Exhibit A.
If the Securities are distributed to the holders of Capital
Securities and Common Securities, the record holder (including any Depositary)
of any Capital Securities or Common Securities shall be issued Securities in
definitive, fully registered form without interest coupons, substantially in the
form provided in Exhibit A, with the legends in substantially the form of the
legends existing on the security representing the Capital Securities or Common
Securities to be exchanged (with such changes thereto as the officers executing
such Securities determine to be necessary or appropriate, as evidenced by their
execution of the Securities) and such other legends as may be applicable thereto
(including any legend required by Section 2.20 hereof), duly executed by the
Company and the Guarantor and authenticated by the Trustee or Authenticating
Agent as provided herein, which Securities, if to be held in global form by any
Depositary, may be deposited on behalf of the holders of the Securities
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of a nominee of the Depositary.
The Securities shall have appropriate insertions, omissions,
substitutions and other variations as are required or permitted by the
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these or other methods, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 2.3 Maturity. The Stated Maturity of the Debt Securities
shall be June 15, 2027, unless a Maturity Advancement occurs as a result of a
Tax Event, in which case the Stated Maturity shall be such advanced maturity
date.
SECTION 2.4 Interest. Each Debt Security shall bear interest at a
rate of 8.05% per annum from the original date of issuance or from the most
recent Interest Payment Date to which interest on such Debt Security (including,
in the case of a New Debenture, the Debenture in exchange for which it was
issued) has been paid or duly provided for, as the case may be, and such
interest will be payable semi-annually (subject to deferral as set forth
herein) in arrears, on June 15 and December 15 of each year (each, an "Interest
Payment Date"), commencing December 15, 1997 until the principal thereof is paid
or made available for payment, to the Holder of such Debt Security on the close
of business on the Regular Record Date. Accrued interest that is not paid on the
applicable Interest Payment Date (including, as described in Section 5.1, during
any Extension Period) will bear additional interest on the amount thereof (to
the extent permitted by law) at the interest rate specified for the Debt
Securities, compounded semi-annually. The term "interest" as used herein shall
include interest payments and interest on interest payments not paid on the
applicable Interest Payment Date.
In the event that a Registration Default (as defined in the
Registration Rights Agreement) occurs, additional interest ("Additional
Interest") shall become payable in respect of the Debt Securities with respect
to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 liquidation
amount of Debt Securities for each week or portion thereof that the Registration
Default continues. Additional Interest will increase by an additional $.05 per
week per $1,000 liquidation amount of Debt Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Additional Interest of $.25 per week per $1,000 liquidation
amount of Debt Securities.
(b) The amount of interest payable for any semi-annual interest
payment period will be computed (i) for any full 180-day semi-annual interest
payment period, on the basis of a 360-day year of twelve 30-day months and (ii)
for any period shorter than a full 180-day semi-annual interest payment period
for which interest payments are computed, on the basis of the actual number of
days elapsed in such period (assuming each full month elapsed in such period
consists of 30 days). In the event that any date on which interest is payable on
the Debt Securities is not a Business Day, then payment of the interest payable
on such date will be made on the next succeeding day that is a Business Day (and
without any additional interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as it made on the date such payment was
originally payable.
(c) The principal of and interest on the Debt Securities shall be
payable at the office or agency of the Paying Agent in the United States
maintained for such purpose and at any other office or agency maintained by the
Company for such purpose in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer in immediately available funds at such place and to such account as may
be designated by the Person entitled thereto as specified in the Security
Register.
SECTION 2.5 Ranking. The obligations of the Company under the
Indenture and the obligations of the Guarantor under the Debt Guarantee and this
Indenture shall be unsecured obligations of the Company and the Guarantor,
respectively, and shall rank junior and subordinated in right of payment to all
Senior Indebtedness of the Company and the Guarantor, respectively.
Notwithstanding the foregoing, this Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Company or the Guarantor,
whether under this Indenture, or any existing or other indenture that the
Company or the Guarantor may enter into in the future or otherwise. The Debt
Securities shall rank pari passu with the 8% Junior Subordinated Deferrable
Interest Debentures due December 16, 2026 of the Company (the "1996
Debentures"), and the Debt Guarantee shall rank pari passu with the Guarantor's
guarantee in respect of the 1996 Debentures.
The Debt Securities shall be redeemable as provided in Article III
hereof.
SECTION 2.6 Denominations. The Debt Securities shall be issuable
only in registered form, without coupons, and only in denominations of $1,000
and any integral multiple thereof.
SECTION 2.7 Forms. The Debentures in definitive form shall be in the
form attached hereto as Exhibit A and the New Debentures in definitive form
shall be in the form attached hereto as Exhibit B.
SECTION 2.8 Special Transfer Provisions. (a) As used in this Section
2.8, the term "Debt Securities" shall be deemed also to refer to the
"Securities". At the request of the beneficial holder of an interest in Debt
Securities in global form, such beneficial holder shall be entitled to obtain a
definitive Debt Security upon written request to the Trustee in accordance with
the standing instructions and procedures existing between the Depositary and the
Trustee for the issuance thereof. Any transfer of a beneficial interest in a
Debt Security in global form which cannot be effected through book-entry
settlement must be effected by the delivery to the transferee (or its nominee)
of a definitive Debt Security or Debt Securities registered in the name of the
transferee (or its nominee) on the Security Register. With respect to any such
transfer, the Trustee will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Trustee, the aggregate
principal amount of the Debt Securities in global form to be reduced and,
following such reduction, the Trustee will cause definitive Debt Securities in
the appropriate aggregate principal amount in the name of such transferee (or
its nominee) and bearing such restrictive legends as may be required by this
Indenture to be delivered. In connection with any such transfer, the Trustee may
request such representations and agreements relating to the restrictions on
transfer of such Debt Security or Debt Securities from such transferee (or such
transferee's nominee) as the Trustee may reasonably require.
(b) So long as the Debt Securities are eligible to be held as Debt
Securities in global form, or unless otherwise required by law, upon any
transfer of a definitive Debt Security or Debt Securities to a QIB in accordance
with Rule 144A, unless otherwise requested by the transferor, and upon receipt
of the definitive Debt Security or Debt Securities being so transferred,
together with a certification in the form attached to the form of Debt Security
from the transferor that the transferor reasonably believes the transferee is a
QIB (or other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Restricted Global Debt Security to reflect an increase in the
aggregate principal amount of the Restricted Global Debt Security, and the
Trustee shall cancel such definitive Debt Security or Debt Securities and cause,
in accordance with the standing instructions and procedures existing between the
Depositary and the Trustee, the aggregate principal amount of Debt Securities
represented by the Restricted Global Debt Security to be increased accordingly.
(c) So long as the Debt Securities are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
definitive Debt Security in accordance with Regulation S, if requested by the
transferor, and upon receipt of the definitive Debt Security or Debt Securities
being so transferred, together with a certification in the form attached to the
form of Debt Security from the transferor that the transfer was made in
accordance with Rule 903 or 904 of Regulation S or Rule 144 under the Securities
Act (or other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Regulation S Global Debt Security to reflect an increase in
the aggregate principal amount of the Debt Securities represented by the
Regulation S Global Debt Security, the Trustee shall cancel such definitive Debt
Security or Debt Securities and cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Trustee, the
aggregate principal amount of Debt Securities represented by the Regulation S
Global Debt Security to be increased accordingly.
(d) If a holder of a beneficial interest in the Restricted Global
Debt Security wishes at any time to exchange its interest in the Restricted
Global Debt Security for an interest in the Regulation S Global Debt Security,
or to transfer its interest in the Restricted Global Debt Security to a Person
who wished to take delivery thereof in the form of an interest in the Regulation
S Global Debt Security, such holder may, subject to the rules and procedures of
the Depositary and to the requirements set forth in the following sentence,
exchange or cause the exchange or transfer or cause the transfer of such
interest for an equivalent beneficial interest in the Regulation S Global Debt
Security. Upon receipt by the Trustee, as transfer agent of (1) written
instructions given in accordance with the Depositary's procedures from or on
behalf of a holder of a beneficial interest in the Restricted Global Debt
Security, directing the Trustee (via DWAC), as transfer agent, to credit or
cause to be credited a beneficial interest in the Regulation S Global Debt
Security in an amount equal to the beneficial interest in the Restricted Global
Debt Security to be exchanged or transferred, (2) a written order given in
accordance with the Depositary's procedures containing information regarding the
Euroclear or Cedel account to be credited with such increase and the name of
such account, and (3) a certificate in the form attached to the form of Debt
Security given by the holder of such beneficial interest stating that the
exchange or transfer of such interest has been made pursuant to and in
accordance with Rule 903 or Rule 904 of Regulation S or Rule 144 under the
Securities Act (or other evidence satisfactory to the Trustee), the Trustee, as
transfer agent, shall promptly deliver appropriate instructions to the
Depositary (via DWAC), its nominee or the custodian for the Depositary, as the
case may be, to reduce or reflect on its records a reduction of the Restricted
Global Debt Security by the aggregate principal amount of the beneficial
interest in such Restricted Global Debt Security to be so exchanged or
transferred from the relevant participant, and the Trustee, as transfer agent,
shall promptly deliver appropriate instructions (via DWAC) to the Depositary,
its nominee, or the custodian for the Depositary, as the case may be,
concurrently with such reduction, to increase or reflect on its records an
increase of the principal amount of such Regulation S Global Debt Security by
the aggregate principal amount of the beneficial interest in such Restricted
Global Debt Security to be so exchanged or transferred, and to credit or cause
to be credited to the account of the person specified in such instructions (who
may be Morgan Guaranty Trust Company of New York, Brussels office, as operator
of Euroclear or Cedel or another agent member of Euroclear or Cedel, or both, as
the case may be, acting for and on behalf of them) a beneficial interest in such
Regulation S Global Debt Security equal to the reduction in the principal amount
of such Restricted Global Debt Security.
(e) If a holder of a beneficial interest in the Regulation S Global
Debt Security wishes at any time to exchange its interest in the Regulation S
Global Debt Security for an interest in the Restricted Global Debt Security, or
to transfer its interest in the Regulation S Global Debt Security to a Person
who wishes to take delivery thereof in the form of an interest in the Restricted
Global Debt Security, such holder may, subject to the rules and procedures of
Euroclear or Cedel and the Depositary, as the case may be, and to the
requirements set forth in the following sentence, exchange or cause the exchange
or transfer or cause the transfer of such interest for an equivalent beneficial
interest in the Restricted Global Debt Security. Upon receipt by the Trustee, as
transfer agent of (1) written instructions given in accordance with the
procedures of Euroclear or Cedel and the Depositary, as the case may be, from or
on behalf of a beneficial owner of an interest in the Regulation S Global Debt
Security directing the Trustee, as transfer agent, to credit or cause to be
credited a beneficial interest in the Restricted Global Debt Security in an
amount equal to the beneficial interest in the Regulation S Global Debt Security
to be exchanged or transferred, (2) a written order given in accordance with the
procedures of Euroclear or Cedel and the Depositary, as the case may be,
containing information regarding the account with the Depositary to be credited
with such increase and the name of such account and (3) prior to the expiration
of the Restricted Period, a certificate in the form attached to the form of Debt
Security given by the holder of such beneficial interest and stating that the
person transferring such interest in such Regulation S Global Debt Security
reasonably believes that the person acquiring such interest in the Restricted
Global Debt Security is a QIB and is obtaining such beneficial interest in a
transaction meeting the requirements of Rule 144A and any applicable securities
laws of any State of the United States or any other jurisdiction (or other
evidence satisfactory to the Trustee), the Trustee, as transfer agent, shall
promptly deliver (via DWAC) appropriate instructions to the Depositary, its
nominee, or the custodian for the Depositary, as the case may be, to reduce or
reflect on its records a reduction of the Regulation S Global Debt Security by
the aggregate principal amount of the beneficial interest in such Regulation S
Global Debt Security to be exchanged or transferred, and the Trustee, as
transfer agent, shall promptly deliver (via DWAC) appropriate instructions to
the Depositary, its nominee, or the custodian for the Depositary, as the case
may be, concurrently with such reduction, to increase or reflect on its records
an increase of the principal amount of the Restricted Global Debt Security by
the aggregate principal amount of the beneficial interest in the Regulation S
Global Debt Security to be so exchanged or transferred, and to credit or cause
to be credited to the account of the Person specified in such instructions a
beneficial interest in the Restricted Global Debt Security equal to the
reduction in the aggregate principal amount of the Regulation S Global Debt
Security. After the expiration of the Restricted Period, the certification
requirement set forth in clause (3) of the second sentence of this Section
2.8(d) will no longer apply to such exchanges and transfers.
(f) Any beneficial interest in one of the Global Debt Securities
that is transferred to a Person who takes delivery in the form of an interest in
the other Global Debt Security will, upon transfer, cease to be an interest in
such Global Debt Security and become an interest in the other Global Debt
Security and, accordingly, will thereafter be subject to all transfer
restrictions and other procedures applicable to beneficial interests in such
other Global Debt Security for as long as it remains such an interest.
(g) Prior to or on the 40th day after the later of the commencement
of the offering of the Capital Securities and the Closing Date (the "Restricted
Period"), beneficial interests in a Regulation S Global Debt Security may only
be held through Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of Euroclear or Cedel or another agent member of Euroclear and Cedel
acting for and on behalf of them, unless delivery is made through the Restricted
Global Debt Security in accordance with the certification requirements hereof.
During the Restricted Period, interests in the Regulation S Global Debt Security
may be exchanged for interests in the Restricted Global Debt Security or for
definitive Debt Securities only in accordance with the certification
requirements described above.
(h) Securities may not be acquired by any Person who is, or who in
acquiring such Securities is using the assets of, an ERISA Plan unless
Securities are acquired pursuant to and in accordance with an applicable
exemption, including but not limited to: (i) Prohibited Transaction Class
Exemption 90-1 ("PTE 90-1"), regarding investments by insurance company pooled
separate accounts, (ii) Prohibited Transaction Class Exemption 91-38 ("PTE
91-38") regarding investments by bank collective investment funds, (iii)
Prohibited Transaction Class Exemption 84-14 ("PTE 84-14"), regarding
transactions effected by qualified professional asset managers, (iv) Prohibited
Transaction Class Exemption 96-23 ("PTE 96-23"), regarding transactions effected
by in-house asset managers, or (v) Prohibited Transaction Class Exemption 95-60
("PTE 95-60"), regarding investments by insurance company general accounts. The
acquisition of Securities by any Person who is, or who in acquiring such
Securities is using the assets of, an ERISA Plan shall be deemed to constitute a
representation by such Person to the Trust that (i) such Person is eligible for
exemptive relief available pursuant to an applicable exemption, including but
not limited to, PTE 90-1, PTE 91-38, PTE 84-14, PTE 96-23 or PTE 95-60 with
respect to the acquisition and holding of such Securities, and (ii) none of
Countrywide Home Loans, Inc., Countrywide Credit Industries, Inc., Countrywide
Financial Services, Inc. or Countrywide Securities Corporation, is a
"fiduciary", within the meaning of Section 3(21) of ERISA and the regulations
thereunder, with respect to such Person's interest in the Securities.
SECTION 2.9 Unconditional Guarantee. Subject to the terms of this
Section 2.9, including the form of Guarantee set forth below, the Guarantor
hereby unconditionally guarantees to each Holder of a Debt Security the due and
punctual payment of the principal of and premium, if any, and interest on such
Debt Security, when and as the same shall become due and payable, whether at
Maturity, by declaration thereof or otherwise.
The form of the Guarantee to be affixed to the reverse side of each
Security shall be as follows:
FOR VALUE RECEIVED, the Guarantor hereby unconditionally guarantees
to the holder of the Debt Security upon which this Guarantee is endorsed the due
and punctual payment of the principal, premium, if any, and interest on said
Debt Security, when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise, according to the terms thereof and of
the Indenture referred to therein.
The Guarantor agrees to determine, at least one Business Day prior
to the date upon which a payment of principal of and premium, if any, or
interest on said Debt Security is due and payable, whether the Company has
available the funds to make such payment as the same shall become due and
payable. In case of the failure of the Company punctually to pay any such
principal, premium, if any, or interest, the Guarantor hereby agrees to cause
any such payment to be made punctually when and as the same shall become due and
payable, whether at maturity, upon redemption, or otherwise, and as if such
payment were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Debt Security or said Indenture, the
absence of any action to enforce the same, any waiver or consent by the Holder
of said Debt Security with respect to any provisions thereof, the recovery of
any judgment against the Company or any action to enforce the same, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of merger or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest or notice with respect to said Debt Security or indebtedness
evidenced thereby, and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the obligations
contained in said Debt Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of
said Debt Security against the Company in respect of any amounts paid by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
the Guarantor shall not, without the consent of the holders of all of the Debt
Securities then outstanding, be entitled to enforce or to receive any payments
arising out of or based upon such right of subrogation until the principal of
and premium, if any, and interest on all Debt Securities shall have been paid in
full or payment thereof shall have been provided for in accordance with said
Indenture.
Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Company on the Debt
Securities to the holders of the Debt Securities it is determined by a final
decision of a court of competent jurisdiction that such payment shall be avoided
by a trustee in bankruptcy (including any debtor-in-possession) as a preference
under 11 U.S.C. Section 547 and such payment is paid by such holder of such
trustee in bankruptcy, then and to the extent of such repayment, the obligations
of the Guarantor hereunder shall remain in full force and effect.
This Guarantee shall not be valid or become obligatory for any
purpose with respect to a Debt Security until the certificate of authentication
on such Security shall have been signed by the Trustee (or the Authentication
Agent).
This Guarantee shall be governed by the laws of the State of New
York without regard to conflict of laws principles thereof.
IN WITNESS WHEREOF, Countrywide Credit Industries, Inc. has
caused this Guarantee to be signed in its corporate name by the facsimile
signature of two of its officers thereunto duly authorized.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:
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Name:
Title:
By:
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Name:
Title:
SECTION 2.10 INTENTIONALLY DELETED.
SECTION 2.11 Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company and the Guarantor by their
respective Chairmen of the Board, Vice Chairmen of the Board, President, one of
their Managing Directors or one of their respective Vice Presidents, or the
Treasurer. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company or the Guarantor shall
bind the Company or the Guarantor, as the case may be, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.
At any time, and from time to time, after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company
and the Guarantor to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate and make available for
delivery such Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 2.12 ______ Temporary Securities. Pending the preparation of
definitive Securities, the Company and the Guarantor may execute, and upon
Company Order the Trustee shall authenticate and make available for delivery,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
12.2, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 2.13 Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the Trustee
a register (designated pursuant to Section 12.2 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 12.2 for such
purpose, the Company shall execute, and the Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or transferees,
one or more new Securities of any authorized denominations and of a like
aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company and
the Guarantor shall execute, and the Trustee shall authenticate and make
available for delivery, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company and the Guarantor,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 2.12, 3.8 or 11.6 not involving any transfer.
The Company shall not be required to issue, register the transfer of
or exchange any Securities during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of any
Securities and ending at the close of business on the day of such mailing.
So long as the Securities are eligible for book-entry settlement
with the Depositary, or unless otherwise required by law, all Securities to be
traded on the PORTAL Market shall be represented by the Restricted Global
Security registered in the name of the Depositary or the nominee of the
Depositary. The transfer and exchange of beneficial interests in any Global
Security, which does not involve the issuance of a definitive Security or the
transfer of interests to another Global Security, shall be effected through the
Depositary (but not the Trustee or the Custodian) in accordance with this
Indenture (including the restrictions on transfer set forth in Section 2.8) and
the procedures of the Depositary therefor. Neither the Trustee nor the Custodian
(in such respective capacities) will have any responsibility for the transfer
and exchange of beneficial interests in such Global Security that does not
involve the issuance of a definitive Security or the transfer of interests to
another Global Security.
SECTION 2.14 Mutilated, Destroyed, Lost and Stolen Securities. If
any mutilated Security is surrendered to the Trustee, the Company and the
Guarantor shall execute and the Trustee shall authenticate and make available
for delivery in exchange therefor a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and make
available for delivery, in lieu of any such destroyed, lost or stolen Security,
a new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 2.14 in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section 2.14 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.15 Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clauses (a) and (b) below.
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a special record date for
the payment of such Defaulted Interest (a "Special Record Date"), which shall be
fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and, if so listed, upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.16 Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee shall treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 2.15) interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 2.17 Cancellation. All Securities surrendered for payment,
redemption, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly cancelled by the Trustee and returned to the
Company. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities held by the Trustee shall be
disposed of as directed by a Company Order, provided, however, that the Trustee
may, but shall not be required to, destroy such cancelled Securities.
SECTION 2.18 CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be place only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company shall
promptly notify the Trustee of any change in the CUSIP numbers.
SECTION 2.19 Global Securities. If the Securities are distributed to
holders of Capital Securities in liquidation of such holder's interests in the
Trust, such Securities will initially be issued as a Global Security. If the
Company shall establish that the Securities are to be issued in the form of one
or more Global Securities, then the Company shall execute and the Trustee shall,
in accordance with Section 2.11 and the Company Order, authenticate and make
available for delivery one or more Global Securities that (i) shall represent
and shall be denominated in an amount equal to the aggregate principal amount of
all of the Securities to be issued in the form of Global Securities and not yet
cancelled, (ii) shall be registered in the name of the Depositary for such
Global Security or Securities or the nominee of such Depositary and (iii) shall
be delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions. Global Securities shall bear a legend substantially to the
following effect:
This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. This Global Security is exchangeable for
Securities registered in the name of a Person other than the Depositary or its
nominee only in the limited circumstances described in the Indenture, and no
transfer of this Security (other than a transfer of this Security as a whole by
the Depositary to another nominee of the Depositary) may be registered except in
such limited circumstances. Every Security delivered upon registration of
transfer of, or in exchange for, or in lieu of, this Global Security shall be a
Global Security subject to the foregoing, except in the limited circumstances
described above. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is to be made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
Notwithstanding the provisions of Section 2.13, unless and until it
is exchanged in whole or in part for Securities in definitive registered form, a
Global Security representing all or a part of the Securities may not be
transferred in the manner provided in Section 2.13 except as a whole by the
Depositary to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.
If at any time the Depositary for any Securities represented by one
or more Global Securities notifies the Company that it is unwilling or unable to
continue as Depositary for such Securities or if at any time the Depositary for
such Securities shall no longer be eligible under this Section 2.19, the Company
shall appoint a successor Depositary with respect to such Securities. If a
successor Depositary for such Securities is not appointed by the Company within
90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company's election that such Securities be represented by one
or more Global Securities shall no longer be effective and the Company shall
execute, and the Trustee, upon receipt of, a Company Order for the
authentication and delivery of definitive Securities, will authenticate and make
available for delivery Securities in definitive registered form, in
denominations of $1,000 and integral multiples thereof, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Securities in exchange for such Global Security or
Securities.
The Company may at any time and in its sole discretion determine
that the Securities issued in the form of one or more Global Securities shall no
longer be represented by a Global Security or Securities. In such event, the
Company shall execute, and the Trustee, upon receipt of, a Company Order or an
Officers' Certificate for the authentication and delivery of definitive
Securities, shall authenticate and make available for delivery, Securities in
definitive registered form, in denominations of $1,000 and integral multiples
thereof, in an aggregate principal amount equal to the principal amount of the
Global Security or Securities representing such Securities, in exchange for such
Global Security or Securities.
If specified by the Company with respect to Securities represented
by a Global Security, the Depositary for such Global Security may surrender such
Global Security in exchange, in whole or in part, for Securities in definitive
registered form on such terms as are acceptable to the Company and such
Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, without service charge, (i) to the
Person specified by such Depositary, a new Security or Securities, of any
authorized denominations as requested by such Person, in an aggregate principal
amount equal to and in exchange for such Person's beneficial interest in the
Global Security; and (ii) to such Depositary a new Global Security in a
denomination equal to the difference, if any, between the principal amount of
the surrendered Global Security and the aggregate principal amount of Securities
authenticated and delivered pursuant to clause (i) above. Upon the exchange of a
Global Security for Securities in definitive registered form in authorized
denominations, such Global Security shall be cancelled by the Trustee or an
agent of the Company or the Trustee. Securities in definitive registered form
issued in exchange for a Global Security pursuant to this Section 2.19 shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Security, pursuant to instructions from its direct or indirect
Participants or otherwise, shall instruct the Trustee or an agent of the Company
or the Trustee. The Trustee or such agent shall deliver at its office such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
Interests of beneficial owners in Global Security may be transferred
or exchanged for definitive Securities and definitive Securities may be
transferred or exchanged for Global Securities in accordance with rules of the
Depositary and the provisions of Section 2.8.
Any Security in global form may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Indenture as may be required by the
Custodian, the Depositary or by the National Association of Securities Dealers,
Inc. in order for the Securities to be tradeable on the PORTAL Market or as may
be required for the Securities to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
any securities exchange upon which the Securities may be listed or traded or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Securities are subject.
SECTION 2.20 Restrictive Legend. (a) Each Global Security and
definitive Security that constitutes a Restricted Security shall bear the
following legend (the "Private Placement Legend") on the face thereof until two
years after the later of the date of original issue and the last date on which
the Company or any Affiliate of the Company was the owner of such Security (or
any predecessor thereto) (the "Resale Restriction Termination Date"), unless
otherwise agreed by the Company and the Holder thereof:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE ISSUER
THAT (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL,
OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE
WHICH IS TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND
THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS
THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR) EXCEPT
(A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (D)
OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 904 UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (III) IT WILL AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE
RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR
OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSES (II)(D) AND (E)
IS SUBJECT TO THE RIGHT OF THE ISSUER AND THE PROPERTY TRUSTEE FOR
SUCH SECURITIES TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND
SUBSTANCE.
Any Security (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms may, upon satisfaction of the requirements of
Section 2.20(b) and surrender of such Security for exchange to the Security
Registrar in accordance with the provisions of this Section 2.20(b), be
exchanged for a new Security or Securities, of like tenor and aggregate
principal amount, which shall not bear the restrictive legend required by this
Section 2.20(a).
(b) Upon any sale or transfer of any Restricted Security (including
any interest in a Global Security) (i) that is effected pursuant to an effective
registration statement under the Securities Act or (ii) in connection with which
the Trustee receives certificates and other information (including an Opinion of
Counsel, if requested) reasonably acceptable to the Company and the Trustee to
the effect that such security will no longer be subject to the resale
restrictions under federal and state securities laws, then (A) in the case of a
Restricted Security in definitive form, the Security Registrar or co-Registrar
shall permit the holder thereof to exchange such Restricted Security for a
Security that does not bear the legend set forth in Section 2.20(a), and shall
rescind any restrictions on transfer and (B) in the case of Restricted
Securities represented by a Global Security, such Security shall no longer be
subject to the restrictions contained in the legend set forth in Section
2.20(a). In addition, any Security (or Security issued in exchange or
substitution therefor) as to which the restrictions on transfer described in the
legend set forth in Section 2.20(a) have expired by their terms, may, upon
surrender thereof (in accordance with the terms of this Indenture) together with
such certifications and other information (including an Opinion of Counsel
having substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company and the Trustee
and in a form acceptable to the Company, to the effect that the transfer of such
Restricted Security has been made in compliance with Rule 144 or any successor
provision thereto) acceptable to the Company and the Trustee as either of them
may reasonably require, be exchanged for a new Security or Securities of like
tenor and aggregate principal amount, which shall not bear the restrictive
legends set forth in Section 2.20(a).
ARTICLE III
Redemption of the Debt Securities
SECTION 3.1 Optional Redemption; Shortening of Stated Maturity. (a)
The Debt Securities are not redeemable at the option of the Company; provided
that the Debt Securities shall be redeemable at the option of the Company at any
time in whole (but not in part), within 90 days of the occurrence of a Special
Event, at a Redemption Price equal to 100% of the aggregate principal amount of
such Debt Securities to be redeemed, plus accrued and unpaid interest, if any,
to the Redemption Date. In addition, if a Tax Event shall occur and be
continuing and in the Opinion of Counsel, rendered by a law firm having a
recognized national tax practice, there would in all cases, after effecting the
dissolution of the Trust and the distribution of the Debt Securities to the
Holders of the Capital Securities and Common Securities in exchange therefor
upon liquidation of the Trust, be more than an insubstantial risk that the Tax
Event would continue to exist, then the Company shall have the right to shorten
the Stated Maturity of the Debt Securities to a date not earlier than December
15, 2011 (a "Maturity Advancement"), such that, in the opinion of counsel to the
Trust rendered by a law firm having a recognized national tax practice, after
advancing the Stated Maturity of the Debt Securities, interest paid on the Debt
Securities will be deductible by the Company for United States federal income
tax purposes.
(b) For so long as the Trust is the Holder of all Debt Securities
Outstanding, the proceeds of any redemption described in this Section 3.1 shall
be used by the Trust to redeem Common Securities and Capital Securities in
accordance with their terms.
SECTION 3.2 Election to Redeem; Notice to Trustee. The election of
the Company to redeem Debt Securities pursuant to Section 3.1 shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
pursuant to Section 3.1, the Company shall, at least 45 days and no more than 60
days prior to the Redemption Date fixed by the Company, notify the Trustee of
such Redemption Date and of the aggregate principal amount of Debt Securities to
be redeemed and provide a copy of the notice of redemption given to Holders of
Debt Securities to be redeemed pursuant to Section 3.1.
SECTION 3.3 INTENTIONALLY DELETED.
SECTION 3.4 INTENTIONALLY DELETED.
SECTION 3.5 Notice of Redemption. (a) Notice of redemption shall be
given by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Debt Securities to
be redeemed, at his or her address appearing in the Security Register.
(b) All notices of redemption shall identify the Debt Securities to
be redeemed (including the CUSIP number thereof) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become
due and payable upon each such Debt Security to be redeemed
and that interest thereon will cease to accrue on and after
said date, and
(4) the place or places where such Debt Securities are to be
surrendered for payment of the Redemption Price.
(c) Notice of redemption of Debt Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
SECTION 3.6 Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 6.5 hereof) an amount of money sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Debt Securities which are to be
redeemed on that date; provided, however, that any such deposit on a Redemption
Date shall be initiated prior to 10:00 a.m.
(New York time) in same-day funds.
SECTION 3.7 Debt Securities Payable on Redemption Date. (a) Subject
to the fulfillment of the notice requirements set forth in Section 3.5 above,
the Debt Securities so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified, and from and after such
date (unless the Company shall default in the payment of the Redemption Price
and accrued interest) such Debt Securities shall cease to bear interest. Upon
surrender of any such Debt Security for redemption in accordance with said
notice, such Debt Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Debt Securities, or one or more
Predecessor Debt Securities, registered as such at the close of business on the
relevant Record Dates according to their terms.
(b) If any Debt Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Debt Security.
SECTION 3.8 INTENTIONALLY DELETED.
SECTION 3.9 No Sinking Fund. The Debt Securities are not entitled to
the benefit of any sinking fund.
ARTICLE IV
Intentionally Deleted
ARTICLE V
Extension of Interest Payment Period
SECTION 5.1 Extension of Interest Payment Period. So long as no
Event of Default has occurred and is continuing, the Company shall have the
right, at any time during the term of the Debt Securities, from time to time, to
defer payment of interest on such Debt Securities, for a period not to exceed 10
consecutive semi-annual periods (an "Extension Period"); provided, that no
Extension Period may extend beyond the Stated Maturity of the Debt Securities.
There may be multiple Extension Periods of varying lengths during the term of
the Debt Securities. At the end of any Extension Period, if any, the Company
shall pay all interest then accrued and unpaid, together with interest thereon,
compounded semi-annually at the rate specified for the Debt Securities to the
extent permitted by applicable law. During any such Extension Period, (a) the
Company and the Guarantor shall not declare or pay any dividends on, or make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or rights to
acquire such capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in connection
with the satisfaction by the Company or the Guarantor, respectively, of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Company's or the Guarantor's capital stock or rights to
acquire such capital stock or the exchange or conversion of one class or series
of the Company's or the Guarantor's capital stock or rights to acquire such
capital stock for another class or series of the Company's or the Guarantor's
capital stock or rights to acquire such capital stock, (iii) the purchase of
fractional interests in shares of the Company's or the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged or (iv) dividends and distributions made
on the Company's or the Guarantor's capital stock or rights to acquire such
capital stock with the Company's or the Guarantor's capital stock or rights to
acquire such capital stock) or make any guarantee payments with respect to any
of the foregoing and (b) the Company and the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including any guarantees, other than the Guarantees)
issued by the Company or the Guarantor that rank pari passu with or junior to
the Debt Securities and the Debt Guarantee. Prior to the termination of any such
Extension Period, the Company may further extend the Extension Period, provided
that no Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Debt Securities. Upon the termination of any
such Extension Period and the payment of all amounts then due on any Interest
Payment Date, the Company may elect to begin a new Extension Period subject to
the above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof.
SECTION 5.2 Notice of Extension. The Company shall give the
Guarantor, the Property Trustee, the Regular Trustees and the Trustee written
notice of its election of such Extension Period not less than one Business Day
prior to the Record Date for the applicable Interest Payment Date. The Property
Trustee shall promptly give notice of the Company's election of such Extension
Period to the Holders of the Capital Securities.
ARTICLE VI
Satisfaction and Discharge; Defeasance
SECTION 6.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect (except as to any surviving rights of
registration of transfer or exchange of Securities herein expressly provided
for), and the Trustee, on written demand of and at the expense of the Company,
shall execute instruments supplied by the Company acknowledging satisfaction and
discharge of this Indenture, when (1) either (A) all Securities theretofore
authenticated and delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.14 and (ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in Section
12.3) have been delivered to the Trustee for cancellation; or (B) all such
Securities not theretofore delivered to the Trustee for cancellation (i) have
become due and payable, or (ii) will become due and payable at their Stated
Maturity within one year, or (iii) if redeemable at the option of the Company,
are to be called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company and the Guarantor, in the case of (i),
(ii) or (iii) above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose of an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal, premium, if any, and interest to
the date of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be; (2)
the Company has paid or caused to be paid all other sums payable hereunder by
the Company; and (3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company to the Trustee under
Section 8.7 and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section 6.1, the obligations of the Trustee
under Sections 6.2, 6.3 and the last paragraph of Section 12.3 shall survive.
SECTION 6.2 Defeasance and Discharge. In addition to discharge of
this Indenture pursuant to Sections 6.1 and 6.3, in the case of any Securities
with respect to which the exact amount described in subparagraph (a) of Section
6.4 can be determined at the time of making the deposit referred to in such
subparagraph (a), (i) the Company shall be deemed to have paid and discharged
the entire indebtedness on all the Securities as provided in this Section 6.2 on
and after the date the conditions set forth in Section 6.4 are satisfied, and
the provisions of this Indenture with respect to the Securities shall no longer
be in effect (except as to (i) rights of registration of transfer and exchange
of Securities, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Securities, (iii) rights of Holders of Securities to receive, solely from
the trust fund described in subparagraph (a) of Section 6.4, payments of
principal thereof and interest, if any, on the Debentures upon the original
stated due dates therefor (but not upon acceleration), (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, (v) the obligations
of the Company and the Guarantor pursuant to Section 12.8, (vi) this Section 6.2
and (vii) the rights of the Holders of Securities as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to all or any of
them) (hereinafter called "Defeasance"), and the Trustee at the cost and expense
of the Company, shall execute proper instruments acknowledging the same.
SECTION 6.3 Covenant Defeasance. In the case of any Securities with
respect to which the exact amount described in subparagraph (a) of Section 6.4
can be determined at the time of making the deposit referred to in such
subparagraph (a), (i) the Company shall be released from its obligations under
any covenants specified in or pursuant to this Indenture (except as to (i)
rights of registration of transfer and exchange of Securities, (ii) substitution
of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of
Holders of Securities to receive, from the Company pursuant to Section 12.1,
payments of principal thereof and interest, if any, on the Debentures upon the
original stated due dates therefor (but not upon acceleration), (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, (v) the obligations
of the Company and the Guarantor pursuant to Section 12.8 and (vi) the rights of
the Holders of Securities as beneficiaries hereof with respect to the property
so deposited with the Trustee payable to all or any of them), and (ii) the
occurrence of any event specified in Section 7.1(3) (with respect to any of the
covenants specified in or pursuant to this Indenture) shall be deemed not to be
or result in an Event of Default, in each case with respect to the Outstanding
Securities as provided in this Section on and after the date the conditions set
forth in Section 6.4 are satisfied (hereinafter called "Covenant Defeasance"),
and the Trustee, at the cost and expense of the Company, shall execute proper
instruments acknowledging the same. For this purpose, such Covenant Defeasance
means that the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document, but the remainder of this
Indenture and the Securities shall be unaffected thereby.
SECTION 6.4 Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 6.2 or 6.3
to the Outstanding Securities:
(a) with reference to Section 6.2 or 6.3, the Company has
irrevocably deposited or caused to be irrevocably deposited with the Trustee or
the Defeasance Agent (as defined below) as funds in trust, specifically pledged
as security for, and dedicated solely to, the benefit of the Holders of
Securities (i) money, or (ii) U.S. Government Obligations, maturing as to
principal and interest, if any, at such times and in such amounts as will insure
the availability of cash, or (iii) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee or the Defeasance Agent, to pay and discharge the principal of, premium,
if any, and interest, if any, on all Securities on each date that such principal
or interest, if any, is due and payable;
(b) in the case of Defeasance under Section 6.2, the Company has
delivered to the Trustee or the Defeasance Agent an Opinion of Counsel based on
the fact that (x) the Company has received from, or there has been published by,
the United States Internal Revenue Service a ruling or (y), since the date
hereof, there has been a change in the applicable United States federal income
tax law, in either case to the effect that, and such opinion shall confirm that,
the Holders of the Securities of such series will not recognize income, gain or
loss for United States federal income tax purposes as a result of such deposit,
Defeasance and discharge and will be subject to United States federal income tax
on the same amount and in the same manner and at the same times, as would have
been the case if such deposit, Defeasance and discharge had not occurred;
(c) in the case of Covenant Defeasance under Section 6.3, the
Company has delivered to the Trustee or the Defeasance Agent and Opinion of
Counsel to the effect that, and such opinion shall confirm that, the Holders of
the Securities will not recognize income, gain or loss for United States federal
income tax purposes as a result of such deposit and Covenant Defeasance and will
be subject to United States federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such deposit
and Covenant Defeasance had not occurred;
(d) such Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any agreement or
instrument to which the Company is a party or by which it is bound; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent contemplated by this provision have been complied with.
SECTION 6.5 Application of Trust Money. Subject to the provisions of
the last paragraph of Section 12.3, all money and U.S. Government Obligations
deposited with the Trustee pursuant to Section 6.1 shall be held in trust and
such money and all money from such U.S. Government Obligations shall be applied
by it, in accordance with the provisions of the Securities and this Indenture,
to the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, in respect of the principal and interest for whose
payment such money and U.S. Government Obligations has been deposited with the
Trustee.
SECTION 6.6 Indemnity for U.S. Government Obligations. The Company
shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the U.S. Government Obligations deposited pursuant to
Section 6.1 or the principal or interest received in respect of such obligations
other than any such tax, fee or other charge that by law is for the account of
the Holders of Outstanding Securities.
ARTICLE VII
Remedies
SECTION 7.1 Events of Default. "Event of Default," wherever used
herein, means any one of the following events that has occurred and is
continuing (whatever the reason for such Event of Default and whether it shall
be occasioned by the provisions of Article XIII or be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(1) the Company or the Guarantor defaults in the payment of any
interest (including Additional Interest) upon the Securities
when it becomes due and payable, and continuance of such
default for a period of 30 days; provided, however, that a
valid deferral of any due date in the case of an Extension
Period shall not constitute a default in the payment of
interest for this purpose; or
(2) the Company or the Guarantor defaults in the payment of all or
any part of the principal of (or premium, if any, on) the
Securities as and when the same shall become due and payable
whether at Stated Maturity, upon redemption, by declaration or
otherwise; or
(3) the Company or the Guarantor defaults in the performance, or
breaches, of any of its covenants or warranties in this
Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section
7.1 specifically dealt with), and continuance of such default
or breach for a period of 90 days after there has been given,
by registered or certified mail, to the Company and the
Guarantor by the Trustee or to the Company, the Guarantor and
the Trustee by the holders of at least 25% in principal amount
of the outstanding Securities, a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder;
or
(4) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company or the
Guarantor in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the
Company or the Guarantor or for any substantial part of its
property, or ordering the winding-up or liquidation of its
affairs and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or
(5) the Company or the Guarantor shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, shall consent to the entry of
an order for relief in an involuntary case under any such law,
or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or the
Guarantor or of any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due; or
(6) the Trust shall have voluntarily or involuntarily dissolved,
wound-up its business or otherwise terminated its existence
except in connection with (i) the distribution of the
Securities to holders of the Capital Securities and Common
Securities in liquidation of their interests in the Trust,
(ii) the redemption of all of the outstanding Capital
Securities and Common Securities of the Trust or (iii) certain
mergers, consolidations or amalgamations, each as permitted by
the Declaration.
SECTION 7.2 Acceleration of Maturity; Rescission and Annulment. If
an Event of Default occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities shall have the right to declare the principal of and the
interest on all the Debentures and any other amounts payable hereunder to be due
and payable immediately.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter provided in this Article VII, the Holders of a
majority in aggregate principal amount of the Outstanding Securities, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if (1) the Company has paid or deposited with the Trustee a
sum sufficient to pay (A) all overdue interest on all Securities, (B) the
principal of (and premium, if any, on) any Securities which have become due
otherwise than by such declaration of acceleration and interest thereon at the
rate borne by the Securities, (C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by the Securities and
(D) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel; and (2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 7.13. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
SECTION 7.3 Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if:
(a) default is made in the payment of any interest (including
"Additional Interest") on any Security when such interest becomes due and
payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of any Security
at the Maturity thereof, the Company will, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal and interest, and, to the extent
that payment thereof shall be legally enforceable, interest on any overdue
principal and on any overdue interest, at the rate borne by the Securities, and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 7.4 Trustee May File Proofs of Claim. In case of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Company (or
any other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 8.7. No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 7.5 Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 7.6 Application of Money Collected. Subject to Article XIII,
any money collected by the Trustee pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money on account of principal upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 8.7;
SECOND: To the payment of all Senior Indebtedness of the
Company, if and to the extent required by Article XIII;
THIRD: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Securities for principal and interest, respectively; and
FOURTH: To the Company if any balance shall remain.
SECTION 7.7 Limitation on Suits. No Holder of any Security shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 7.8 Unconditional Right of Holders to Receive Principal and
Interest. Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Security on the Stated
Maturity (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 7.9 Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 7.10 Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in the last paragraph of Section 2.14, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 7.11 Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder of any Security to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article VII or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 7.12 Control by Holders. The Holders of a majority in
principal amount of the Outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee,
provided that (subject to the provisions of Section 8.1) the Trustee shall have
the right to decline to follow any such direction if the Trustee shall determine
that the action so directed would be unjustly prejudicial to the Holders not
taking part in such direction or if the Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if the Trustee in good faith by its board of directors or trustees, executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Trustee in personal liability.
SECTION 7.13 Waiver of Past Defaults. Subject to Sections 11.2 and
12.9 hereof, the Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all the
Securities waive any past default hereunder and its consequences, except a
default:
(a) in the payment of the principal of or interest on any Security
(unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Trustee); or
(b) in respect of a covenant or provision hereof which under Article
XI cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected; provided, however, that so long as any of
the Capital Securities remain outstanding such waiver or modification
thereof shall not be effective until the Holders of a majority in
aggregate liquidation amount of Capital Securities shall have consented to
such waiver or modification thereof and, if the consent of the Holder of
each of the Outstanding Securities is required, such waiver shall not be
effective until each Holder of the Capital Securities shall have consented
to such waiver.
Upon any such waiver, such default shall cease to exist, effective
as of the date specified in such waiver (and effective retroactively to the date
of default, if so specified) and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 7.14 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture, or in any suit against the Trustee
for any action taken, suffered or omitted by it as Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs,
including legal fees and expenses, of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section 7.14 nor the Trust Indenture
Act shall be deemed to authorize any court to require such an undertaking or to
make such an assessment in any suit instituted by the Company or the Trustee or
in any suit for the enforcement of the right to receive the principal of and
interest on any Security.
SECTION 7.15 Waiver of Stay or Extension Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 7.16 Capital Security Holders Rights. If an Event of Default
constituting the failure to pay interest, principal or premium, if any, on the
Securities on the date such interest, principal or premium, if any, is otherwise
payable has occurred and is continuing and the Guarantor has failed to make
payments to the extent required hereunder, then a registered holder of Capital
Securities may directly institute a proceeding against the Company or the
Guarantor for enforcement of payment to such holder directly of the principal of
or interest on the Securities having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder on or after the
respective due dates specified in the Securities (a "Direct Action"). The
Company and the Guarantor may not amend this Section 7.16 without the prior
written consent of the holders of all of the Capital Securities. Notwithstanding
any payment made to such holder of Capital Securities by the Company or the
Guarantor in connection with such a Direct Action, the Guarantor shall be
subrogated to the rights of the holder of such Capital Securities with respect
to payments on the Capital Securities to the extent of any payments made by the
Guarantor to such holder in any Direct Action.
ARTICLE VIII
The Trustee
SECTION 8.1 Certain Duties and Responsibilities. The duties and
responsibilities of the Trustee shall be as provided by the Trust Indenture Act
and no implied covenants or obligations shall be read into this Indenture
against the Trustee. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 8.1.
SECTION 8.2 Notice of Defaults. The Trustee shall give the Holders
notice of any default hereunder as and to the extent provided by the Trust
Indenture Act; provided, however, that except in the case of a default in the
payment of the principal of or interest on any Security, the Trustee shall be
protected in withholding such notice if and so long as the Board of Directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Holders of Securities; provided, further, that
in the case of any default of the character specified in Section 7.1(3), no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section 8.2, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default. For purposes of this Section 8.2, the Trustee shall not be deemed to
have knowledge of a default unless the Trustee has actual knowledge of such
default or has received written notice of such default in the manner
contemplated by Section 1.5.
SECTION 8.3 Certain Rights of Trustee. Subject to the provisions of
Section 8.1:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its choice and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers conferred
upon it by this Indenture.
SECTION 8.4 Trustee Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
SECTION 8.5 Trustee May Hold Securities. The Trustee, any Paying
Agent, any Security Registrar, or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 8.8 and 8.13, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Paying Agent, Security
Registrar, or such other agent. Money held by the Trustee in trust hereunder
shall not be invested by the Trustee pending distribution thereof to the holders
of the Securities.
SECTION 8.6 Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest or any money
received by it hereunder except as otherwise agreed in writing with the Company.
SECTION 8.7 Compensation; Reimbursement; and Indemnity. The
Company as issuer of the Debt Securities agrees
(a) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify each of the Trustee and any predecessor Trustee
for, and to hold it harmless against, any and all loss, damage, claim, liability
or expenses, including taxes (other than taxes based on the income of the
Trustee) incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of this trust or the trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
The obligations of the Company under this Section 8.7 to compensate
the Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any, on) or interest
on particular Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 7.1(5) or Section 7.1(6), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
SECTION 8.8 Disqualification; Conflicting Interests. If the Trustee
has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or resign, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture.
SECTION 8.9 Corporate Trustee Required; Eligibility. There shall at
all times be a Trustee hereunder which shall be a person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000 and has its Corporate Trust Office in New
York, New York. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 8.9, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII.
SECTION 8.10 Resignation and Removal; Appointment of Successor.(a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article VIII shall become effective until the
acceptance of appointment by the successor Trustee under Section 8.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
a majority in aggregate principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of removal, the Trustee being removed may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 8.8 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 8.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 7.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
If an instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company or the Guarantor, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company or the Guarantor. If no successor Trustee shall have
been so appointed by the Company or the Guarantor or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(f) The Company or the Guarantor shall give notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee to all Holders in the manner provided in Section 1.6. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 8.11 Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Company and the Guarantor and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; provided that, on request of the Company,
the Guarantor or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company and the Guarantor shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article VIII.
SECTION 8.12 Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article VIII,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 8.13 Preferential Collection of Claims Against Company. If
and when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).
ARTICLE IX
Holders' Lists and Reports by Trustee and Company
SECTION 9.1 Company to Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than January 15 and July 15 in each
year, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders to the extent the Company has knowledge thereof as
of a date not more than 15 days prior to the delivery thereof, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 9.2 Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 9.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 9.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 9.3 Reports by Trustee. (a) The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Trustee shall, within sixty days after each May 15 following
the date of this Indenture deliver to Holders a brief report, dated as of such
May 15, which complies with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each securities exchange
upon which the Securities are listed, with the Commission and with the Company.
The Company will promptly notify the Trustee when the Securities are listed on
any securities exchange.
SECTION 9.4 Reports by the Guarantor. The Guarantor shall file with
the Trustee and the Commission, and transmit to Holders, such information,
documents and other reports, and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act; provided that any such information, documents or reports
required to be filed with the Commission pursuant to Section 13(a) or 15(d) of
the Exchange Act shall be filed with the Trustee within 15 days after the same
is so required to be filed with the Commission. Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
ARTICLE X
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 10.1 Company or Guarantor May Consolidate, etc., on Certain
Terms. Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company or the Guarantor with or into
any other corporation or corporations (whether or not affiliated with the
Company or the Guarantor, as the case may be), or successive consolidations or
mergers in which the Company or the Guarantor, as the case may be, or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or other disposition of the property of the Company or the
Guarantor, as the case may be, or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not
affiliated with the Company and the Guarantor, as the case may be, or its
successor or successors) authorized to acquire and operate the same; provided,
however, the Company and the Guarantor hereby covenant and agree that, upon any
such consolidation, merger, sale, conveyance, transfer or other disposition, the
due and punctual payment, in the case of the Company, of the principal of
(premium, if any) and interest on all of the Securities, according to their
tenor or, in the case of the Guarantor, the performance of all obligations under
the Guarantees, and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be kept or performed by the
Company or the Guarantor, as the case may be, shall be expressly assumed, by
supplemental indenture (which shall conform to the provisions of the Trust
Indenture Act, as then in effect) satisfactory in form to the Trustee executed
and delivered to the Trustee by the entity formed by such consolidation, or into
which the Company or the Guarantor, as the case may be, shall have been merged,
or by the entity which shall have acquired such property.
SECTION 10.2 Successor Corporation to be Substituted. In case of any
such consolidation, merger, sale, conveyance, transfer or other disposition and
upon the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of, in the case of the Company, the due and punctual payment of the principal of
and premium, if any, and interest on all of the Securities or, in the case of
the Guarantor, the performance of all obligations under the Guarantees, and the
due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Company or the
Guarantor, as the case may be, such successor corporation shall succeed to and
be substituted for the Company or the Guarantor, as the case may be, with the
same effect as if it had been named herein as the Company or the Guarantor, as
the case may be, and thereupon the predecessor corporation shall be relieved of
any further liability or obligation hereunder or upon the Securities. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of Countrywide Home Loans, Inc. or Countrywide
Credit Industries, Inc., any or all of the Securities or Guarantees,
respectively, issuable hereunder which theretofore shall not have been signed by
the Company or the Guarantor and delivered to the Trustee; and, upon the order
of such successor corporation instead of the Company or the Guarantor, as the
case may be, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and deliver any Securities
which previously shall have been signed and delivered by the officers of the
Company or the Guarantor, as the case may be, to the Trustee for authentication,
and any Securities which such successor corporation thereafter shall cause to be
signed and delivered to the Trustee for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Securities had been issued at
the date of the execution hereof.
SECTION 10.3 Opinion of Counsel to be Given Trustee. The Trustee,
subject to the provisions of Sections 8.1 and 8.2, may receive an Opinion of
Counsel as conclusive evidence that any consolidation, merger, sale, conveyance,
transfer or other disposition, and any assumption, permitted or required by the
terms of this Article X complies with the provisions of this Article X.
ARTICLE XI
Supplemental Indentures
SECTION 11.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company and the Guarantor, when
authorized by appropriate Board Resolutions, and the Trustee, at any time and
from time to time, may enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company or
the Guarantor and the assumption by any such successor of the covenants of the
Company or the Guarantor herein and in the Securities, as and to the extent
permitted under this Indenture; or
(b) to add to the covenants of the Company or the Guarantor for the
benefit of the Holders, or to surrender any right or power herein conferred upon
the Company or the Guarantor; or
(c) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture,
provided that such action pursuant to this clause (c) shall not adversely affect
the interests of the Holders of the Securities or, so long as any of the Capital
Securities shall remain outstanding, the holders of the Capital Securities; or
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act.
SECTION 11.2 Supplemental Indentures with Consent of Holders. With
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities, by Act of said Holders delivered to the Company, the
Guarantor and the Trustee, the Company and the Guarantor, when authorized by
appropriate Board Resolutions, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(a) change the Stated Maturity of, the principal of, or any
installment of interest on, any Security, or reduce the principal amount thereof
or the rate of interest thereon, or change the place of payment where, or the
coin or currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or modify the provisions of this Indenture with respect to
the subordination of the Securities in a manner adverse to the Holders,
(b) reduce the percentage in principal amount of the Outstanding
Securities, 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 this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(c) modify any of the provisions of this Section, Section 7.13 or
Section 12.9, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby;
provided, that, so long as any of the Capital Securities remain outstanding, no
such amendment shall be made that adversely affects the holders of the Capital
Securities, and no termination of this Indenture shall occur, and no waiver of
any Event of Default or compliance with any covenant under this Indenture shall
be effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation preference of the outstanding Capital Securities
unless and until the principal of and any premium on the Securities and all
accrued and unpaid interest thereon have been paid in full.
It shall not be necessary for any Act of Holders under this Section
11.2 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
SECTION 11.3 Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article XI or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
8.1) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 11.4 Effect of Supplemental Indentures. Upon the execution
of any supplemental indenture under this Article XI, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 11.5 Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article XI shall conform to the requirements
of the Trust Indenture Act.
SECTION 11.6 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company and the Guarantor shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company and the Guarantor, to any such supplemental indenture
may be prepared and executed by the Company and the Guarantor and authenticated
and delivered by the Trustee in exchange for Outstanding Securities.
ARTICLE XII
Covenants; Representations and Warranties
SECTION 12.1 Payment of Principal and Interest. The Company will
duly and punctually pay the principal of and interest on the Securities in
accordance with the terms of the Securities and this Indenture and comply with
all other terms, agreements and conditions contained herein.
SECTION 12.2 Maintenance of Office or Agency. The Company will
maintain in The City of New York an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange, where Securities may be surrendered for
conversion and where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in the United States) where the Securities may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in the United States for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
SECTION 12.3 Money for Security Payments to Be Held in Trust. If the
Company shall at any time act as its own Paying Agent, it will, on or at the
option of the Company on or before each due date of the principal of or interest
on any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of its action or
failure so to act. In such case the Company shall not invest the amount so
segregated and held in trust pending the distribution thereof.
Whenever the Company shall have one or more Paying Agents, it will,
on or prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act; provided, however, that any such deposit on a due date shall
be initiated prior to 12:00 noon (New York time) in same-day funds.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 12.3,
that such Paying Agent will (i) comply with the provisions of the Trust
Indenture Act applicable to it as a Paying Agent and (ii) during the continuance
of any default by the Company (or any other obligor upon the Securities) in the
making of any payment in respect of the Securities, upon the written request of
the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest on
any Security and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease.
SECTION 12.4 Statement by Officers as to Default. The Company will
deliver to the Trustee, upon 120 days after the end of each fiscal year of the
Company ending after the date hereof, an Officers' Certificate, stating whether
or not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the material terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
they may have knowledge.
SECTION 12.5 Existence. Subject to Article X, the Company and the
Guarantor will do or cause to be done all things necessary to preserve and keep
in full force and effect its existence, rights (charter and statutory) and
franchises; provided, however, that the Company and the Guarantor shall not be
required to preserve any such right or franchise if its Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
its business and that the loss hereof is not disadvantageous in any material
respect to the Holders and, while any Capital Securities are outstanding, the
holders of the Capital Securities.
SECTION 12.6 INTENTIONALLY DELETED.
SECTION 12.7 INTENTIONALLY DELETED.
SECTION 12.8 Additional Covenants. (a) The Guarantor also covenants
that so long as the Capital Securities and Common Securities remain outstanding
(i) to maintain 100% direct or indirect ownership of the Common Securities of
the Trust; provided, however, that any permitted successor of the Guarantor
hereunder may succeed to the Guarantor's ownership of such Common Securities,
(ii) to timely perform its duties as sponsor of the Trust, (iii) to use its
reasonable efforts to cause the Trust (A) to remain a business trust classified
as a grantor trust except in connection with the distribution of the Securities
to the Holders of the Capital Securities in liquidation of the Trust, the
redemption of all Capital Securities and Common Securities of the Trust or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (B) to continue not to be treated as an association taxable as
a corporation for United States Federal income tax purposes and (iv) to use its
reasonable efforts to cause each Holder of Capital Securities and Common
Securities to be treated as owning an undivided beneficial interest in the
Securities.
(b) Because the Trust is being formed solely to facilitate an
investment in the Securities, the Company, as borrower, hereby covenants to pay
all debts and obligations (other than with respect to the Capital Securities and
Common Securities) and all costs and expenses of the Trust (including, but not
limited to, all costs and expenses relating to the organization of the Trust,
the fees and expenses of the Trustees and all costs and expenses relating to the
operation of the Trust) and to pay any and all taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
on the Trust by the United States, or any other taxing authority, so that the
net amounts received and retained by the Trust and the Property Trustee after
paying such expenses will be equal to the amounts the Trust and the Property
Trustee would have received had no such costs or expenses been incurred by or
imposed on the Trust. The foregoing obligations of the Company are for the
benefit of, and shall be enforceable by, any person to whom any such debts,
obligations, costs, expenses and taxes are owed (each, a "Creditor") whether or
not such Creditor has received notice thereof. Any such Creditor may enforce
such obligations of the Company directly against the Company, and the Company
irrevocably waives any right or remedy to require that any such Creditor take
any action against the Trust or any other person before proceeding against the
Company. The Company shall execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
SECTION 12.9 Waiver of Certain Covenants. Except as otherwise
specified as contemplated by Section 3.1 for Securities, the Company and the
Guarantor may, with respect to the Securities, omit in any particular instance
to comply with any term, provision or condition set forth in any covenant
provided pursuant to Section 11.1(b) for the benefit of the Holders if before
the time for such compliance the Holders of at least a majority in aggregate
principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in resect of any such term, provision or condition shall
remain in full force and effect.
SECTION 12.10 Restrictions on Payments and Distributions. The
Company and the Guarantor will not declare or pay any dividends on, or make
a distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of their capital stock or rights to
acquire such capital stock (other than (1) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in connection
with the satisfaction by the Company or the Guarantor, respectively, of its
obligations under any employee benefit plans, (2) as a result of a
reclassification of the Company's or the Guarantor's capital stock or rights to
acquire such capital stock or the exchange or conversion of one class or series
of the Company's or Guarantor's capital stock or rights to acquire such capital
stock for another class or series of the Company's or the Guarantor's capital
stock or rights to acquire such capital stock, (3) the purchase of fractional
interests in the Company's or the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged or (4) dividends and distributions made on the Company's
or the Guarantor's capital stock or rights to acquire such capital stock with
the Company's or the Guarantor's capital stock or rights to acquire such capital
stock) or make any guarantee payments with respect to any of the foregoing and
0.2. make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including any guarantees, other than
the Guarantees) issued by the Company or the Guarantor that rank pari passu with
or junior to the Debt Securities or the Debt Guarantee, if at such time (x)
there shall have occurred any event of which the Company or the Guarantor has
actual knowledge that (I) with the giving of notice or the lapse of time, or
both, would constitute an Event of Default with respect to Debentures and (II)
in respect of which the Company shall not have taken reasonable steps to cure,
(y) the Guarantor shall be in default with respect to its payment of any
obligations under the Debt Guarantee or (z) the Company shall have given notice
of its election of an Extension Period as provided in Section 5.2 and shall not
have rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing.
SECTION 12.11 Listing or Quotation of Debentures. If the Securities
are to be distributed to the holders of Capital Securities and Common Securities
upon a Dissolution Event, the Company shall use its reasonable efforts to
arrange to list, or seek approval for quotation of, such Debentures on any
securities exchange or other organization on which the Capital Securities are
then listed or quoted, if any.
ARTICLE XIII
Subordination of Securities
SECTION 13.1 Securities Subordinate to Senior Indebtedness. The
Company covenants and agrees, and each Holder of a Security, by his acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article XIII (subject to Article VI), the payment
of the principal of and interest on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full in cash of all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred. The payment by the Guarantor of any
obligation due under the Debt Guarantee shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of payment to the
prior payment in full of all Senior Indebtedness of the Guarantor, whether
outstanding at the date of this Indenture or thereafter incurred.
This Article XIII shall constitute a continuing offer to all persons
who become holders of, or continue to hold, Senior Indebtedness, and such
provisions are made for the benefit of the holders of Senior Indebtedness and
such holders are made obligees hereunder and any one or more of them may enforce
such provisions. Holders of Senior Indebtedness need not prove reliance on the
subordination provisions hereof.
SECTION 13.2 Default on Senior Indebtedness. In the event and during
the continuation of any default by the Company or the Guarantor in the payment
of principal, premium, interest or any other payment due on any Senior
Indebtedness (and any applicable grace period with respect to such default has
ended and such default has not been cured or waived) or in the event that the
maturity of any Senior Indebtedness of the Company or the Guarantor, as the case
may be, has been accelerated because of a default, then, in either case, no
payment shall be made by the Company with respect to the principal (including
redemption payments) of, premium, if any, or interest on, the Securities,
including payment with respect to any obligation due under the Debt Guarantee.
In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee or any Holder when such payment is prohibited by the
preceding paragraph of this Section 13.2, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee within 90 days of such payment
of the amounts then due and owing on the Senior Indebtedness and only the
amounts specified in such notice to the Trustee shall be paid to the holders of
Senior Indebtedness.
SECTION 13.3 Liquidation; Dissolution; Bankruptcy. Upon any payment
by the Company or the Guarantor, or distribution of assets of the Company or the
Guarantor of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company or the Guarantor, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all principal of, and premium, if
any, and interest due or to become due upon all Senior Indebtedness of the
Company or the Guarantor, as the case may be (including interest after the
commencement of any bankruptcy, insolvency, receivership or other proceedings at
the rate specified in the applicable Senior Indebtedness whether or not such
interest is an allowable claim in any such proceeding) shall first be paid in
full, or payment thereof provided for in money in accordance with its terms,
before any payment is made on account of the principal or interest on the
Securities, and upon any such dissolution or winding-up or liquidation or
reorganization any payment by the Company or the Guarantor, or distribution of
substantially all of the assets of the Company or the Guarantor of any kind or
character, whether in cash, property or securities, to which the Holders of the
Securities or the Trustee would be entitled, except for the provisions of this
Article XIII, shall be paid by the Company or the Guarantor, as the case may be,
or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, or by the Holders of the Securities
or by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness of the Company or the Guarantor, as the case
may be, (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, as calculated by the Company or the
Guarantor, as the case may be) or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full of the Company or the Guarantor, as the case may be, (including interest
after the commencement of any bankruptcy, insolvency, receivership or other
proceedings at the rate specified in the applicable Senior Indebtedness whether
or not such interest is an allowable claim in any such proceeding) or to provide
for such payment in money in accordance with its terms, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the Holders of
Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or the Guarantor of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee or the Holders of the Securities before all Senior
Indebtedness of the Company or the Guarantor is paid in full, of the Company or
the Guarantor, as the case may be (including interest after the commencement of
any bankruptcy, insolvency, receivership or other proceedings at the rate
specified in the applicable Senior Indebtedness whether or not such interest is
an allowable claim in any such proceeding) or provision is made for such payment
in money in accordance with its terms, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, as calculated by the Company or the Guarantor, for
application to the payment of all Senior Indebtedness of the Company or the
Guarantor, as the case may be, remaining unpaid to the extent necessary to pay
all Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness.
Any holder of Senior Indebtedness may file any proof of claim or
similar instrument on behalf of the Trustee and the Holders if such instrument
has not been filed by the date which is 30 days prior to the date specified for
filing thereof.
For purposes of this Article XIII, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company or the
Guarantor as reorganized or readjusted, or securities of the Company or the
Guarantor or any other corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated at least to the extent
provided in this Article XIII with respect to the Securities to the payment of
all Senior Indebtedness of the Company or the Guarantor, as the case may be,
that may at the time be outstanding, provided, however, that (i) the Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of the Senior
Indebtedness are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company or the
Guarantor with, or the merger of the Company or the Guarantor into, another
corporation or the liquidation or dissolution of the Company or the Guarantor
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article X hereof shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 13.3
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article X hereof.
Nothing in Section 13.2 or in this Section 13.3 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 8.7.
SECTION 13.4 Subrogation. Subject to the payment in full of all
Senior Indebtedness of the Company or the Guarantor, the rights of the Holders
of the Securities shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company or the Guarantor, as the case may be, applicable to
the Senior Indebtedness until the principal of (and premium, if any) and
interest on the Securities shall paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article XIII, and no payment over pursuant to the provisions of this Article
XIII, to or for the benefit of the holders of Senior Indebtedness by Holders of
the Securities or the Trustee, shall, as between (i) the Company, its creditors
other than holders of Senior Indebtedness of the Company, and the Holders of the
Securities, or (ii) the Guarantor, its creditors other than the holders of
Senior Indebtedness of the Guarantor, and the Holders of the Securities, be
deemed to be a payment by the Company or the Guarantor, as the case may be, to
or on account of the Senior Indebtedness. It is understood that the provisions
of this Article XIII are and are intended solely for the purposes of defining
the relative rights of the Holders of the Securities, on the one hand, and the
holders of the Senior Indebtedness on the other hand.
Nothing contained in this Article XIII or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between (i)
the Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the Holders of the Securities, or (ii) the Guarantor, its creditors
other than holders of Senior Indebtedness of the Guarantor, and the Holders of
the Securities, the obligation of the Company or the Guarantor, as the case may
be, which is absolute and unconditional, to pay to the Holders of the Securities
the principal of (and premium, if any) and interest on the Securities as and
when the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders of the Securities
and creditors of the Company or the Guarantor, as the case may be, other than
the holders of the Senior Indebtedness or the Guarantor, as the case may be, nor
shall anything herein or therein prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
XIII of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company or the Guarantor, as the case may be, received upon
the exercise of any such remedy.
Upon any payment or distribution of assets of the Company or the
Guarantor referred to in this Article XIII, the Trustee, subject to the
provisions of Section 8.1, and the Holders of the Securities, shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, Trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or distribution,
delivered to the trustee or to the Holders of the Securities, for the purposes
of ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company or the
Guarantor, as the case may be, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XIII.
SECTION 13.5 Trustee to Effectuate Subordination. Each Holder of a
Security by acceptance thereof authorizes and directs the Trustee on such
Holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article XIII and appoints the
Trustee such Holder's attorney-in-fact for any and all such purposes.
SECTION 13.6 Notice by the Company and the Guarantor. The Company or
the Guarantor shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Company or the Guarantor that would prohibit
the making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XIII. Notwithstanding the
provisions of this Article XIII or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article XIII,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office of the Trustee from the
Company or the Guarantor or a holder or holders of Senior Indebtedness or from
any trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 8.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 13.6 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (or premium, if any) or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within two Business Days prior
to such date.
The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness of the Company or the Guarantor, as the case may be, or a
trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article XIII, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article XIII, and
if such evidence is not furnished the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
SECTION 13.7 Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article XIII in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article XIII shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.7.
With respect to the holders of Senior Indebtedness of the Company or
the Guarantor, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XIII,
and no implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and, subject to the provisions of Section 8.1, the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall pay over or
deliver to holders of Securities, the Company, the Guarantor or any other Person
money or assets to which any holder of Senior Indebtedness shall be entitled by
virtue of this Article XIII or otherwise.
SECTION 13.8 Subordination May Not be Impaired. No right of any
present or future holder of any Senior Indebtedness of the Company or the
Guarantor to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or the Guarantor, as the case may be, or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by the Company or the
Guarantor, as the case may be, with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company or the Guarantor
may, at any time and from time to time, without the consent of or notice to the
Trustee or the Holders of the Securities, without incurring responsibility to
the Holders of the Securities and without impairing or releasing the
subordination provided in this Article XIII or the obligations hereunder of the
Holders of the Securities to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company or the
Guarantor, as the case may be, and any other Person.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
COUNTRYWIDE HOME LOANS, INC.
By: /s/Stanford L. Kurland
-------------------------------------------
Name: Stanford L. Kurland
Title: Senior Managing Director
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: /s/Stanford L. Kurland
-------------------------------------------
Name: Stanford L. Kurland
Title: Senior Managing Director
THE BANK OF NEW YORK, as Trustee
By: /s/Vivian Georges
-------------------------------------------
Name: Vivian Georges
Title: Assistant Vice President
Exhibit A
This Security may not be acquired by any Person who is, or who in
acquiring this Security is using the assets of, an ERISA Plan unless this
Security is acquired pursuant to and in accordance with an applicable exemption,
including but not limited to: (i) Prohibited Transaction Class Exemption 90-1
("PTE 90-1"), regarding investments by insurance company pooled separate
accounts, (ii) Prohibited Transaction Class Exemption 91-38 ("PTE 91-38")
regarding investments by bank collective investment funds, (iii) Prohibited
Transaction Class Exemption 84-14 ("PTE 84-14"), regarding transactions effected
by qualified professional asset managers, (iv) Prohibited Transaction Class
Exemption 96-23 ("PTE 96-23"), regarding transactions effected by in-house asset
managers, or (v) Prohibited Transaction Class Exemption 95-60 ("PTE 95-60"),
regarding investments by insurance company general accounts. The acquisition of
this Security by any Person who is, or who in acquiring this Security is using
the assets of, an ERISA Plan shall be deemed to constitute a representation by
such Person to the Trust that (i) such Person is eligible for exemptive relief
available pursuant to an applicable exemption, including but not limited to, PTE
90-1, PTE 91-38, PTE 84-14, PTE 96-23 or PTE 95-60 with respect to the
acquisition and holding of this Security, and (ii) none of Countrywide Home
Loans, Inc., Countrywide Credit Industries, Inc., Countrywide Financial
Services, Inc. or Countrywide Securities Corporation is a "fiduciary", within
the meaning of Section 3(21) of ERISA and the regulations thereunder, with
respect to such Person's interest in this Security.
COUNTRYWIDE HOME LOANS, INC.
8.05% Junior Subordinated Debentures due
June 15, 2027, Series A
$
--------------------
Certificate No.
--
COUNTRYWIDE HOME LOANS, INC., a corporation duly organized and
existing under the laws of the State of New York (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to , or
registered assigns, the principal sum of ($ ) on
June 15, 2027 (the "Stated Maturity"; unless a Maturity Advancement (as
hereinafter defined) occurs as a result of a Tax Event, in which case the Stated
Maturity shall be such advanced maturity date), and to pay interest on said
principal from , 199 or from the most recent interest payment date to
which interest on this Security has been paid or duly provided for,
semi-annually (subject to deferral as set forth herein) in arrears on June 15
and December 15 of each year (each, an "Interest Payment Date"), commencing
December 15, 1997, at a rate of 8.05% per annum until the principal hereof shall
have been paid or made available for payment, and on any overdue principal and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum compounded semi-annually. In the event that a Registration
Default (as defined in the Registration Rights Agreement) occurs, additional
interest ("Additional Interest") shall become payable in respect of this
Security with respect to the first 90-day period immediately following the
occurrence of such Registration Default, in an amount equal to $.05 per week per
$1,000 liquidation amount of this Security for each week or portion thereof that
the Registration Default continues, as provided in the Registration Rights
Agreement. Additional Interest will increase by an additional $.05 per week per
$1,000 liquidation amount of this Security with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of Additional Interest of $.25 per week per $1,000 liquidation amount of
this Security. The amount of interest payable for any semi-annual interest
period will be computed for any full 180-day semi-annual interest payment
period, on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any period shorter than a full 180-day semi-annual interest
payment period for which interest payments are computed, will be computed on the
basis of actual number of days elapsed in such 180-day period (assuming each
full month elapsed in such period consists of 30 days). In the event that any
date on which interest is payable on this Security is not a Business Day (as
hereinafter defined), then a payment of the interest payable on such date will
be made on the next succeeding day which is a Business Day (and without any
additional interest or other payment in respect of any such delay), except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on the date such payment was originally payable;
provided that no interest shall accrue for the period from and after the date
such payment was originally payable. A "Business Day" shall mean any day other
than a Saturday or a Sunday, or a day on which banking institutions in The City
of New York or Los Angeles, California are authorized or required by law or
executive order to remain closed or a day on which the Corporate Trust Office of
the Trustee, or the principal corporate trust office of the Property Trustee
under the Declaration, is closed for business. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the Person in whose name the
Securities (or one or more Predecessor Securities, as defined in the Indenture)
is registered at the close of business on the Regular Record Date for such
interest installment, which shall be determined as provided in the Indenture.
Any such interest installment not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name the Securities or one or more
Predecessor Securities is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right at any time during the term of this Security, from
time to time, to defer payment of interest on such Security for a period not to
exceed 10 semi-annual periods, (an "Extension Period"), provided, that no
Extension Period may extend past the Stated Maturity of this Security. There may
be multiple Extension Periods of varying lengths during the term of this
Security. At the end of any Extension Period, if any, the Company shall pay all
interest then accrued and unpaid, together with interest thereon, compounded
semi-annually at the rate specified on this Security to the extent permitted by
applicable law. During any such Extension Period, the Company and the Guarantor
shall not, declare or pay any dividends on, or make a distribution with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to, any of its capital stock or rights to acquire such capital stock (other than
(i) purchases or acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by the Company or
the Guarantor, respectively, of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of the Company's or the
Guarantor's capital stock or rights to acquire such capital stock or the
exchange or conversion of one class or series of the Company's or the
Guarantor's capital stock or rights to acquire such capital stock for another
class or series of the Company's or the Guarantor's capital stock or rights to
acquire such capital stock, (iii) the purchase of fractional interests in shares
of the Company's or the Guarantor's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged or (iv) dividends and distributions made on the Company's or the
Guarantor's capital stock or rights to acquire such capital stock with the
Company's or the Guarantor's capital stock or rights to acquire such capital
stock) or make any guarantee payments with respect to any of the foregoing and
(b) the Company and the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including any guarantees, other than the Guarantees) issued by the
Company or the Guarantor that rank pari passu with or junior to this Security
and the Debt Guarantee. Prior to the termination of any such Extension Period,
the Company may further extend the Extension Period, provided that no Extension
Period may exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of this Security. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to the above requirements. No
interest shall be due and payable during an Extension Period, except at the end
thereof. The Company shall give the Guarantor, the Property Trustee, the Regular
Trustees and the Trustee written notice of its election of such Extension Period
not less than one Business Day prior to the record date for the applicable
Interest Payment Date.
Payment of the principal of and interest on this Security will be
made at the office or agency of the Paying Agent maintained for that purpose in
the United States, in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company, payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security Register.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, Countrywide Home Loans, Inc. has caused this
instrument to be duly executed.
COUNTRYWIDE HOME LOANS, INC.
By:
----------------------------------------------
Name:
Title:
Attest:
- ----------------------
Name:
Title: Secretary
[Form of Reverse of Security]
This Security is one of a duly authorized issue of Securities of
Countrywide Home Loans, Inc. (the "Company"), designated as its 8.05% Junior
Subordinated Debentures due June 15, 2027, Series A (herein called the
"Securities"), limited in aggregate principal amount to $206,200,000 issued
under an Indenture, dated as of June 4, 1997 (herein called the "Indenture"),
among the Company, Countrywide Credit Industries, Inc. (the "Guarantor") and The
Bank of New York, a New York banking corporation, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Trustee, the Company, the Guarantor and the Holders
of the Securities, and of the terms upon which the Securities are, and are to
be, authenticated and delivered.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Security is not redeemable at the option of the Company;
provided that this Security shall be redeemable at the option of the Company at
any time in whole (but not in part), within 90 days of the occurrence of a
Special Event (as defined in the Indenture), at a Redemption Price equal to 100%
of the aggregate principal amount of the Securities to be redeemed, plus accrued
and unpaid interest, if any, to the Redemption Date. In addition, if a Tax Event
shall occur and be continuing and in the opinion of counsel, rendered by a law
firm having a recognized national tax practice, there would in all cases, after
effecting the dissolution of the Trust and the distribution of the Securities to
the Holders of the Capital Securities and Common Securities in exchange therefor
upon liquidation of the Trust, be more than an insubstantial risk that the Tax
Event would continue to exist, then the Company shall have the right to shorten
the Stated Maturity of the Securities to a date not earlier than December 15,
2011 (a "Maturity Advancement"), such that, in the opinion of counsel to the
Trust rendered by a law firm having a recognized national tax practice, after
advancing the Stated Maturity of the Debt Securities, interest paid on the
Securities will be deductible by the Company for United States federal income
tax purposes.
For so long as the Trust is the Holder of all the Securities
Outstanding, the proceeds of any redemption described herein shall be used by
the Trust to redeem Common Securities and Capital Securities in accordance with
their terms.
If an Event of Default with respect to the Securities shall occur
and be continuing, the principal of the Securities may be declared due and
payable in the manner, with the effect and subject to the conditions provided in
the Indenture.
The Indenture contains provisions for satisfaction and discharge or
legal defeasance of the entire indebtedness of this Security and for the
defeasance of certain covenants under the Indenture at any time upon compliance
by the Company with certain conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company, the
Guarantor and the Trustee, with the consent of Holders of not less than a
majority in principal amount of the Outstanding Securities, to modify the
Indenture in a manner affecting the rights of the Holders of the Securities;
provided that no such modification may, without the consent of the Holder of
each Outstanding Security affected thereby, (i) except to the extent permitted
and subject to the conditions set forth in the Indenture with respect to
extension of the installments of interest on the Securities or shortening of the
Stated Maturity of the Securities, change the Stated Maturity of, the principal
of, or any installment of interest on, this Security or reduce the principal
amount thereof, or the rate of payment of interest thereon, or change the place
of payment where, or the coin or currency in which, this Security or interest
thereon is payable, or impair the right to institute suit for the enforcement of
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or modify the provisions of the
Indenture with respect to the subordination of the Securities in a manner
adverse to the Holders, (ii) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for 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, or
(iii) modify any of the provisions of Section 7.13, Section 11.2 or Section 12.9
of the Indenture, except to increase any 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 Security affected thereby,
provided that, so long as any of the Capital Securities remain outstanding, no
such amendment shall be made that adversely affects the holders of the Capital
Securities, and no termination of the Indenture shall occur, and no waiver of an
Event of Default or compliance with any covenant under the Indenture shall be
effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation preference of the outstanding Capital Securities
unless and until the principal of and any premium on the Securities and all
accrued and unpaid interest thereon have been paid in full.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Securities are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of different
authorized denominations, as requested by the Holder surrendering the same.
THE SECURITIES AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------------------------
Authorized Signatory
Dated:
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act covering resales of this Security (which effectiveness shall not have been
suspended or terminated at the date of the transfer) and (ii) two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date"), the
undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer:
[Check One]
-------------
(1) to the Company or a subsidiary thereof; or
---
(2) pursuant to and in compliance with Rule 144A under the Securities
--- Act of 1933, as amended; or
(3) outside the United States to a "foreign person" in compliance
--- with Rule 904 of Regulation S under the Securities Act of 1933,
as amended; or
(4) pursuant to the exemption from registration provided by Rule 144
--- under the Securities Act of 1933, as amended; or
(5) pursuant to an effective registration statement under the
--- Securities Act of 1933, as amended; or
(6) pursuant to another available exemption from the registration
--- requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3), (4) or
(6) is checked, the Company or the Trustee may require, prior to registering any
such transfer of the Securities, in its sole discretion, such written legal
opinions, certifications (including an investment letter in the case of box (3))
and other information as the Trustee or the Company has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, as amended.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.8 of the Indenture shall have
been satisfied.
Dated: Signed:
------------------ -----------------------------------
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:
------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
----------------- -------------------------------------
NOTICE: To be executed by an
executive officer
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing the
Security outside the United States as a "foreign person" in compliance with Rule
904 of Regulation S under the Securities Act and is aware that the sale to it is
being made in reliance on Regulation S.
Dated:
----------------- -------------------------------------
NOTICE: To be executed by an
executive officer
FOR VALUE RECEIVED, the Guarantor hereby unconditionally guarantees
to the holder of this Security upon which this Guarantee is endorsed the due and
punctual payment of the principal, premium, if any, and interest on said
Security, when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise, according to the terms thereof and of
the Indenture referred to therein.
The Guarantor agrees to determine, at least one Business Day prior
to the date upon which a payment of principal of and premium, if any, or
interest on said Security is due and payable, whether the Company has available
the funds to make such payment as the same shall become due and payable. In case
of the failure of the Company punctually to pay any such principal, premium, if
any, or interest, the Guarantor hereby agrees to cause any such payment to be
made punctually when and as the same shall become due and payable, whether at
maturity, upon redemption, or otherwise, and as if such payment were made by the
Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Security or said Indenture, the absence of
any action to enforce the same, any waiver or consent by the Holder of said
Security with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company,
protest or notice with respect to said Security or indebtedness evidenced
thereby, and all demands whatsoever and covenants that this Guarantee will not
be discharged except by complete performance of the obligations contained in
said Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of
said Security against the Company in respect of any amounts paid by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
the Guarantor shall not, without the consent of the holders of all of the
Securities then outstanding, be entitled to enforce or to receive any payments
arising out of or based upon such right of subrogation until the principal of
and premium, if any, and interest on all Securities shall have been paid in full
or payment thereof shall have been provided for in accordance with said
Indenture.
Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Company on the Securities
to the holders of the Securities it is determined by a final decision of a court
of competent jurisdiction that such payment shall be avoided by a trustee in
bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C.
Section 547 and such payment is paid by such holder of such trustee in
bankruptcy, then and to the extent of such repayment, the obligations of the
Guarantor hereunder shall remain in full force and effect.
This Guarantee shall not be valid or become obligatory for any
purpose with respect to a Security until the certificate of authentication on
such Security shall have been signed by the Trustee (or the Authentication
Agent).
This Guarantee shall be governed by the laws of the State of New
York without regard to conflict of laws principles thereof.
IN WITNESS WHEREOF, Countrywide Credit Industries, Inc. has
caused this Guarantee to be signed in its corporate name by the facsimile
signature of two of its officers thereunto duly authorized.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:
----------------------------------------------
Name:
Title:
By:
----------------------------------------------
Name:
Title:
Exhibit B
COUNTRYWIDE HOME LOANS, INC.
8.05% Junior Subordinated Debentures due
June 15, 2027, Series B
$
--------------------
Certificate No.
---
This Security may not be acquired by any Person who is, or who in
acquiring such this Security is using the assets of, an ERISA Plan unless this
Security is acquired pursuant to and in accordance with an applicable exemption,
including but not limited to: (i) Prohibited Transaction Class Exemption 90-1
("PTE 90-1"), regarding investments by insurance company pooled separate
accounts, (ii) Prohibited Transaction Class Exemption 91-38 ("PTE 91-38")
regarding investments by bank collective investment funds, (iii) Prohibited
Transaction Class Exemption 84-14 ("PTE 84-14"), regarding transactions effected
by qualified professional asset managers, (iv) Prohibited Transaction Class
Exemption 96-23 ("PTE 96-23"), regarding transactions effected by in-house asset
managers, or (v) Prohibited Transaction Class Exemption 95-60 ("PTE 95-60"),
regarding investments by insurance company general accounts. The acquisition of
this Security by any Person who is, or who in acquiring this Security is using
the assets of, an ERISA Plan shall be deemed to constitute a representation by
such Person to the Trust that (i) such Person is eligible for exemptive relief
available pursuant to an applicable exemption, including but not limited to, PTE
90-1, PTE 91-38, PTE 84-14, PTE 96-23 or PTE 95-60 with respect to the
acquisition and holding of this Security, and (ii) none of Countrywide Home
Loans, Inc., Countrywide Credit Industries, Inc., Countrywide Financial
Services, Inc. or Countrywide Securities Corporation is a "fiduciary", within
the meaning of Section 3(21) of ERISA and the regulations thereunder, with
respect to such Person's interest in this Security.
COUNTRYWIDE HOME LOANS, INC., a corporation duly organized and
existing under the laws of the State of New York (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to , or
registered assigns, the principal sum of ($ ) on
June 15, 2027 (the "Stated Maturity"; unless a Maturity Advancement (as
hereinafter defined) occurs as a result of a Tax Event, in which case the Stated
Maturity shall be such advanced maturity date), and to pay interest on said
principal from , 199 or from the most recent interest payment date to
which interest on this Security (or the 8.05% Junior Subordinated Debentures due
June 15, 1987, Series A, in exchange for which this Security was issued) has
been paid or duly provided for, semi-annually (subject to deferral as set forth
herein) in arrears on June 15 and December 15 of each year (each, an "Interest
Payment Date"), commencing December 15, 1997, at a rate of 8.05% per annum until
the principal hereof shall have been paid or made available for payment, and on
any overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually. In the event that
a Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest ("Additional Interest") shall become payable in respect of
this Security with respect to the first 90-day period immediately following the
occurrence of such Registration Default, in an amount equal to $.05 per week per
$1,000 liquidation amount of this Security for each week or portion thereof that
the Registration Default continues, as provided in the Registration Rights
Agreement. Additional Interest will increase by an additional $.05 per week per
$1,000 liquidation amount of this Security with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of Additional Interest of $.25 per week per $1,000 liquidation amount of
this Security. The amount of interest payable for any semi-annual period will be
computed for any full 180-day semi-annual interest payment period, on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full 180-day semi-annual interest payment period for
which interest payments are computed, will be computed on the basis of actual
number of days elapsed in such 180-day period (assuming each full month elapsed
in such period consists of 30 days). In the event that any date on which
interest is payable on this Security is not a Business Day (as hereinafter
defined), then a payment of the interest payable on such date will be made on
the next succeeding day which is a Business Day (and without any additional
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable; provided that
no interest shall accrue for the period from and after the date such payment was
originally payable. A "Business Day" shall mean any day other than a Saturday or
a Sunday, or a day on which banking institutions in The City of New York or Los
Angeles, California are authorized or required by law or executive order to
remain closed or a day on which the Corporate Trust Office of the Trustee, or
the principal corporate trust office of the Property Trustee under the
Declaration, is closed for business. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name the Securities
(or one or more Predecessor Securities, as defined in the Indenture) is
registered at the close of business on the Regular Record Date for such interest
installment, which shall be determined as provided in the Indenture. Any such
interest installment not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name the Securities or one or more Predecessor
Securities is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right at any time during the term of this Security, from
time to time, to defer payment of interest on such Security for a period not to
exceed 10 semi-annual periods, (an "Extension Period"), provided, that no
Extension Period may extend past the Stated Maturity of this Security. There may
be multiple Extension Periods of varying lengths during the term of this
Security. At the end of any Extension Period, if any, the Company shall pay all
interest then accrued and unpaid, together with interest thereon, compounded
semi-annually at the rate specified on this Security to the extent permitted by
applicable law. During any such Extension Period, the Company and the Guarantor
shall not, declare or pay any dividends on, or make a distribution with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to, any of its capital stock or rights to acquire such capital stock (other than
(i) purchases or acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by the Company or
the Guarantor, respectively, of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of the Company's or the
Guarantor's capital stock or rights to acquire such capital stock or the
exchange or conversion of one class or series of the Company's or the
Guarantor's capital stock or rights to acquire such capital stock for another
class or series of the Company's or the Guarantor's capital stock or rights to
acquire such capital stock, (iii) the purchase of fractional interests in shares
of the Company's or the Guarantor's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged or (iv) dividends and distributions made on the Company's or the
Guarantor's capital stock or rights to acquire such capital stock with the
Company's or the Guarantor's capital stock or rights to acquire such capital
stock) or make any guarantee payments with respect to any of the foregoing and
(b) the Company and the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including any guarantees, other than the Guarantees) issued by the
Company or the Guarantor that rank pari passu with or junior to this Security
and the Debt Guarantee. Prior to the termination of any such Extension Period,
the Company may further extend the Extension Period, provided that no Extension
Period may exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of this Security. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to the above requirements. No
interest shall be due and payable during an Extension Period, except at the end
thereof. The Company shall give the Guarantor, the Property Trustee, the Regular
Trustees and the Trustee written notice of its election of such Extension Period
not less than one Business Day prior to the record date for the applicable
Interest Payment Date.
Payment of the principal of and interest on this Security will be
made at the office or agency of the Paying Agent maintained for that purpose in
the United States, in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company, payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security Register.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of the Indenture
summarized on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, Countrywide Home Loans, Inc. has caused this
instrument to be duly executed.
COUNTRYWIDE HOME LOANS, INC.
By:
----------------------------------------------
Name:
Title:
Attest:
- ---------------------------
Name:
Title: Secretary
[Form of Reverse of Security]
This Security is one of a duly authorized issue of Securities of
Countrywide Home Loans, Inc. (the "Company"), designated as its 8.05% Junior
Subordinated Debentures due June 15, 2027, Series B (herein called the
"Securities"), limited in aggregate principal amount to $206,200,000 issued
under an Indenture, dated as of June 4, 1997 (herein called the "Indenture"),
among the Company, Countrywide Credit Industries, Inc. (the "Guarantor") and The
Bank of New York, a New York banking corporation, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Trustee, the Company, the Guarantor and the Holders
of the Securities, and of the terms upon which the Securities are, and are to
be, authenticated and delivered.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Security is not redeemable at the option of the Company;
provided that this Security shall be redeemable at the option of the Company at
any time in whole (but not in part), within 90 days of the occurrence of a
Special Event (as defined in the Indenture), at a Redemption Price equal to 100%
of the aggregate principal amount of the Securities to be redeemed, plus accrued
and unpaid interest, if any, to the Redemption Date. In addition, if a Tax Event
shall occur and be continuing and in the opinion of counsel, rendered by a law
firm having a recognized national tax practice, there would in all cases, after
effecting the dissolution of the Trust and the distribution of the Securities to
the Holders of the Capital Securities and Common Securities in exchange therefor
upon liquidation of the Trust, be more than an insubstantial risk that the Tax
Event would continue to exist, then the Company shall have the right to shorten
the Stated Maturity of the Securities to a date not earlier than December 15,
2011 (a "Maturity Advancement"), such that, in the opinion of counsel to the
Trust rendered by a law firm having a recognized national tax practice, after
advancing the Stated Maturity of the Debt Securities, interest paid on the
Securities will be deductible by the Company for United States federal income
tax purposes.
For so long as the Trust is the Holder of all the Securities
Outstanding, the proceeds of any redemption described herein shall be used by
the Trust to redeem Common Securities and Capital Securities in accordance with
their terms.
If an Event of Default with respect to the Securities shall occur
and be continuing, the principal of the Securities may be declared due and
payable in the manner, with the effect and subject to the conditions provided in
the Indenture.
The Indenture contains provisions for satisfaction and discharge or
legal defeasance of the entire indebtedness of this Security and for the
defeasance of certain covenants under the Indenture at any time upon compliance
by the Company with certain conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company, the
Guarantor and the Trustee, with the consent of Holders of not less than a
majority in principal amount of the Outstanding Securities, to modify the
Indenture in a manner affecting the rights of the Holders of the Securities;
provided that no such modification may, without the consent of the Holder of
each Outstanding Security affected thereby, (i) except to the extent permitted
and subject to the conditions set forth in the Indenture with respect to
extension of the installments of interest on the Securities or shortening of the
Stated Maturity of the Securities, change the Stated Maturity of, the principal
of, or any installment of interest on, this Security or reduce the principal
amount thereof, or the rate of payment of interest thereon, or change the place
of payment where, or the coin or currency in which, this Security or interest
thereon is payable, or impair the right to institute suit for the enforcement of
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or modify the provisions of the
Indenture with respect to the subordination of the Securities in a manner
adverse to the Holders, (ii) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for 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, or
(iii) modify any of the provisions of Section 7.13, Section 11.2 or Section 12.9
of the Indenture, except to increase any 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 Security affected thereby,
provided that, so long as any of the Capital Securities remain outstanding, no
such amendment shall be made that adversely affects the holders of the Capital
Securities, and no termination of the Indenture shall occur, and no waiver of an
Event of Default or compliance with any covenant under the Indenture shall be
effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation preference of the outstanding Capital Securities
unless and until the principal of and any premium on the Securities and all
accrued and unpaid interest thereon have been paid in full.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Securities are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of different
authorized denominations, as requested by the Holder surrendering the same.
THE SECURITIES AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------------------------
Authorized Signatory
Dated:
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act covering resales of this Security (which effectiveness shall not have been
suspended or terminated at the date of the transfer) and (ii) two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date"), the
undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer:
[Check One]
(1) to the Company or a subsidiary thereof; or
---
(2) pursuant to and in compliance with Rule 144A under the Securities
--- Act of 1933, as amended; or
(3) outside the United States to a "foreign person" in compliance
--- with Rule 904 of Regulation S under the Securities Act of 1933,
as amended; or
(4) pursuant to the exemption from registration provided by Rule 144
--- under the Securities Act of 1933, as amended; or
(5) pursuant to an effective registration statement under the
--- Securities Act of 1933, as amended; or
(6) pursuant to another available exemption from the registration
--- requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3), (4) or
(6) is checked, the Company or the Trustee may require, prior to registering any
such transfer of the Securities, in its sole discretion, such written legal
opinions, certifications (including an investment letter in the case of box (3)
or (4)) and other information as the Trustee or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.8 of the Indenture shall have
been satisfied.
Dated: Signed:
--------------------- ------------------------------
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:
----------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
------ -------------------------------------
NOTICE: To be executed by an
executive officer
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing the
Security outside the United States as a "foreign person" in compliance with Rule
904 of Regulation S under the Securities Act and is aware that the sale to it is
being made in reliance on Regulation S.
Dated:
------ -------------------------------------
NOTICE: To be executed by an
executive officer
FOR VALUE RECEIVED, the Guarantor hereby unconditionally guarantees
to the holder of this Security upon which this Guarantee is endorsed the due and
punctual payment of the principal, premium, if any, and interest on said
Security, when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise, according to the terms thereof and of
the Indenture referred to therein.
The Guarantor agrees to determine, at least one Business Day prior
to the date upon which a payment of principal of and premium, if any, or
interest on said Security is due and payable, whether the Company has available
the funds to make such payment as the same shall become due and payable. In case
of the failure of the Company punctually to pay any such principal, premium, if
any, or interest, the Guarantor hereby agrees to cause any such payment to be
made punctually when and as the same shall become due and payable, whether at
maturity, upon redemption, or otherwise, and as if such payment were made by the
Company.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrevocable, and absolute, irrespective of the validity,
regularity, or enforceability of said Security or said Indenture, the absence of
any action to enforce the same, any waiver or consent by the Holder of said
Security with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company,
protest or notice with respect to said Security or indebtedness evidenced
thereby, and all demands whatsoever and covenants that this Guarantee will not
be discharged except by complete performance of the obligations contained in
said Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the holder of
said Security against the Company in respect of any amounts paid by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
the Guarantor shall not, without the consent of the holders of all of the
Securities then outstanding, be entitled to enforce or to receive any payments
arising out of or based upon such right of subrogation until the principal of
and premium, if any, and interest on all Securities shall have been paid in full
or payment thereof shall have been provided for in accordance with said
Indenture.
Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Company on the Securities
to the holders of the Securities it is determined by a final decision of a court
of competent jurisdiction that such payment shall be avoided by a trustee in
bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C.
Section 547 and such payment is paid by such holder of such trustee in
bankruptcy, then and to the extent of such repayment, the obligations of the
Guarantor hereunder shall remain in full force and effect.
This Guarantee shall not be valid or become obligatory for any
purpose with respect to a Security until the certificate of authentication on
such Security shall have been signed by the Trustee (or the Authentication
Agent).
This Guarantee shall be governed by the laws of the State of New
York without regard to conflict of laws principles thereof.
IN WITNESS WHEREOF, Countrywide Credit Industries, Inc. has
caused this Guarantee to be signed in its corporate name by the facsimile
signature of two of its officers thereunto duly authorized.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:----------------------------------------------
Name:
Title:
By:
Name:
Title:
EXHIBIT 4.7
- -------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Countrywide Capital III
Dated as of June 4, 1997
- -------------------------------------------------------------------------------
TABLE OF CONTENTS*
------------------
PAGE
----
ARTICLE 1
INTERPRETATION AND DEFINITIONS.......................1
SECTION 1.1 Interpretation and Definitions..........................1
ARTICLE 2
TRUST INDENTURE ACT..................................5
SECTION 2.1 Trust Indenture Act; Application........................5
SECTION 2.2 Lists of Holders of Securities..........................5
SECTION 2.3 Reports by Guarantee Trustee............................6
SECTION 2.4 Periodic Reports to Guarantee Trustee...................6
SECTION 2.5 Evidence of Compliance with Conditions Precedent........6
SECTION 2.6 Guarantee Event of Default; Waiver......................6
SECTION 2.7 Guarantee Event of Default; Notice......................6
SECTION 2.8 Conflicting Interests...................................7
SECTION 2.9 Disclosure of Information...............................7
SECTION 2.10 Guarantee Trustee May File Proofs of Claim..............7
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE....................................7
SECTION 3.1 Powers and Duties of Guarantee Trustee..................7
SECTION 3.2 Certain Rights of Guarantee Trustee.....................9
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee..11
ARTICLE 4
GUARANTEE TRUSTEE...................................11
SECTION 4.1 Guarantee Trustee; Eligibility.........................11
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustee................................................11
ARTICLE 5
GUARANTEE...........................................12
SECTION 5.1 Guarantee..............................................12
SECTION 5.2 Waiver of Notice and Demand............................12
SECTION 5.3 Obligations Not Affected...............................13
SECTION 5.4 Rights of Holders......................................14
SECTION 5.5 Guarantee of Payment...................................14
SECTION 5.6 Subrogation............................................14
SECTION 5.7 Independent Obligations................................14
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION...........15
SECTION 6.1 Limitation of Transactions.............................15
SECTION 6.2 Ranking................................................15
ARTICLE 7
TERMINATION.........................................16
SECTION 7.1 Termination............................................16
ARTICLE 8
INDEMNIFICATION.....................................16
SECTION 8.1 Exculpation............................................16
SECTION 8.2 Indemnification........................................16
ARTICLE 9
MISCELLANEOUS.......................................17
SECTION 9.1 Successors and Assigns.................................17
SECTION 9.2 Amendments.............................................17
SECTION 9.3 Notices................................................17
SECTION 9.4 Benefit................................................18
SECTION 9.5 Governing Law..........................................18
- ----------
* This Table of Contents does not constitute part of the Agreement and shall
not have any bearing upon the interpretation of any of its terms or
provisions.
CROSS REFERENCE TABLE*
----------------------
Section of Trust
Indenture Act of Section of
1939, as amended Agreement
---------------- ----------
310(a)..............................4.1(a)
310(b)..............................2.8; 4.1(c)
310(c)..............................Inapplicable
311(a)..............................2.2(b)
311(b)..............................2.2(b)
311(c)..............................Inapplicable
312(a)..............................2.2(a); 2.9
312(b)..............................2.2(b); 2.9
312(c)..............................2.9
313(a)..............................2.3
313(b)..............................2.3
313(c)..............................2.3
313(d)..............................2.3
314(a)..............................2.4
314(b)..............................Inapplicable
314(c)..............................2.5
314(d)..............................Inapplicable
314(e)..............................2.5
314(f)..............................Inapplicable
315(a)..............................3.1(d); 3.2(a)
315(b)..............................2.7(a)
315(c)..............................3.1(c)
315(d)..............................3.1(d)
316(a)..............................2.6; 5.4(a)
316(b)..............................5.3
316(c)..............................Inapplicable
317(a)..............................2.10
317(b)..............................Inapplicable
318(a)..............................2.1(b)
- ----------
* This Cross-Reference Table does not constitute part of the Agreement
and shall not have any bearing upon the interpretation of any of its terms
or provisions.
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of
June 4, 1997, is executed and delivered by Countrywide Credit
Industries, Inc., a Delaware corporation (the "Guarantor"), and The
Bank of New York, a New York banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Securities (as defined herein) of
Countrywide Capital III, a Delaware statutory business trust (the
"Trust").
W I T N E S S E T H :
WHEREAS, pursuant to the Declaration (as defined herein),
the Trust is issuing on the date hereof $200,000,000 aggregate
liquidation amount of subordinated capital income securities, having a
liquidation amount of $1,000 per security and designated the 8.05%
Subordinated Capital Income Securities, Series A, of the Trust
(together with the 8.05% Subordinated Capital Income Securities,
Series B, of the Trust proposed to be issued in exchange therefor as
contemplated by the Declaration, the "Capital Securities"); and
$6,200,000 aggregate liquidation amount of common securities, having a
liquidation amount of $1,000 per security and designated the Common
Securities of the Trust (the "Common Securities" and, together with
the Capital Securities, the "Securities");
WHEREAS, as incentive for the Holders to purchase the
Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Guarantee, to pay to the
Holders of the Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set
forth herein; and
WHEREAS, if a Trust Enforcement Event (as defined herein) has
occurred and is continuing, the rights of holders of the Common Securities to
receive Guarantee Payments under this Guarantee are subordinated to the rights
of Holders of Capital Securities to receive Guarantee Payments under this
Guarantee;
NOW, THEREFORE, in consideration of the purchase by each Holder of
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.
ARTICLE 1
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions. In this Guarantee,
unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Guarantee has the same meaning
throughout;
(c) all references to "the Guarantee" or "this Guarantee" are to
this Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Guarantee to Articles, Sections and
Recitals are to Articles, Sections and Recitals of this Guarantee, unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee unless otherwise defined in this Guarantee or unless
the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa
and a reference to any masculine form of a term shall include the feminine form
of a term, as applicable; and
(g) the following terms have the following meanings:
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" has the meaning specified in the Indenture.
"Common Securities" has the meaning specified in the Recitals
hereto.
"Company" means Countrywide Home Loans, Inc., a New York corporation
and wholly-owned subsidiary of the Guarantor.
"Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee
shall, at any particular time, be principally administered, which office at
the date of execution of this Guarantee is located at 101 Barclay Street,
Floor 21 West, New York, New York 10286, Attention: Corporate Trust Trustee
Administration; telecopy no. (212) 815-5915.
"Covered Person" means a Holder or beneficial owner of Securities.
"Debentures"(i) means the series of subordinated debentures to
be issued by the Company, designated the "8.05% Junior Subordinated
Debentures due 2027, Series A (the "Series A Debentures"), and (ii) the
series of subordinated debentures to be issued by the Company, designated
the "8.05% Junior Subordinated Debentures due June 15, 2027, Series B", to
be issued in exchange for the Series A Debentures, in each case held by the
Property Trustee (as defined in the Declaration) of the Trust.
"Debt Guarantee" means the guarantee by the Guarantor of the
principal of and premium, if any, and interest on the Debentures pursuant to the
Indenture.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of June 4, 1997, as amended, modified or supplemented from time to
time, among the trustees of the Trust named therein, the Guarantor, as sponsor,
and the Holders, from time to time, of undivided beneficial ownership interests
in the assets of the Trust.
"Guarantee Event of Default" means a default by the Guarantor on any
of its payment or other obligations under this Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Securities, to the extent not paid by
or on behalf of the Trust: (i) any accumulated and unpaid Distributions (as
defined in the Declaration) required to be paid on such Securities, to the
extent the Trust has sufficient funds available therefor at the time, (ii) the
redemption price, including all accrued and unpaid Distributions through the
date of redemption, with respect to any Securities called for redemption, to the
extent the Trust shall have sufficient funds available therefor at the time or
(iii) upon a voluntary or involuntary dissolution, winding up or liquidation of
the Trust (unless, in connection therewith, the Debentures are distributed to
the Holders in exchange for Securities as provided in the Declaration), the
lesser of (a) the aggregate liquidation amount and all accrued and unpaid
Distributions on the Securities to the date of payment, to the extent the Trust
has sufficient funds available therefor at the time, and (b) the amount of
assets of the Trust remaining available for distribution to Holders (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"Holder" means a Person in whose name a certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Delaware Business Trust Act.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of
the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Guarantee Trustee.
"Indenture" means the Indenture, dated as of June 4, 1997, among the
Company, as issuer, the Guarantor, as guarantor, and the Guarantee Trustee, as
trustee, and any indenture supplemental thereto pursuant to which the Debentures
are to be issued to the Property Trustee (as defined in the Declaration) of the
Trust.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the
terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities, voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class. In determining
whether the holders of the requisite amount of Securities have voted, Securities
which are owned by the Guarantor (including the Company) or by an Affiliate of
the Guarantor shall be disregarded for the purpose of any such determination.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by two Authorized Officers (as
defined in the Declaration) of such Person. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer on behalf of such Person in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
on behalf of such Person to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer
acting on behalf of such Person, such condition or covenant has been complied
with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities" has the meaning specified in the Recitals
hereto.
"Property Trustee" has the meaning specified in the Declaration.
"Redemption Price" has the meaning specified in the Declaration.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any officer within the Corporate Trust Office of the Guarantee Trustee,
including any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Securities" has the meaning specified in the Recitals hereto.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Enforcement Event" in respect of the Securities means an
Indenture Event of Default (as defined in the Indenture) has occurred and is
continuing in respect of the Debentures.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application (a) This Guarantee is
subject to the provisions of the Trust Indenture Act that are required to be
part of this Guarantee and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Guarantee
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities. (a) Unless the Guarantee
Trustee shall be the registrar for the Securities, the Guarantor shall provide
the Guarantee Trustee, (i) except while the Capital Securities are represented
by one or more Global Securities, at least one Business Day prior to the date
for payment of Distributions, a list, in such form as the Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Securities
("List of Holders") as of the record date relating to the payment of such
Distributions, and (ii) at any other time, within 30 days of receipt by the
Guarantor of a written request from the Guarantee Trustee for a List of Holders
as of a date no more than 15 days before such List of Holders is given to the
Guarantee Trustee; provided that the Guarantor shall not be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Guarantee Trustee by the Guarantor. The
Guarantee Trustee shall preserve, in as current a form as is reasonably
practicable, all information contained in Lists of Holders given to it, provided
that the Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by Guarantee Trustee. Within 60 days after
May 15 of each year (commencing with the year of the first anniversary of
the issuance of the Securities), the Guarantee Trustee shall provide to the
Holders of the Securities such reports as are required by Section 313 of
the Trust Indenture Act (if any) in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The Guarantor
shall provide to the Guarantee Trustee such documents, reports and information
as required by Section 314(a) (if any) of the Trust Indenture Act and the
compliance certificate required by Section 314(a) of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314(a) of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Guarantee Event of Default; Waiver. The Holders of a
Majority in Liquidation Amount of the Securities may, by vote or written
consent, on behalf of the Holders of all of the Securities, waive any past
Guarantee Event of Default and its consequences. Upon such waiver, any such
Guarantee Event of Default shall cease to exist, and any Guarantee Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Guarantee, but no such waiver shall extend to any subsequent or other
default or Guarantee Event of Default or impair any right consequent thereon.
SECTION 2.7 Guarantee Event of Default; Notice. (a) The Guarantee
Trustee shall, within 90 days after the occurrence of a Guarantee Event of
Default, transmit by mail, first class postage prepaid, to the Holders of the
Securities, notices of all Guarantee Events of Default actually known to a
Responsible Officer of the Guarantee Trustee, unless such defaults have been
cured before the giving of such notice; provided, that the Guarantee Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Guarantee Event of Default unless the Guarantee Trustee shall have received
written notice thereof or a Responsible Officer of the Guarantee Trustee charged
with the administration of the Declaration shall have obtained actual knowledge
thereof.
SECTION 2.8 Conflicting Interests. The Declaration, the Indenture
and the Debt Guarantee shall be deemed to be specifically described in this
Guarantee for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
SECTION 2.9 Disclosure of Information. The disclosure of information
as to the names and addresses of the Holders of the Securities in accordance
with Section 312 of the Trust Indenture Act, regardless of the source from which
such information was derived, shall not be deemed to be a violation of any
existing law, or any law hereafter enacted which does not specifically refer to
Section 312 of the Trust Indenture Act, nor shall the Guarantee Trustee be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
SECTION 2.10 Guarantee Trustee May File Proofs of Claim. Upon the
occurrence of a Guarantee Event of Default, the Guarantee Trustee is hereby
authorized to (a) recover judgment, in its own name and as trustee of an express
trust, against the Guarantor for the whole amount of any Guarantee Payments
remaining unpaid and (b) file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have its claims and those of the
Holders of the Securities allowed in any judicial proceedings relative to the
Guarantor, its creditors or its property.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee on behalf
of the Trust for the benefit of the Holders of the Securities, and the Guarantee
Trustee shall not transfer this Guarantee to any Person except to a Holder of
Securities exercising his, her or its rights pursuant to Section 5.4(b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee in and to this Guarantee shall automatically
vest in any Successor Guarantee Trustee, and such vesting and succession of
title shall be effective whether or not conveyance documents have been executed
and delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a Responsible
Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee for the benefit of the Holders of the
Securities.
(c) The Guarantee Trustee, before the occurrence of any Guarantee
Event of Default and after the curing of all Guarantee Events of Default that
may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee, and no implied covenants shall be read
into this Guarantee against the Guarantee Trustee. In case a Guarantee Event of
Default has occurred (that has not been cured or waived pursuant to Section 2.6)
and is actually known to a Responsible Officer of the Guarantee Trustee, the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Guarantee Event of Default
and after the curing or waiving of all such Guarantee Events of
Default that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the express
provisions of this Guarantee, and the Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee,
and no implied covenants or obligations shall be read into
this Guarantee against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it
under the terms of this Guarantee or if the Guarantee Trustee shall
have reasonable grounds for believing that an indemnity, reasonably
satisfactory to the Guarantee Trustee, against such risk or
liability is not reasonably assured to it under the terms of this
Guarantee.
SECTION 3.2 Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely, and shall be
fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed, sent or presented by
the proper party or parties;
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee shall be sufficiently evidenced by an Officers'
Certificate;
(iii) Whenever, in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by
the Guarantor;
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration or any instrument (or any
rerecording, refiling or re-registration thereof);
(v) The Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Guarantee
Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee from any court of
competent jurisdiction;
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
at the request or direction of any Holder, unless such Holder shall
have provided to the Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of
the Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided, that nothing contained
in this Section 3.2(a)(vi) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of a Guarantee Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Guarantee;
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit;
(viii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through agents, nominees, custodians or attorneys, and the
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due
care by it hereunder;
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to inquire
as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee,
both of which shall be conclusively evidenced by the Guarantee
Trustee's or its agent's taking such action; and
(x) Whenever in the administration of this Guarantee the
Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (i) may request written
instructions from the Holders of a Majority in Liquidation Amount of
the Securities, (ii) may refrain from enforcing such remedy or right
or taking such other action until such written instructions are
received and (iii) shall be protected in conclusively relying on or
acting in accordance with such written instructions.
(b) No provision of this Guarantee shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Guarantee Trustee does not assume any responsibility for
their correctness. The Guarantee Trustee makes no representations as to the
validity or sufficiency of this Guarantee.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.
(a) There shall be at all times a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any state or territory
thereof or of the District of Columbia, or a corporation or other
Person permitted by the Securities and Exchange Commission to act as
an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by federal,
state, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of
this Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed with or without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold such office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 30 days after
delivery to the Guarantor of an instrument of removal or resignation, the
removed or resigning Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions
to act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation of
the Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to
the Guarantee Trustee all amounts owing for fees and reimbursement of expenses
which have accrued to the date of such termination, removal or resignation.
(g) The Guarantor shall promptly notify the Holders of the
Securities of the removal, resignation or appointment of the Guarantee Trustee.
ARTICLE 5
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee
and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Trust or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall be absolute and unconditional and shall remain in
full force and effect until the entire liquidation amount of all outstanding
Securities shall have been paid and such obligation shall in no way be affected
or impaired by reason of the happening from time to time of any event, including
without limitation, the following, whether or not with notice to, or the consent
of, the Guarantor:
(a) The release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Securities to be performed or
observed by the Trust;
(b) The extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Securities or the extension of time
for the performance of any other obligation under, arising out of, or in
connection with the Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum payable
that results from the extension of any interest payment period on the Debentures
or any change to the maturity date of the Debentures permitted by the
Indenture);
(c) Any failure, omission, delay or lack of diligence on the part of
the Property Trustee or the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Property Trustee or the Holders
pursuant to the terms of the Securities, or any action on the part of the Trust
granting indulgence or extension of any kind;
(d) The voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Trust or any of the assets of
the Trust;
(e) Any invalidity of, or defect or deficiency in, the Securities;
(f) The settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) Any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Guarantee Trustee or the Holders
to give notice to, or obtain consent of, the Guarantor or any other Person with
respect to the happening of any of the foregoing.
No set-off, counterclaim, reduction or diminution of any obligation,
or any defense of any kind or nature that the Guarantor has or may have against
any Holder shall be available hereunder to the Guarantor against such Holder to
reduce the payments to it under this Guarantee.
SECTION 5.4 Rights of Holders.
The Holders of at least a Majority in Liquidation Amount of the
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee.
If the Guarantee Trustee fails to enforce this Guarantee, then any
Holder of Securities may, subject to the subordination provisions of Section
6.2, institute a legal proceeding directly against the Guarantor to enforce the
Guarantee Trustee's rights under this Guarantee without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. In addition, if the Guarantor has failed to make a Guarantee Payment, a
Holder of Securities may, subject to the subordination provisions of Section
6.2, directly institute a proceeding against the Guarantor for enforcement of
the Guarantee for such payment to the Holder of the Securities of the principal
of or interest on the Debentures on or after the respective due dates specified
in the Debentures, and the amount of the payment will be based on the Holder's
pro rata share of the amount due and owing on all of the Securities. The
Guarantor hereby waives any right or remedy to require that any action on this
Guarantee be brought first against the Trust or any other person or entity
before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of collection.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Securities against the Trust in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if at the time of any such payment,
any amounts are due and unpaid under this Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Guarantee Trustee for the benefit of the Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections 5.3(a) through 5.3(g),
inclusive, hereof.
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Securities remain outstanding, if there shall have
occurred a Guarantee Event of Default or a Trust Enforcement Event, then the
Guarantor shall not, and shall not permit the Company, to (i) declare or pay any
dividends or distributions on, or make a distribution with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to any
of its capital stock or rights to acquire such capital stock (other than (1)
purchases or acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by the Guarantor
or the Company, respectively, of its obligations under any employee benefit
plans, (2) as a result of a reclassification of the Guarantor's or the Company's
capital stock or rights to acquire such capital stock or the exchange or
conversion of one class or series of the Guarantor's or the Company's capital
stock or rights to acquire such capital stock for another class or series of the
Guarantor's or the Company's capital stock or rights to acquire such capital
stock, (3) the purchase of fractional interests in shares of the Guarantor's or
the Company's capital stock pursuant to conversion or exchange provisions of
such capital stock or the security being converted or exchanged or (4) dividends
and distributions made on the Guarantor's or the Company's capital stock or
rights to acquire such capital stock with the Guarantor's or the Company's
capital stock or rights to acquire such capital stock) or make any guarantee
payments with respect to any of the foregoing or (ii) make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including any guarantees, other than this Guarantee and the
Debt Guarantee) issued by the Guarantor or the Company that rank pari passu with
or junior to the Debentures or the Debt Guarantee.
SECTION 6.2 Ranking.
The obligations of the Guarantor under this Guarantee and the
Indenture will be subordinate and junior in right of payment to all Senior
Indebtedness (as defined in the Indenture) of the Guarantor. In addition, at all
times such obligations will be structurally subordinated to all liabilities and
obligations of the Guarantor's subsidiaries.
If a Trust Enforcement Event has occurred and is continuing under
the Declaration, the rights of the holders of the Common Securities to receive
Guarantee Payments hereunder shall be subordinated to the rights of the Holders
of the Preferred Securities to receive Guarantee Payments hereunder.
ARTICLE 7
TERMINATION
SECTION 7.1 Termination.
This Guarantee shall terminate upon (i) full payment of the
Redemption Price of all Securities, (ii) distribution of the Debentures to the
Holders of all the Securities or (iii) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Trust. Notwithstanding
the foregoing, this Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Securities must
restore payment of any sums paid under the Securities or under this Guarantee.
ARTICLE 8
INDEMNIFICATION
SECTION 8.1 Exculpation.
No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss,
damage, liability, expense or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance with
this Guarantee and in a manner that such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Guarantee or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 8.2 Indemnification.
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Guarantee.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Securities then
outstanding.
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely affect the
rights of the Holders (in which case no consent of the Holders will be
required), this Guarantee may only be amended with the prior approval of the
Holders of at least a Majority in Liquidation Amount of the Securities. The
provisions of Section 11.2 of the Declaration with respect to meetings of, and
action by written consent of, the Holders of the Securities apply to the giving
of such approval.
SECTION 9.3 Notices.
All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered by hand,
telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Guarantor and the Holders of the Securities):
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trust Trustee Administration
Fax: (212) 815-5915
(b) If given to the Guarantor, at the Guarantor's mailing addresses
set forth below (or such other address as the Guarantor may give notice of to
the Guarantee Trustee and the Holders of the Securities):
Countrywide Credit Industries, Inc.
4500 Park Granada
Calabasas, California 91302
Attn: General Counsel
Fax: (818) 225-4055
(c) If given to any Holder of Securities, at the address set forth
on the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4 Benefit.
This Guarantee is solely for the benefit of the Holders of the
Securities and, subject to Section 3.1(a), is not separately transferable from
the Securities.
SECTION 9.5 Governing Law.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, this Guarantee is executed as of the day and
year first above written.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
as Guarantor
By: /s/ Stanford L. Kurland
------------------------------------
Name: Stanford L. Kurland
Title: Senior Managing Director
THE BANK OF NEW YORK
as Guarantee Trustee
By: /s/ Vivian Georges
------------------------------------
Name: Vivian Georges
Title: Assisant Vice President
EXHIBIT 4.8
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of June 4, 1997
Among
COUNTRYWIDE CAPITAL III,
COUNTRYWIDE CREDIT INDUSTRIES, INC.,
COUNTRYWIDE HOME LOANS, INC.
and
LEHMAN BROTHERS INC.,
COUNTRYWIDE SECURITIES CORPORATION,
GOLDMAN, SACHS & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
SALOMON BROTHERS INC,
as Initial Purchasers
================================================================================
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of June 4, 1997 by and among COUNTRYWIDE CAPITAL III, a Delaware
statutory business trust (the "Trust"), COUNTRYWIDE CREDIT INDUSTRIES, INC., a
Delaware corporation ("the Company"), COUNTRYWIDE HOME LOANS, INC., a New York
corporation ("CHL"), and LEHMAN BROTHERS INC., COUNTRYWIDE SECURITIES
CORPORATION, GOLDMAN, SACHS & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED and SALOMON BROTHERS INC (collectively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of May 30, 1997, among the Company, CHL, the Trust and the
Initial Purchasers (the "Purchase Agreement"), which provides for the sale by
the Trust to the Initial Purchasers of an aggregate of $200,000,000 liquidation
amount of the Trust's 8.05% Subordinated Capital Income Securities, Series A,
liquidation amount $1,000 per security (the "Preferred Securities"). The Company
will be the owner of all of the beneficial ownership interest represented by the
common securities (the "Common Securities") of the Trust. The Preferred
Securities and the Common Securities will be guaranteed by a guarantee (the
"Trust Guarantee") by the Company, to the extent provided for in a Guarantee
Agreement, dated as of June 4, 1997. Concurrently with the issuance of the
Preferred Securities, the Trust Guarantee and the Common Securities, the Trust
will invest the proceeds of each thereof in CHL's 8.05% Junior Subordinated
Debentures due June 15, 2027, Series A (the "Debentures"). The Debentures will
be guaranteed by a guarantee (the "Debt Guarantee" and, together with the
Preferred Securities, the Trust Guarantee and the Debentures, the "Securities")
by the Company. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Trust, CHL and the Company have agreed to provide the
registration rights set forth in this Agreement for the benefit of the Initial
Purchasers, and its and their direct and indirect transferees and assigns. The
execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the Preferred Securities under the Purchase
Agreement.
The parties hereby agree as follows:
1. Interpretation and Definitions. In this Agreement, unless the
context otherwise requires:
(a) capitalized terms used in this Agreement but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.;
(b) a term defined anywhere in this Agreement has the same
meaning throughout;
(c) all references to "the Agreement" or "this Agreement" are
to this Agreement as modified, supplemented or amended from time to time;
(d) all references in this Agreement to Sections are to
Sections of this Agreement, unless otherwise specified;
(e) capitalized terms not defined herein shall have the
meaning given to such terms in the Declaration or, if the Debentures have been
distributed to the Holders of Preferred Securities in liquidation of the Trust,
the Indenture;
(f) a reference to the singular includes the plural and vice
versa and a reference to the masculine form of a term includes the feminine form
of a term, as applicable; and
(g) the following terms have the following meanings:
Additional Distributions: As defined in Section 5(a).
Additional Interest: As defined in Section 5(a).
Broker-Dealer: Any broker or dealer registered under the
Exchange Act.
Closing Date: The date on which the Securities were sold.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence of (i)
the filing and effectiveness under the Securities Act of the Exchange
Offer Registration Statement relating to the New Securities to be issued
in the Exchange Offer, (ii) the maintenance of such Registration Statement
continuously effective and the keeping of the Exchange Offer open for a
period not less than the minimum period required pursuant to Section 3(b)
hereof, and (iii) the delivery by the Registrants of the New Securities in
the same aggregate amount as the aggregate amount of Transfer Restricted
Securities that were validly tendered by Holders thereof pursuant to the
Exchange Offer.
Declaration: The Amended and Restated Declaration of Trust,
dated as of June 4, 1997, among the Company, The Bank of New York as
Property Trustee, The Bank of New York (Delaware), as Delaware Trustee and
the other trustees named therein, pursuant to which the Preferred
Securities are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
Distribution: As defined in the Declaration.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
Exchange Offer: The registration by the Registrants under the
Securities Act of the New Securities pursuant to a Registration Statement
pursuant to which the Registrants will offer the Holders of all
outstanding Transfer Restricted Securities the opportunity to exchange all
such outstanding Transfer Restricted Securities held by such Holders for
New Securities in an aggregate amount equal to the aggregate amount of the
Transfer Restricted Securities tendered in such exchange offer by such
Holders.
Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the Prospectus
which forms a part thereof.
Exempt Resales: The transactions in which the Initial
Purchasers propose to sell the Securities to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the
Securities Act, and to certain non-U.S. persons.
Guarantee Agreement: The Guarantee Agreement, dated as of June
4, 1997, between the Company and The Bank of New York, as Guarantee
Trustee, pursuant to which the Trust Guarantee is being issued, as amended
or supplemented from time to time in accordance with the terms thereof.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of June 4, 1997, among CHL,
the Company and The Bank of New York, as trustee (the "Trustee"), pursuant
to which the Debentures, the Debt Guarantee, the New Junior Subordinated
Debentures and the New Debt Guarantee are to be issued, as such Indenture
is amended or supplemented from time to time in accordance with the terms
thereof.
Initial Purchasers: As defined in the preamble hereto.
NASD: National Association of Securities Dealers, Inc.
New Debt Guarantee: The Company's guarantee of the New
Junior Subordinated Debentures pursuant to the Indenture.
New Junior Subordinated Debentures: CHL's Junior
Subordinated Debentures to be issued pursuant to the Indenture in the
Exchange Offer.
New Securities: The securities to be issued pursuant to
the Indenture, the Declaration and the Trust Guarantee Agreement in the
Exchange Offer.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
Prospectus: The prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and by
all other amendments thereto, including post-effective amendments, and all
material incorporated by reference into such Prospectus.
Registrants: The Trust, the Company and CHL or, if the
Debentures have been distributed to the Holders of the Preferred
Securities in liquidation of the Trust, the Company and CHL only.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the
Registrants relating to (a) an offering of New Securities pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, which is filed
pursuant to the provisions of this Agreement, in each case, including the
Prospectus included therein, all amendments and supplements thereto
(including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Securities Act: The Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4
hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb), as amended.
Transfer Restricted Securities: Each Security, (for the
purposes of this definition, if the Debentures have been distributed to
the Holders of Preferred Securities in liquidation of the Trust, each
Debenture and the Debt Guarantee) until the earliest to occur of (a) the
date on which such Security has been exchanged by a person other than a
Broker-Dealer for New Securities in the Exchange Offer, (b) following the
exchange by a Broker-Dealer in the Exchange Offer of such Security for one
or more New Securities, the date on which such New Securities are sold to
a purchaser who receives from such Broker-Dealer on or prior to the date
of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (c) the date on which such Security has been
effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (d) the date on which
such Security is sold to the public pursuant to Rule 144 under the
Securities Act.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Registrants are sold to an
underwriter for reoffering to the public.
2. Securities Subject to This Agreement.
(a) Transfer Restricted Securities. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities.
3. Registered Exchange Offer.
(a) Unless (i) the Exchange Offer shall not be permissible
under applicable law or Commission policy (after the procedures set forth in
Section 6(a) below have been complied with), or (ii) CHL has received an opinion
of counsel, rendered by a law firm having a recognized national tax practice, to
the effect that, as a result of the consummation of the Exchange Offer, there is
more than an insubstantial risk that (1) the Trust would be subject to United
States federal income tax with respect to income received or accrued on the
Debentures or New Junior Subordinated Debentures, (2) interest payable by CHL on
such Debentures or New Junior Subordinated Debentures would not be deductible by
CHL, in whole or in part, for United States federal income tax purposes, or (3)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges (in each case a "Tax Event Opinion"), (x)
the Registrants shall (A) cause to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 150 days after
the Closing Date, a Registration Statement under the Securities Act relating to
the New Securities and the Exchange Offer, (B) use their respective reasonable
best efforts to cause such Registration Statement to become effective at the
earliest possible time, but in no event later than 180 days after the Closing
Date, (C) in connection with the foregoing, file (1) all pre-effective
amendments to such Registration Statement as may be necessary in order to cause
such Registration Statement to become effective, (2) if applicable, a
post-effective amendment to such Registration Statement pursuant to Rule 430A
under the Securities Act and (3) cause all necessary filings in connection with
the registration and qualification of the New Securities to be made under the
Blue Sky laws of such jurisdictions as are necessary to permit Consummation of
the Exchange Offer, and (y) unless the Exchange Offer would not be permitted by
applicable law or Commission policy, the Registrants shall commence the Exchange
Offer and use their reasonable best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
business days thereafter, unless under applicable law the Exchange Offer is
required to remain open for a longer period. The Exchange Offer shall be on the
appropriate form permitting registration of the New Securities to be offered in
exchange for the Transfer Restricted Securities and to permit resales of New
Securities held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Registrants shall cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
provided, however, that in no event shall such period be less than 20 business
days. The Company and the Trust shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
New Securities shall be included in the Exchange Offer Registration Statement.
(c) The Registrants shall indicate in a "Plan of Distribution"
section contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Securities that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Registrants) may exchange such
Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resales of the New Securities received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales by
Broker-Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of New Securities held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy announced after the date of this Agreement.
The Registrants shall use their respective best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of New Securities acquired
by Broker-Dealers for their own accounts as a result of market-making activities
or other trading activities, and to ensure that it conforms with the
requirements of this Agreement, the Securities Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of 90
days from the date on which the Exchange Offer Registration Statement is
declared effective.
The Registrants shall provide sufficient copies of the latest
version of such Prospectus to Broker-Dealers promptly upon request at any time
during such 90-day period in order to facilitate such resales.
4. Shelf Registration.
(a) Shelf Registration. If (i) the Registrants are not
required to file an Exchange Offer Registration Statement or permitted to
consummate the Exchange Offer because the Exchange Offer is not permitted by
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), (ii) the Company has received a Tax Event
Opinion (as defined in Section 3(a)) or (iii) if any Holder of Transfer
Restricted Securities provides CHL with an opinion of counsel on or before the
twentieth business day following the Consummation of the Exchange Offer (A) that
such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, (B) that such Holder may not resell the New
Securities acquired by it in the Exchange Offer to the public without delivering
a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales, or (C)
that such Holder is a Broker-Dealer and owns Securities acquired directly from
the Trust or one of its affiliates, then the Registrants shall use their
respective reasonable best efforts to:
(x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Securities Act, which may
be an amendment to the Exchange Offer Registration
Statement (in either event, the "Shelf Registration
Statement"), on or prior to the earliest to occur of (1)
the 150th day after the date on which the Registrants
determine that they are not required to file the Exchange
Offer Registration Statement or (2) the 150th day after
the date on which the Registrants receive notice from a
Holder of Transfer Restricted Securities as contemplated
by clause (iii) above (such earliest date being the "Shelf
Filing Deadline"), which Shelf Registration Statement
shall provide for resales of all Transfer Restricted
Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof; and
(y) cause such Shelf Registration Statement to be
declared effective by the Commission on or prior to the
180th day after the Shelf Filing Deadline.
The Registrants shall use their respective best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for resales of Securities by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period ending on the second
anniversary of the Closing Date.
(a) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Registrants in writing, within 20 business days after receipt
of a request therefor, such information as the Registrants may reasonably
request for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Additional Interest and Additional
Distributions pursuant to Section 5 hereof unless and until such Holder shall
have used its best efforts to provide all such reasonably requested information
and a sufficient time has passed after the receipt of such information to
provide Registrants a reasonable opportunity to satisfy their obligations
hereunder. Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Registrants all information required
to be disclosed in order to make the information previously furnished to the
Registrants by such Holder not materially misleading.
5. Additional Interests and Additional Distributions.
(a) If (a) any of the Registration Statements required by this
Agreement is not filed with the Commission on or prior to the date specified for
such filing in this Agreement, (b) any of such Registration Statements has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) subject to the provisions of Section 6(c)(i) below with respect
to any Shelf Registration Statement, any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
within two business days by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective (each such event referred to in clauses (a) through (d), a
"Registration Default"), additional interest (the "Additional Interest") shall
become payable in respect of the Debentures (including in respect of amounts
accruing during any Extension Period (as defined in the Indenture)) and
corresponding additional Distributions (the "Additional Distributions") shall
accrue to each Holder of Trust Securities with respect to the first 90-day
period immediately following the occurrence of such Registration Default in an
amount equal to $.05 per week per $1,000 liquidation amount of Preferred
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of Additional Interest, and the
corresponding amount of Additional Distributions accruing to any Holder of Trust
Securities shall increase by an additional $.05 per week per $1,000 in
liquidation amount of Trust Securities held by such Holder with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Additional Interest (and corresponding Additional
Distributions) of $.25 per week per $1,000 liquidation amount of Trust
Securities. All accrued Additional Interest (and corresponding Additional
Distributions) shall be paid to Holders by CHL and the Property Trustee in the
same manner as interest and Distributions are made pursuant to the Indenture and
the Declaration. Following the cure of all Registration Defaults relating to any
particular Transfer Restricted Securities, the accrual of Additional Interest
(and corresponding Additional Distributions) with respect to such Transfer
Restricted Securities will cease.
All obligations of the Company set forth in the preceding
paragraph that are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such Transfer
Restricted Security shall have been satisfied in full.
(b) CHL shall notify the Property Trustee (or, if the
Debentures shall have been distributed to the Holders of the Preferred
Securities in liquidation of the Trust, the Debenture Trustee) within one
business day after each and every date on which an event occurs in respect of
which Additional Interest (and corresponding Additional Distributions) are
required to be paid (an "Event Date"). Additional Interest (and corresponding
Additional Distributions) shall be paid by depositing with the Property Trustee
(or, if the Debentures shall have been distributed to the Holders of the
Preferred Securities in liquidation of the Trust, the Debenture Trustee), in
trust, for the benefit of the Holders thereof, on or before the applicable
interest payment date (whether or not any payment other than Additional Interest
(and corresponding Additional Distributions) is payable on the Preferred
Securities or the Debentures, as the case may be), immediately available funds
in sums sufficient to pay the Additional Interest (and corresponding Additional
Distributions) then due to Holders of Transfer Restricted Securities. Each
obligation to pay Additional Interest (and corresponding Additional
Distributions) shall be deemed to accrue from the applicable date of the
occurrence of the Registration Default.
6. Registration Procedures.
(a) Exchange Offer Registration Statement. In connection with
the Exchange Offer, the Registrants shall comply with all of the provisions of
Section 6(c) below, shall use their best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
(i) If, in the reasonable opinion of counsel to the
Registrants, there is a question as to whether the Exchange Offer is
permitted by applicable law, the Registrants hereby agree to seek a
no-action letter or other favorable decision from the Commission
allowing the Registrants to Consummate an Exchange Offer for the
Transfer Restricted Securities. The Registrants hereby agree to
pursue the issuance of such a decision to the Commission staff level
but shall not be required to take commercially unreasonable action
to effect a change of Commission policy. The Registrants hereby
agree, however, to (A) participate in telephonic conferences with
the Commission, (B) deliver to the Commission staff an analysis
prepared by counsel to the Registrants setting forth the legal
bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted and (C) diligently pursue a
resolution (which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the Exchange
Offer pursuant to the terms of this Agreement, each Holder of
Transfer Restricted Securities shall furnish, upon the request of
the Registrants, prior to the Consummation thereof, a written
representation to the Registrants (which may be contained in the
letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an
affiliate of the Registrants, (B) it is not engaged in, and does not
intend to engage in, and has no arrangement or understanding with
any person to participate in, a distribution of the New Securities
to be issued in the Exchange Offer and (C) it is acquiring the New
Securities in its ordinary course of business. In addition, all such
Holders of Transfer Restricted Securities shall otherwise cooperate
in the Registrants' preparations for the Exchange Offer. Each Holder
hereby acknowledges and agrees that any Broker-Dealer and any such
Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not
under Commission policy as in effect on the date of this Agreement
rely on the position of the Commission enunciated in Morgan Stanley
and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Securities
Act in connection with a secondary resale transaction and that such
a secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of New Securities obtained by such
Holder in exchange for Securities acquired by such Holder directly
from the Registrants.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Registrants shall provide a supplemental
letter to the Commission (A) stating that the Registrants are
registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation
(available May 13, 1988), Morgan Stanley and Co., Inc. (available
June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above and (B) including a representation that
the Registrants have not entered into any arrangement or
understanding with any Person to distribute the New Securities to be
received in the Exchange Offer and that, to the best of the
Registrants' information and belief, each Holder participating in
the Exchange Offer is acquiring the New Securities in its ordinary
course of business and has no arrangement or understanding with any
Person to participate in the distribution of the New Securities
received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Registrants shall comply with all the provisions of
Section 6(c) below and shall use their best efforts to effect such registration
to permit the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Registrants will as expeditiously as possible prepare and
file with the Commission a Registration Statement relating to the registration
on any appropriate form under the Securities Act, which form shall be available
for the sale of the Transfer Restricted Securities in accordance with the
intended method or methods of distribution thereof.
(c) General Provisions. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Securities by Broker-Dealers), the Registrants shall:
(i) use their best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this
Agreement, as applicable; upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or omission
or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement,
the Registrants shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any
such misstatement or omission, and, in the case of either clause (A)
or (B), use their best efforts to cause such amendment to be
declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter; notwithstanding the foregoing, the
Registrants may suspend the offering and sales under the Shelf
Registration Statement for up to 30 days in each year during which
such Shelf Registration Statement is required to be effective and
usable hereunder (each such year to be measured from the date of
effectiveness of such Shelf Registration Statement to successive
anniversaries thereof) if (A) either (y)(I) either the Company or
CHL is engaged in a material acquisition or disposition and (II)(aa)
such acquisition or disposition is required to be disclosed in the
Shelf Registration Statement, the related Prospectus or any
amendment or supplement thereto, or the failure by the Registrants
to disclose such transaction in the Shelf Registration Statement or
related Prospectus, or any amendment or supplement thereto, as then
amended or supplemented, would cause such Shelf Registration
Statement, Prospectus or amendment or supplement thereto, to contain
an untrue statement of material fact or omit to state a material
fact necessary in order to make the statement therein, in light of
the circumstances under which they were made, not misleading, (bb)
information regarding the existence of such acquisition or
disposition has not then been publicly disclosed by or on behalf of
the Company or CHL and (cc) a majority of the Board of Directors of
the Company or CHL, as the case may be, determines in the exercise
of its good faith judgment that disclosure of such acquisition or
disposition would not be in the best interest of such Registrant or
would have a material adverse effect on the consummation of such
acquisition or disposition or (z) a majority of the Board of
Directors of the Company determines in the exercise of its good
faith judgment that compliance with the disclosure obligations set
forth in this Section 6(c)(i) would otherwise have a material
adverse effect on the Company and its subsidiaries, taken as a
whole, and (B) the Registrants notify the Holders within two
business days after such Boards of Directors make the relevant
determinations set forth in clause (A); provided, however, that in
each such case (1) the applicable period specified in Section 4
hereof during which the Shelf Registration Statement is required to
be kept effective and usable shall be extended by the number of days
during which such effectiveness was suspended pursuant to the
foregoing, (2) the Registrants shall use all reasonable efforts to
permit resumption of the offering and sales under the Shelf
Registration Statement at the earliest practicable time and (3) the
Additional Interest (and corresponding Additional Distributions)
provided for in Section 5 hereof shall not apply during any period
the Registrants are permitted to suspend offerings and sales under
this sentence;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration Statement
effective for the applicable period set forth in Section 3 or 4
hereof, as applicable, or such shorter period as will terminate when
all Transfer Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act, and to comply
fully with the applicable provisions of Rules 424 and 430A under the
Securities Act in a timely manner; and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by
the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, to confirm such
advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to any Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Securities Act or of the suspension
by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact
made in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness
of the Registration Statement, or any state securities commission or
other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the
Registrants shall use their best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of
the underwriter(s), if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration
Statement or Prospectus (including all documents incorporated by
reference after the initial filing of such Registration Statement),
which documents will be subject to the review of such Holders and
underwriter(s), if any, for a period of at least five business days,
and the Registrants will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated
by reference) to which a selling Holder of Transfer Restricted
Securities covered by such Registration Statement or the
underwriter(s), if any, shall reasonably object within five business
days after the receipt thereof. A selling Holder or underwriter, if
any, shall be deemed to have reasonably objected to such filing if
such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material
misstatement or omission;
(v) promptly prior to the filing of any document that is
to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to the selling Holders
and to the underwriter(s), if any, make the Registrants'
representatives available for discussion of such document and other
customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection
by the selling Holders, any underwriter participating in any
disposition pursuant to such Registration Statement, and any
attorney or accountant retained by such selling Holders or any of
the underwriter(s), all financial and other records, pertinent
corporate documents and properties of the Registrants and cause the
Registrants' officers, trustees, directors, managers and employees
to supply all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to
its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the liquidation or principal amount of
Transfer Restricted Securities being sold to such underwriter(s),
the purchase price being paid therefor and any other terms of the
offering of the Transfer Restricted Securities to be sold in such
offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after
the Registrants are notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
(viii)cause the Transfer Restricted Securities covered
by the Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in
aggregate liquidation or principal amount of Securities covered
thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Persons reasonably may request; the
Registrants hereby consent to the use of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and
each of the underwriter(s), if any, in connection with the offering
and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including an
underwriting agreement), and make such representations and
warranties, and take all such other actions in connection therewith
in order to expedite or facilitate the disposition of the Transfer
Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement, all to such extent as may be
requested by any Initial Purchaser or by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or
resale pursuant to any Registration Statement contemplated by this
Agreement; and in connection with an Underwritten Registration, the
Registrants shall:
(A) upon request, furnish to each selling Holder
and each underwriter, if any, in such substance and scope as
they may request and as are customarily made by issuers to
underwriters in primary underwritten offerings, upon the date
of the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of the
effectiveness of the Shelf Registration Statement,
signed by (x) the Chairman of the Board, President, Vice
Chairman of the Board, Executive Vice President, Senior
Managing Director or a Managing Director of the Company,
(y) the Chairman of the Board, Chief Executive Officer,
President, Chief Operating Officer or a Managing
Director of CHL and (z) the Chief Financial Officer of
the Company and CHL, confirming, as of the date thereof,
such matters as such parties may reasonably request;
(2) an opinion, dated the date of the
effectiveness of the Shelf Registration Statement, of
counsel for the Registrants, covering such matters as
such parties may reasonably request, and in any event
including a statement to the effect that such counsel
has participated in conferences with officers and other
representatives of the Registrants, representatives of
the independent public accountants for the Company, the
Initial Purchasers' representatives and the Initial
Purchasers' counsel in connection with the preparation
of such Registration Statement and the related
Prospectus and have considered the matters required to
be stated therein and the statements contained therein,
although such counsel has not independently verified the
accuracy, completeness or fairness of such statements;
and that such counsel advises that, on the basis of the
foregoing (relying as to materiality to a large extent
upon facts provided to such counsel by officers and
other representatives of the Company, CHL and the Trust
and without independent check or verification), no facts
came to such counsel's attention that caused such
counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or
any post-effective amendment thereto became effective,
contained an untrue statement of a material fact or
omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement, as of its date, contained an
untrue statement of a material fact or omitted to state
a material fact necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. Without limiting
the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of the financial statements, notes and
schedules and other financial data included in any
Registration Statement contemplated by this Agreement or
the related Prospectus; and
(3) a customary comfort letter, dated the
date of the effectiveness of the Shelf Registration
Statement, from the Company's independent accountants,
in the customary form and covering matters of the type
customarily covered in comfort letters by underwriters
in connection with primary underwritten offerings.
(B) set forth in full or incorporate by reference
in the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates
as may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Registrants pursuant to this
clause (xi), if any.
If at any time the representations and warranties of the
Company contemplated in clause (A)(1) above cease to be true and
correct, the Company shall so advise the Initial Purchasers and the
underwriter(s), if any, and each selling Holder promptly and, if
requested by such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in connection
with the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or underwriter(s) may
reasonably request and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the
Transfer Restricted Securities covered by the Shelf Registration
Statement; provided, however, that no Registrant shall be required
to register or qualify as a foreign corporation where it is not now
so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters
and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii)issue, upon the request of any Holder of
Securities covered by the Shelf Registration Statement, New
Securities in the same amount as the Securities surrendered to the
Registrants by such Holder in exchange therefor or being sold by
such Holder; such New Securities to be registered in the name of
such Holder or in the name of the purchaser(s) of such Securities,
as the case may be; in return, the Securities held by such Holder
shall be surrendered to the Registrants for cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities
to be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if
any, may request at least two business days prior to any sale of
Transfer Restricted Securities made by such underwriter(s);
(xv) use its best efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof or the underwriter(s), if any, to consummate the disposition
of such Transfer Restricted Securities, subject to the proviso
contained in clause (xii) above;
(xvi) subject to the provisions of Section 6(c)(i) above
with respect to any Shelf Registration Statement, if any fact or
event contemplated by clause (c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of
Transfer Restricted Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(xvii)provide CUSIP numbers for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement and provide certificates for the Transfer Restricted
Securities;
(xviii)cooperate and assist in any filings required to
be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified
independent underwriter") that is required to be retained in
accordance with the rules and regulations of the NASD, and use its
best efforts to cause such Registration Statement to become
effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable,
a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve-month period (A)
commencing at the end of any fiscal quarter in which Transfer
Restricted Securities are sold to underwriters in a firm or best
efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the
Registration Statement;
(xx) cause the Indenture and, if the Debentures shall
not have been distributed to the Holders of the Preferred Securities
in liquidation of the Trust, the Declaration and the Trust Guarantee
to be qualified under the TIA not later than the effective date of
the first Registration Statement required by this Agreement, and, in
connection therewith, cooperate with the Trustee and the Holders of
Securities to effect such changes to the Indenture, the Declaration
and the Trust Guarantee as may be required for the Indenture, the
Declaration and the Trust Guarantee to be so qualified in accordance
with the terms of the TIA; and execute and use their best efforts to
cause the Indenture Trustee, Trust Guarantee Trustee and the
Property Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and
(xxi) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from any Registrant of the existence of any
fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi)
hereof, or until it is advised in writing (the "Advice") by any Registrant that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by a Registrant, each Holder will deliver to such
Registrant (at the Registrants' expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of such
notice. In the event the Company, CHL or the Trust shall give any such notice,
the time period regarding the effectiveness of such Registration Statement set
forth in Section 3 or 4 hereof, as applicable, shall be extended by the number
of days during the period from and including the date of the giving of such
notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when
each selling Holder covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof or shall have received the Advice.
7. Registration Expenses.
All expenses incident to the Registrants' performance of or
compliance with this Agreement will be borne by CHL, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by any Initial
Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of
any "qualified independent underwriter" and its counsel that may be required by
the rules and regulations of the NASD)); (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the New Securities
to be issued in the Exchange Offer and printing of Prospectuses) and messenger
and delivery services; (iv) all fees and disbursements of counsel for the
Registrants; (v) all application and filing fees in connection with listing
Securities on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
The Registrants will, in any event, bear their internal expenses
(including, without limitation, all salaries and expenses of their officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts and
legal counsel, retained by the Registrants.
8. Indemnification and Contribution.
(a) In connection with a Shelf Registration Statement or in
connection with any delivery of a Prospectus contained in an Exchange Offer
Registration Statement by any participating Broker-Dealer or Initial Purchaser,
as applicable, who seeks to sell New Securities, the Company and CHL, jointly
and severally, shall indemnify and hold harmless each Holder of Transfer
Restricted Securities included within any such Shelf Registration Statement and
each participating Broker-Dealer or Initial Purchaser selling New Securities,
and each person, if any, who controls any such person within the meaning of the
Securities Act (each, a "Participant"), from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Securities) to which such Participant or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary Prospectus, such Registration Statement or any
Prospectus or in any amendment or supplement thereto or (ii) 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 shall reimburse
each Participant promptly upon demand for any legal or other expenses reasonably
incurred by such Participant in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that (i) the Company and CHL
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any such Registration Statement or any prospectus forming part thereof or in any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company, CHL and the Trust by or on behalf of any
Participant specifically for inclusion therein; and provided further that as to
any preliminary Prospectus, the indemnity agreement contained in this Section
8(a) shall not inure to the benefit of any such Participant or any controlling
person of such Participant on account of any loss, claim, damage, liability or
action arising from the sale of the New Securities to any person by that
Participant if (i) that Participant failed to send or give a copy of the
Prospectus, as the same may be amended or supplemented, to that person within
the time required by the Securities Act and (ii) the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact in such preliminary Prospectus was corrected in the Prospectus,
unless, in each case, such failure resulted from non-compliance by the
Registrants with Section 6(c). The foregoing indemnity agreement is in addition
to any liability which the Registrants may otherwise have to any Participant or
to any controlling person of that Participant.
(b) Each Participant, severally and not jointly, shall
indemnify and hold harmless the Registrants, each of their respective trustees,
directors, officers, employees or agents and each person, if any, who controls
the Company, CHL or the Trust within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Registrants or any such director, officer,
employees or agents or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary Prospectus,
Registration Statement or Prospectus or in any amendment or supplement thereto
or (ii) 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, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Registrants by
or on behalf of that Participant specifically for inclusion herein, and shall
reimburse the Registrants and any such trustee, director, officer, employees or
agents or controlling person for any legal or other expenses reasonably incurred
by the Registrants or any such trustee, director, officer, employees or agents
or controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Participant may otherwise have to the Registrants or any
such trustee, director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, 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 claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall have notified the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that if
the defendants in any such action include both the indemnified and indemnifying
party or parties the indemnified party or parties shall have the right to employ
separate counsel if, in the reasonable judgment of such indemnified party or
parties, there may be legal defenses available to it or them and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party or parties, and in that event the fees and expenses of
such separate counsel shall be paid by the indemnifying party or parties (it
being understood, however, that the indemnifying party or parties shall not be
liable for the expenses of more than one separate counsel in any single
jurisdiction). Each indemnified party, as a condition of the indemnity
agreements contained in Section 8, shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss of
liability by reason of such settlement or judgment.
(d) If the indemnification hereinbefore provided for in this
Section 8 shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 8(a) or 8(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect the relative
fault of the Registrants on the one hand and the Participants on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Registrants or the Participants, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Registrants and the Participants agree that it would
not be just and equitable if contributions pursuant to this Section 8(d) were to
be determined by pro rata allocation (even if the Participants were treated as
one entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
8(d) shall be deemed to include, for purposes of this Section 8(d), 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 Section 8(d), no Participant shall be required to contribute
any amount in excess of the amount by which the total proceeds received by such
Participant with respect to the sale of its Securities exceeds the amount of any
damages which such Participant has otherwise paid or become liable to pay by
reason of any 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 Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Participants' obligations to contribute as provided in this Section 8(d) are
several and not joint.
9. Rule 144A.
The Registrants hereby agree with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available upon
request to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information, if
any, required by Rule 144A(d)(4) under the Securities Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A.
10. Participation in Underwritten Registrations.
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
11. Selection of Underwriters.
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal or liquidation amount of the Transfer Restricted Securities
included in such offering; provided, that such investment bankers and managers
must be reasonably satisfactory to the Company.
12. Miscellaneous.
(a) Remedies. Each of the Company, CHL and the Trust agrees
that monetary damages (including any Additional Interest or Additional
Distributions contemplated hereby) would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company, CHL and the Trust
shall not on or after the date of this Agreement enter into any agreement with
respect to their securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof. The
Company, CHL and the Trust have not previously entered into any agreement
granting any registration rights pursuant to which the holders of such rights
have any right to demand or request that the Company register the securities
held by them (or any securities they have any right to acquire) as a result of
the filing of any Registration Statement required to be filed hereunder. The
rights granted to the Holders hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of the Trust's, CHL's
and the Company's securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Securities. The Company, CHL and
the Trust shall not take any action, or permit any change to occur, with respect
to Securities that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company, CHL
and the Trust have obtained the written consent of Holders of a majority of the
outstanding principal or liquidation amount of Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does not
affect directly or indirectly the rights of other Holders whose securities are
not being tendered pursuant to such Exchange Offer may be given by the Holders
of a majority of the outstanding principal or liquidation amount of Transfer
Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Trust; and
(ii) if to the Company, CHL and the Trust:
c/o Countrywide Credit Industries, Inc.
4500 Park Granada
Calabasas, California 91302
Attn: General Counsel
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attn: Kenneth R. Blackman, Esq.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Indenture Trustee at
the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder. The
indemnity agreement of the Company and CHL contained in Section 8(a) of this
Agreement shall also be deemed to be for the benefit of each of the
Participants; and the indemnity agreement of the Participants contained in
Section 8(b) of this Agreement shall also be deemed to be for the benefit of
directors, officers and employees of the Company and CHL and the trustees of the
Trust and any Person controlling the Company, CHL or the Trust within the
meaning of the Securities Act.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other
transaction documents is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company, CHL and the Trust with respect
to the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(l) Required Consents. Whenever the consent or approval of
Holders of a specified percentage of Transfer Restricted Securities is required
hereunder, Transfer Restricted Securities held by the Company or its affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: /s/Stanford L. Kurland
-------------------------------
Name: Stanford L. Kurland
Title: Senior Managing Director
COUNTRYWIDE HOME LOANS, INC.
BY: /s/Stanford L. Kurland
-------------------------------
Name: Stanford L. Kurland
Title: Senior Managing Director
COUNTRYWIDE CAPITAL III
BY: /s/Sandor E. Samuels
-------------------------------
REGULAR TRUSTEE
Accepted as of the date thereof
LEHMAN BROTHERS INC.,
for itself and on behalf of the
other Initial Purchasers Identified
in this Agreement
By: /s/Neil Sherman
-----------------------
Name: Neil Sherman
Title:Managing Director
EXHIBIT 5.1
[LETTERHEAD OF MORRIS, NICHOLS, ARSHT & TUNNELL]
October 2, 1997
Countrywide Capital III
c/o Countrywide Credit Industries, Inc.
4500 Park Granada
Calabasas, California 91302
RE: Countrywide Capital III
-----------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to Countrywide Capital
III, a Delaware statutory business trust (the "Trust"), in connection with
certain matters relating to the creation of the Trust and the proposed issuance
of 8.05% Subordinated Capital Income Securities, Series B (the New Capital
Securities"), to beneficial owners pursuant to and as described in Registration
Statement No. 333- (and the Prospectus forming a part thereof) on Form S-4 filed
with the Securities and Exchange Commission on September , 1997 (the
"Registration Statement"). Capitalized terms used herein and not otherwise
herein defined are used as defined in the Amended and Restated Declaration of
Trust of the Trust dated as of June 4, 1997 (the "Governing Instrument").
In rendering this opinion, we have examined and relied upon
copies of the following documents in the forms provided to us: the
Certificate of Trust of the Trust as filed in the Office of the Secretary
of State of the State of Delaware (the "State Office") on May 28, 1997 (the
"Certificate of Trust"); a Declaration of Trust of the Trust dated as of
May 28 1997 (the "Original Governing Instrument"); the Governing
Instrument; the Indenture dated as of June 4, 1997 among Countrywide Home
Loans, Inc., a New York corporation ("CHL"), Countrywide Credit Industries,
Inc., a Delaware corporation ("Countrywide Credit"), and The Bank of New
York, as Trustee; the Guarantee Agreement, dated as of June 4, 1997, between
Countrywide Credit and The Bank of New York, as Trustee, relating to the
Securities; the Registration Rights Agreement dated as of June 4, 1997
among the Trust, CHL, Countrywide Credit and the "Initial Purchasers" (as
defined therein) (the "Registration Rights Agreement"); the Registration
Statement; and a certification of good standing of the Trust obtained as of
recent date from the State Office. In such examinations, we have assumed
the genuineness of all signatures, the conformity to original documents of
all documents submitted to us as drafts or copies or forms of documents to
be executed and the legal capacity of natural persons to complete the
execution of documents. We have further assumed for purposes of this
opinion: (i) the due formation or organization, valid existence and good
standing of each entity (other than the Trust) that is a party to any of
the documents reviewed by us under the laws of the jurisdiction of its
respective formation or organization; (ii) the due authorization, execution
and delivery by, or on behalf of, each of the parties thereto of the
above-referenced documents (including, without limitation, the due
authorization, execution and delivery of the Governing Instrument and the
Registration Rights Agreement prior to the first issuance of New Capital
Securities); (iii) that no event has occurred subsequent to the filing of
the Certificate of Trust that would cause a dissolution or liquidation of
the Trust under the Original Governing Instrument or the Governing
Instrument, as applicable; (iv) that the activities of the Trust have been
and will be conducted in accordance with the Original Governing Instrument
or the Governing Instrument, as applicable, and the Delaware Business Trust
Act, 12 Del. C. ss.ss. 3801 et seq. (the "Delaware Act"); (v) that each
Person that will acquire New Capital Securities in the "Exchange Offer" (as
defined in the Registration Statement and as used herein, the "Exchange
Offer") will validly tender Transfer Restricted Securities in exchange
therefor, that such Transfer Restricted Securities will be duly accepted,
and that such Person will duly receive New Capital Security Certificates in
consideration thereof, all in accordance with the terns and conditions of
the Governing Instrument, the Registration Statement and the Registration
Rights Agreement and that the New Capital Securities are otherwise issued
to the New Capital Securities Holders in accordance with the terms,
conditions, requirements and procedures set forth in the Governing
Instrument, the Registration Statement and the Registration Rights
Agreement; and (vi) that the documents examined by us are in full force and
effect, express the entire understanding of the parties thereto with
respect to the subject matter thereof and have not been modified,
supplemented or otherwise amended, except as herein referenced. We have not
reviewed any documents other than those identified above in connection with
this opinion, and we have assumed that there are no other documents that
are contrary to or inconsistent with the opinions expressed herein.
Further, we express no opinion with respect to, and assume no
responsibility for the contents of, the Registration Statement or any other
offering material relating to the New Capital Securities. No opinion is
expressed herein with respect to the requirements of, or compliance with,
federal or state securities or blue sky laws. As to any fact material to
our opinion, other than those assumed, we have relied without independent
investigation on the above-referenced documents and on the accuracy, as of
the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects
to matters of Delaware law, it is our opinion that:
1. The Trust is a duly created and validly existing business trust
in good standing under the laws of the State of Delaware.
2. The New Capital Securities, upon issuance pursuant to the
Exchange Offer, will constitute validly issued and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
beneficial interests in the assets of the Trust.
3. Under the Delaware Act and the terms of the Governing Instrument,
each New Capital Security Holder of the Trust, in such capacity, will be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware; provided, however, we express no opinion with respect
to the liability of any New Capital Security Holder who is, was or may become a
named Trustee of the Trust. Notwithstanding the foregoing, we note that pursuant
to Section 10.4 of the Governing Instrument, the Trust may withhold amounts
otherwise distributable to a Holder and pay over such amounts to the applicable
jurisdictions in accordance with federal, state and local law and any amount
withheld will be deemed to have been distributed to such Holder and that,
pursuant to the Governing Instrument, New Capital Security Holders may be
obligated to make payments or provide indemnity or security under the
circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and reference to our opinion
under the heading "LEGAL MATTERS" in the Prospectus forming a part thereof. In
giving this consent, we do not thereby admit that we come within the Category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. This opinion speaks only as of the date hereof and is
based on our understandings and assumptions as to present facts, and on our
review of the above-referenced documents and the application of Delaware law as
the same exist as of the date hereof, and we undertake no obligation to update
or supplement this opinion after the date hereof for the benefit of any person
or entity with respect to any facts or circumstances that may hereafter come to
our attention or any changes in facts or law that may thereafter occur or take
effect.
Very truly yours,
/s/ Morris, Nichols, Arsht & Tunnell
------------------------------------
MORRIS, NICHOLS, ARSHT & TUNNELL
EXHIBIT 5.2
[LETTERHEAD OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON]
212-859-8280
October 2, 1997 (FAX: 212-859-8586)
Countrywide Credit Industries, Inc.
Countrywide Home Loans, Inc.
Countrywide Capital III
4500 Park Granada
Calabasas, CA 91302
Ladies and Gentlemen:
We are acting as special counsel to Countrywide Credit Industries,
Inc., a Delaware corporation (the "Guarantor"), Countrywide Home Loans, Inc., a
New York corporation and a wholly-owned subsidiary of the Guarantor (the
"Company"), and Countrywide Capital III, a Delaware statutory business trust
(the "Trust"), in connection with the preparation of a Registration Statement on
Form S-4 of the Trust, the Company and the Guarantor (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act")
with respect to the contemplated issuance of (i) $206,200,000 aggregate
principal amount of the Company's 8.05% Subordinated Debentures due June 15,
2027, Series B (the "Debentures"), (ii) the related guarantee by the Guarantor
as to payments of principal, premium, if any, and interest on the Debentures
(the "Debt Guarantee") and (iii) the guarantee by the Guarantor (the "Trust
Guarantee") in respect of distributions and payments on liquidation or
redemption of the Trust's common securities (the "Common Securities") and its
8.05% Subordinated Capital Income Securities, Series B (the "Capital
Securities"), in each case, representing undivided beneficial interests in the
assets of the Trust. The Debentures and the Debt Guarantee, which will be issued
to the Trust, will be issued pursuant to the Indenture, dated as of June 4, 1997
(the "Indenture"), among the Company, the Guarantor and The Bank of New York, as
trustee. The Debentures and the Debt Guarantee will be exchanged for the
Company's 8.05% Subordinated Debentures due June 15, 2027, Series A, and the
related guarantee by the Guarantor thereon, in accordance with the terms of the
Exchange Offer as described in the Registration Statement. The Trust Guarantee
will be issued to The Bank of New York, as trustee for the benefit of the
holders of the Capital Securities and the Common Securities ("Guarantee
Trustee"), pursuant to a Guarantee Agreement, dated as of June 4, 1997, between
the Guarantor and The Bank of New York, as Guarantee Trustee.
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 opinion hereinafter
expressed. In all such examinations, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
original and 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 have 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), and that
when executed and delivered by such parties, such agreements or instruments will
be 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, the Guarantor, the Trust and others. With respect to the opinion
expressed in paragraph 2 below, we have relied with your permission on the
opinion of Morris, Nichols, Arsht & Tunnell of even date herewith with respect
to matters of Delaware trust law. To the extent that such opinion contains
qualifications, assumptions and exceptions, we are incorporating such
qualifications, assumptions and exceptions herein.
Based upon the foregoing and subject to the limitations set forth
herein, we are of the opinion that:
1. When (i) the Debt Guarantee has been duly endorsed on the
Debentures and executed in accordance with the terms of the Indenture and (ii)
the Debentures have been duly executed and authenticated in accordance with the
terms of the Indenture and issued as contemplated in the Registration Statement,
the Debentures will constitute valid and binding obligations of the Company and
the Debt Guarantee will constitute a valid and binding obligation of the
Guarantor, subject in each case to (i) applicable bankruptcy, insolvency,
moratorium, fraudulent transfer and other similar laws now or hereafter in
effect affecting creditors' rights and remedies generally and (ii) general
principles of equity, including, without limitation, standards of materiality,
good faith, fair dealing and reasonableness, equitable defenses and limits as to
the availability of equitable remedies, whether considered in a proceeding in
equity or at law.
2. The Trust Guarantee constitutes a valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its terms,
subject to (i) applicable bankruptcy, insolvency, moratorium, fraudulent
transfer and other similar laws now or hereafter in effect affecting creditors'
rights and remedies generally and (ii) general principles of equity, including,
without limitation, standards of materiality, good faith, fair dealing and
reasonableness, equitable defenses and limits as to the availability of
equitable remedies, whether considered in a proceeding in equity or at law.
This opinion is expressly limited to the laws of the State of New York
and, to the extent required by the foregoing opinions, the General Corporation
Law of the State of Delaware, each as currently in effect.
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
"Legal Matters" in the Prospectus forming a part of 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.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Kenneth R. Blackman
------------------------------------
Kenneth R. Blackman
EXHIBIT 8.1
[LETTERHEAD OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON]
212-859-8171
October 2, 1997 (Fax: 212-859-8588)
Countrywide Credit Industries, Inc.
Countrywide Home Loans, Inc.
Countrywide Capital III
4500 Park Granada
Calabasas, CA 91302
Ladies and Gentlemen:
We are acting as special counsel to Countrywide Home Loans,
Inc., a New York corporation (the "Company") and a wholly owned
subsidiary of Countrywide Credit Industries, Inc., a Delaware
corporation ("CCI"), CCI and Countrywide Capital III, a statutory
business trust formed under the laws of the State of Delaware (the
"Trust"), in connection with (a) the proposed issuance by the Company
of 8.05% Junior Subordinated Debentures due June 15, 2027, Series B (the
"Subordinated Debentures") in exchange for the Company's outstanding
8.05% Junior Subordinated Debentures due June 15, 2027, Series A, and (b)
the Trust's proposed issuance of 8.05% Subordinated Capital Income
Securities, Series B (the "Capital Securities") in exchange for its
outstanding 8.05% Subordinated Capital Income Securities, Series A,
all as contemplated by the joint Registration Statement on Form S-4 of
the Company, CCI and the Trust (the "Registration Statement"). Terms
with initial capitals used in this letter and not otherwise defined
herein have the meanings set forth in the Registration Statement.
You have requested our opinion concerning (a) the
characterization of the Trust and the Subordinated Debentures for
United States federal income tax purposes, and (b) the section of the
Registration Statement captioned "Certain United States Federal Income
Tax Consequences." In expressing our opinion, we have examined and
relied upon the Registration Statement, the Declaration and the
Indenture (each as filed as Exhibits to the Registration Statement),
certain representations of officers of CCI and the Company (the
"Representations") and such other materials as we have deemed
necessary or appropriate. We have assumed, with your permission, that
the facts stated in the Registration Statement and the Representations
are true and complete, that the Trust will be administered in
accordance with the terms of the Declaration, that the Subordinated
Debentures will be issued and administered in accordance with the
terms of the Indenture and that the Capital Securities will be issued
and administered in accordance with the terms of the Declaration.
Our opinion is based upon the provisions of the United
States Internal Revenue Code of 1986, as amended, existing and
proposed Treasury regulations promulgated thereunder, judicial
decisions and rulings and other pronouncements of the Internal Revenue
Service (the "Service"), all as in effect on the date hereof. The
application of some of these provisions, regulations, decisions,
rulings and other pronouncements is uncertain in the absence of
definitive guidance and may be subject to differing interpretations.
Our opinion does not bind the Internal Revenue Service and there can
be no assurance that the Service or a court of law would agree with
the conclusions expressed in our opinion. Further, all such
provisions, regulations, decisions, rulings and other pronouncements
are subject to change, possibly with retroactive effect. Accordingly,
there can be no assurance that future changes in law will not affect
the conclusions set forth herein.
Characterization of the Trust. Based upon and subject to the
foregoing, it is our opinion that, for federal income tax purposes,
the Trust will be characterized as a grantor trust, and will not be
characterized as an association taxable as a corporation. Accordingly,
for federal income tax purposes, each holder of Capital Securities
generally will be considered the owner of an undivided interest in the
Subordinated Debentures owned by the Trust, and each US Holder will be
required to include all income or gain recognized for federal income
tax purposes with respect to its allocable share of the Subordinated
Debentures on its own income tax return.
Characterization of the Subordinated Debentures. Based upon
and subject to the foregoing, and although there is no controlling
authority directly on point, it is our opinion that the Subordinated
Debentures will be characterized as indebtedness of the Company for
federal income tax purposes.
"Certain United States Federal Income Tax Consequences"
Section. Based upon and subject to the foregoing, and based upon the
assumptions and subject to the qualifications and limitations set
forth in such section, we hereby affirm that (a) it is our opinion, as
of the date hereof, that the statements in the section of the
Registration Statement captioned "Certain United States Federal Income
Tax Consequences" summarize the material federal income tax
consequences of the purchase, ownership and disposition of the Capital
Securities, and (b) to the extent such statements constitute
statements of law or legal conclusions with respect thereto, such
statements represent our opinion, as of the date hereof, with respect
to the matters set forth therein.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to this
firm under the captions "Certain United States Federal Income Tax
Consequences" and "Legal Matters" therein. In giving this consent, we
do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as
amended.
No opinion is expressed on any matter other than that
specifically referred to herein.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Lee S. Parker
------------------------------------
Lee S. Parker
|
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 22, 1997, 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 28, 1997, which
is incorporated by reference in the Registration Statement on
Form S-4 (the "Registration Statement"). We consent to the
incorporation by reference in the Registration Statement of the
aforementioned report.
GRANT THORNTON LLP
/s/GRANT THORNTON LLP
Los Angeles, California
September 30, 1997
EXHIBIT 25-1
CONFORMED COPY
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
-----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-----------------------
COUNTRYWIDE HOME LOANS, INC.
(Exact name of obligor as specified in its charter)
New York 13-2631719
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4500 Park Granada
Calabasas, California 91302
(Address of principal executive offices) (Zip code)
----------------------
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-2641992
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4500 Park Granada
Calabasas, California 91302
(Address of principal executive offices) (Zip code)
-----------------------
Junior Subordinated Debentures
(Title of the indenture securities)
================================================================================
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
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 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
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 26th day of September, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
-------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 7,769,502
Interest-bearing balances .......... 1,472,524
Securities:
Held-to-maturity securities ........ 1,080,234
Available-for-sale securities ...... 3,046,199
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,352,045
LESS: Allowance for loan and
lease losses ..............625,042
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,726,574
Assets held in trading accounts ...... 1,611,096
Premises and fixed assets (including
capitalized leases) ................ 676,729
Other real estate owned .............. 22,460
Investments in unconsolidated
subsidiaries and associated
companies .......................... 209,959
Customers' liability to this bank on
acceptances outstanding ............ 1,357,731
Intangible assets .................... 720,883
Other assets ......................... 1,627,267
-----------
Total assets ......................... $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices ................ $26,875,596
Noninterest-bearing ......11,213,657
Interest-bearing .........15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 16,334,270
Noninterest-bearing .........596,369
Interest-bearing .........15,737,901
Federal funds purchased and Securities
sold under agreements to repurchase. 1,583,157
Demand notes issued to the U.S.
Treasury ........................... 303,000
Trading liabilities .................. 1,308,173
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,383,570
With remaining maturity of more than
one year through three years.......... 0
With remaining maturity of more than
three years ......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,377,244
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 1,732,792
-----------
Total liabilities .................... 52,937,421
-----------
EQUITY CAPITAL
Common stock ........................ 1,135,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,721,258
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 1,948
Cumulative foreign currency transla-
tion adjustments .................. ( 12,272)
------------
Total equity capital ................ 4,577,537
-----------
Total liabilities and equity
capital ........................... $57,514,958
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Alan R. Griffith /
J. Carter Bacot /
Thomas A. Renyi / Directors
- --------------------------------------------------------------------------------
EXHIBIT 25.2
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
-----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-----------------------
COUNTRYWIDE CAPITAL III
(Exact name of obligor as specified in its charter)
Delaware Applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
c/o Countrywide Credit Industries, Inc.
4500 Park Granada
Calabasas, California 91302
(Address of principal executive offices) (Zip code)
-----------------------
Subordinated Capital Income Securities
(Title of the indenture securities)
================================================================================
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the 2 Rector Street, New York,
State of New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
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 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
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 26th day of September, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
-------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 7,769,502
Interest-bearing balances .......... 1,472,524
Securities:
Held-to-maturity securities ........ 1,080,234
Available-for-sale securities ...... 3,046,199
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,352,045
LESS: Allowance for loan and
lease losses ..............625,042
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,726,574
Assets held in trading accounts ...... 1,611,096
Premises and fixed assets (including
capitalized leases) ................ 676,729
Other real estate owned .............. 22,460
Investments in unconsolidated
subsidiaries and associated
companies .......................... 209,959
Customers' liability to this bank on
acceptances outstanding ............ 1,357,731
Intangible assets .................... 720,883
Other assets ......................... 1,627,267
-----------
Total assets ......................... $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices ................ $26,875,596
Noninterest-bearing ......11,213,657
Interest-bearing .........15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 16,334,270
Noninterest-bearing .........596,369
Interest-bearing .........15,737,901
Federal funds purchased and Securities
sold under agreements to repurchase. 1,583,157
Demand notes issued to the U.S.
Treasury ........................... 303,000
Trading liabilities .................. 1,308,173
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,383,570
With remaining maturity of more than
one year through three years.......... 0
With remaining maturity of more than
three years ......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,377,244
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 1,732,792
-----------
Total liabilities .................... 52,937,421
-----------
EQUITY CAPITAL
Common stock ........................ 1,135,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,721,258
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 1,948
Cumulative foreign currency transla-
tion adjustments .................. ( 12,272)
------------
Total equity capital ................ 4,577,537
-----------
Total liabilities and equity
capital ........................... $57,514,958
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Alan R. Griffith /
J. Carter Bacot /
Thomas A. Renyi / Directors
- --------------------------------------------------------------------------------
EXHIBIT 25.3
CONFORMED COPY
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
-----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-----------------------
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-2641992
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4500 Park Granada
Calabasas, California 91302
(Address of principal executive offices) (Zip code)
-----------------------
Guarantee of Subordinated Capital Income Securities of
Countrywide Capital III
(Title of the indenture securities)
===============================================================================
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
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 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
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 26th day of September, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
-------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 7,769,502
Interest-bearing balances .......... 1,472,524
Securities:
Held-to-maturity securities ........ 1,080,234
Available-for-sale securities ...... 3,046,199
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,352,045
LESS: Allowance for loan and
lease losses ..............625,042
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,726,574
Assets held in trading accounts ...... 1,611,096
Premises and fixed assets (including
capitalized leases) ................ 676,729
Other real estate owned .............. 22,460
Investments in unconsolidated
subsidiaries and associated
companies .......................... 209,959
Customers' liability to this bank on
acceptances outstanding ............ 1,357,731
Intangible assets .................... 720,883
Other assets ......................... 1,627,267
-----------
Total assets ......................... $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices ................ $26,875,596
Noninterest-bearing ......11,213,657
Interest-bearing .........15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 16,334,270
Noninterest-bearing .........596,369
Interest-bearing .........15,737,901
Federal funds purchased and Securities
sold under agreements to repurchase. 1,583,157
Demand notes issued to the U.S.
Treasury ........................... 303,000
Trading liabilities .................. 1,308,173
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,383,570
With remaining maturity of more than
one year through three years.......... 0
With remaining maturity of more than
three years ......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,377,244
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 1,732,792
-----------
Total liabilities .................... 52,937,421
-----------
EQUITY CAPITAL
Common stock ........................ 1,135,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,721,258
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 1,948
Cumulative foreign currency transla-
tion adjustments .................. ( 12,272)
------------
Total equity capital ................ 4,577,537
-----------
Total liabilities and equity
capital ........................... $57,514,958
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Alan R. Griffith /
J. Carter Bacot /
Thomas A. Renyi / Directors
- --------------------------------------------------------------------------------
Exhibit 99.1
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
LETTER OF TRANSMITTAL
COUNTRYWIDE CAPITAL III
OFFER TO EXCHANGE ITS
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES B (SKISSM*)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY),
WHICH ARE FULLY AND UNCONDITIONALLY GUARANTEED AS TO DISTRIBUTIONS AND OTHER
PAYMENTS BY
COUNTRYWIDE CREDIT INDUSTRIES, INC.
AND WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES A (SKISSM*)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY),
WHICH ARE FULLY AND UNCONDITIONALLY GUARANTEED AS TO DISTRIBUTIONS AND OTHER
PAYMENTS BY
COUNTRYWIDE CREDIT INDUSTRIES, INC.
EXCHANGE AGENT:
THE BANK OF NEW YORK
By Hand or Overnight By Registered or Certified By Facsimile:
Courier: Mail: (Eligible
Institutions Only)
(212) 571-6339
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Corporate Trust Services Floor 7E Confirm by
Window, New York, New York 10286 telephone to:
Ground Floor Attention: Reorganization (212) 815-2742
New York, New York 10286 Section
Attention: Reorganization
Section
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus, dated ,
1997 (the "Prospectus"), of Countrywide Capital III, a Delaware statutory
business trust (the "Trust"), and Countrywide Credit Industries, a Delaware
corporation (the "Guarantor"), which, together with this Letter of
Transmittal (the "Letter of Transmittal"), constitute the Trust's offer
(the "Exchange Offer") to exchange up to $200,000,000 aggregate liquidation
amount of its 8.05% Subordinated Capital Income Securities, Series B (the
"New Capital Securities"), for a like liquidation amount of its outstanding
8.05% Subordinated Capital Income Securities, Series A (the "Old Capital
Securities"). Capitalized terms used but not defined herein have the same
meanings given them in the Prospectus.
The form and terms of the New Capital Securities will be identical in all
material respects to the form and terms of the Old Capital Securities except
that (i) the New Capital Securities will have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and therefore will
not contain terms with respect to transfer restrictions, (ii) the Distribution
Rate will not be subject to increase in certain circumstances relating to the
timing of the Exchange Offer and (iii) the holders of New Capital Securities
will not be entitled to certain rights under the Registration Rights, which
rights will terminate when the Exchange Offer is consummated. Any Old Capital
Securities not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the rights and preferences, and will be
subject to the limitations applicable thereto, under the Declaration (except for
those rights relating to the Exchange Offer which terminate upon consummation of
the Exchange Offer). Following consummation of the Exchange Offer, the holders
of the Old Capital Securities will not be entitled to any increase in the
Distribution Rate thereon and will continue to be subject to any existing
restrictions upon transfer thereof, and none of the Company, CHL and the Trust
will have any further obligation to such holders (other than under certain
limited circumstances) to provide for the registration under the Securities Act
of the Old Capital Securities held by them.
- --------
* SKIS is a servicemark of Lehman Brothers Inc.
The term "Expiration Date" means 5:00 p.m., New York City time, on ,
1997, unless the Exchange Offer is extended, as provided in the Prospectus, in
which case the term "Expiration Date" means the latest date and time to which
the Exchange Offer is extended.
This Letter of Transmittal is to be completed by holders of Old Capital
Securities either (i) if Old Capital Securities are forwarded herewith or (ii)
if tender of Old Capital Securities is to be made by book-entry transfer to an
account maintained by The Bank of New York (the "Exchange Agent") at the The
Depository Trust Company ("DTC") pursuant to the procedures set forth in "The
Exchange Offer -- Procedures for Tendering Old Capital Securities" in the
Prospectus.
Holders of Old Capital Securities whose certificates (the "Certificates")
for such Old Capital Securities are not immediately available or who cannot
deliver their Certificates and all other required documents to the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date or who
cannot complete the procedures for book-entry transfer on a timely basis must
tender their Old Capital Securities according to the guaranteed delivery
procedures set forth in "The Exchange Offer -- Procedures for Tendering Old
Capital Securities -- Guaranteed Delivery" in the Prospectus. See Instruction 1.
The term "holder" with respect to the Exchange Offer means any person in
whose name Old Capital Securities are registered on the books of the Trust or
any other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Old Capital
Securities must complete this Letter of Transmittal in its entirety.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED,
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Capital Securities to which this Letter of Transmittal
relates. If the space provided below is inadequate, the Certificate Numbers and
Liquidation Amounts should be listed on a separate signed schedule affixed
hereto.
BOX 1
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
- --------------------------------------------------------------------------------
LIQUIDATION
AMOUNT OF OLD
CAPITAL
SECURITIES
TENDERED NUMBER OF BENEFICIAL
NAME(S) AND ADDRESS(ES) OF (IF LIQUIDATION HOLDERS FOR WHOM OLD
REGISTERED HOLDER(S) CERTIFICATE AMOUNT IS LESS CAPITAL SECURITIES
(PLEASE FILL IN) NUMBER(S)* THAN ALL)** ARE HELD
- --------------------------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
TOTAL:
- --------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Old Capital Securities may be tendered in whole or in part in denominations
of $100,000 liquidation amount and integral multiples of $1,000 in excess
thereof, provided that if any Old Capital Securities are tendered for
exchange in part, the untendered liquidation amount thereof must be $100,000
or any integral multiple of $1,000 in excess thereof. All Old Capital
Securities held shall be deemed tendered unless a lesser number is specified
in this column.
- --------------------------------------------------------------------------------
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED
BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH DTC AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN DTC MAY DELIVER
OLD CAPITAL SECURITIES BY BOOK-ENTRY TRANSFER (SEE INSTRUCTION 1)):
Name of Tendering Institution:
---------------------------------------------
DTC Account Number:
--------------------------------------------------------
Transaction Code Number:
---------------------------------------------------
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED
DELIVERY IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING (SEE INSTRUCTION 5):
Name of Registered Holder(s):
-----------------------------------------------
Window Ticket Number (if any):
---------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------
Name of Institution Which Guaranteed Delivery:
------------------------------
If guaranteed delivery is to be made by book-entry transfer:
----------------
Name of Tendering Institution:
---------------------------------------------
DTC Account Number:
---------------------------------------------------------
Transaction Code Number:
----------------------------------------------------
[ ] CHECK HERE IF OLD CAPITAL SECURITIES TENDERED BY BOOK-ENTRY
TRANSFER BUT NOT EXCHANGED ARE TO BE RETURNED BY CREDITING A DTC ACCOUNT
NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL
SECURITIES FOR YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER
TRADING ACTIVITIES AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-----------------------------------------------------------------------
Address:
--------------------------------------------------------------------
Area Code and Telephone Number:
---------------------------------------------
Contact Person:
-------------------------------------------------------------
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Trust and the Guarantor the above-described
liquidation amount of Old Capital Securities in exchange for a like liquidation
amount of New Capital Securities. Subject to and effective upon the acceptance
for exchange of the Old Capital Securities tendered herewith in accordance with
the terms and conditions of the Exchange Offer (including, if the Exchange Offer
is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby exchanges, assigns and transfers to, or upon
the order of, the Trust all right, title and interest in and to such Old Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Exchange
Agent acts as the agent of the Trust and the Guarantor in connection with the
Exchange Offer) with respect to the tendered Old Capital Securities, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), subject only to the right of withdrawal
described in the Prospectus, to (i) deliver Certificates for Old Capital
Securities, together with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Trust upon receipt by the Exchange
Agent, as the undersigned's agent, of the New Capital Securities to be issued in
exchange for such Old Capital Securities, (ii) present Certificates for such Old
Capital Securities for transfer, and to transfer the Old Capital Securities on
the books of the Trust, and (iii) receive for the account of the Trust all
benefits and otherwise exercise all rights of beneficial ownership of such Old
Capital Securities, all in accordance with the terms and conditions of the
Exchange Offer.
The undersigned represents and warrants that it has full power and
authority to tender, exchange, sell, assign and transfer the Old Capital
Securities tendered hereby and to acquire New Capital Securities issuable upon
the exchange of such tendered Old Capital Securities, and that, when the same
are accepted for exchange, the Trust will acquire good, marketable and
unencumbered title to the tendered Old Capital Securities, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim. The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent, the Trust or the
Guarantor to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Old Capital Securities or to transfer ownership of such Old
Capital Securities on the account books maintained by DTC. The undersigned has
read and agreed to all of the terms of the Exchange Offer.
If any tendered Old Capital Securities are not exchanged pursuant to the
Exchange Offer for any reason, or if Certificates are submitted for more Old
Capital Securities than are tendered or accepted for exchange, Certificates for
such non-exchanged or non-tendered Old Capital Securities will be returned (or,
in the case of Old Capital Securities tendered by book-entry transfer, such Old
Capital Securities will be credited to an account maintained at DTC), without
expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tender of Old Capital Securities pursuant
to any one of the procedures described in "The Exchange Offer -- Procedures for
Tendering Old Capital Securities" in the Prospectus and in this Letter of
Transmittal, and the Trust's and the Guarantor's acceptance for exchange of such
tendered Old Capital Securities, will constitute a binding agreement between the
undersigned, the Trust and the Guarantor upon the terms and subject to the
conditions of the Exchange Offer. The undersigned recognizes that, under certain
circumstances set forth in the Prospectus, the Trust and the Guarantor may not
be required to accept for exchange any of the Old Capital Securities tendered
hereby.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Capital
Securities be issued in the name(s) of the undersigned, or in the case of
book-entry transfer of Old Capital Securities, that such New Capital Securities
be credited to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, will be credited to the account
indicated above maintained at DTC. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please deliver New Capital Securities to the
undersigned at the address shown below the undersigned's signature.
The undersigned acknowledges that this Offer is being made in reliance on
an interpretation by the staff of the Division of Corporation Finance of the
Securities and Exchange Commission (the "SEC") that the New Capital Securities
issued pursuant to the Exchange Offer in exchange for the Old Capital Securities
may be offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers, as set forth below, and any such holder which is an
"affiliate" of the Trust within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Capital Securities are acquired in
the ordinary course of such holders' business and such holders have no
arrangement or understanding with any person to participate in the distribution
of such New Capital Securities.
By tendering Old Capital Securities and executing this Letter of
Transmittal, the undersigned hereby represents to the Trust, the Guarantor and
Countrywide Home Loans, Inc., a New York corporation, and a wholly-owned
subsidiary of the Guarantor ("CHL"), that (i) the undersigned is not an
"affiliate" of the Trust, the Guarantor or CHL, (ii) any New Capital Securities
to be received by the undersigned are being acquired in the ordinary course of
its business, (iii) the undersigned has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of such New Capital Securities to be received in the Exchange Offer and
(iv) if the undersigned is not a broker-dealer or is a broker-dealer but will
not receive New Capital Securities for its own account in exchange for Old
Capital Secutities, the undersigned is not engaged in, and does not intend to
engage in, a distribution (within the meaning of the Securities Act) of such New
Capital Securities. By tendering Old Capital Securities pursuant to the Exchange
Offer and executing this Letter of Transmittal, a holder of Old Capital
Securities which is a broker-dealer represents and agrees, consistent with
certain interpretive letters issued by the staff of the Division of Corporation
Finance of the SEC to third parties, that (a) such Old Capital Securities held
by the broker-dealer are held only as a nominee or (b) such Old Capital
Securities were acquired by such broker-dealer for its own account as a result
of market-making activities or other trading activities and it will deliver a
prospectus (as amended or supplemented from time to time) meeting the
requirements of the Securities Act in connection with any resale of such New
Capital Securities (provided that by so acknowledging and by delivering a
prospectus, such broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act).
The Trust, the Guarantor and CHL have agreed that, subject to the
provisions of the Registration Rights Agreement, the Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer (as defined below) in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities for a period
ending 90 days after the Registration Statement is declared effective. In that
regard, each broker-dealer who acquired Old Capital Securities for its own
account as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), by tendering such Old Capital Securities and
executing this Letter of Transmittal, agrees that, upon receipt of notice from
the Trust, the Guarantor or CHL of the occurrence of any event or the discovery
of any fact which makes any statement contained in the Prospectus untrue in any
material respect or which causes the Prospectus to omit to state a material fact
necessary in order to make the statements contained herein, in light of the
circumstances under which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of New Capital Securities
pursuant to the Prospectus until the Trust, the Guarantor and CHL have amended
or supplemented the Prospectus to correct such misstatement or omission and have
furnished copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Trust, the Guarantor or CHL has given notice that the sale
of the New Capital Securities may be resumed, as the case may be.
All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and other
legal representatives of the undersigned. Tendered Old Capital Securities may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
BOX 2
- --------------------------------------------------------------------------------
TENDERING HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated: , 199
---------------- --
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificate(s) for Old Capital Securities or by any person(s) authorized to
become registered holder(s) by endorsements and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please set forth the full title of such person.) See
Instruction 5.
Name (s):
-----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
Tax Identification No.:
---------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED - SEE INSTRUCTION 2)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Area Code and Telephone No.:
----------------------------------------------------
Dated: , 199
----------- --
- --------------------------------------------------------------------------------
BOX 3
TO BE COMPLETED BY ALL TENDERING HOLDERS
- --------------------------------------------------------------------------------
PAYOR'S NAME: COUNTRYWIDE CAPITAL III
- --------------------------------------------------------------------------------
Part I - PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND -------------------
CERTIFY BY SIGNING AND SOCIAL SECURITY
DATING BELOW NUMBER OR
EMPLOYER
IDENTIFICATION
NUMBER
- --------------------------------------------------------------------------------
SUBSTITUTE
FORM W-9
DEPARTMENT OF THE TREASURY Part 2 - Check the box if you are NOT subject to
INTERNAL REVENUE back-up withholding under the provisions of Section
SERVICE 3406 (a) (1) (C) of the Internal Revenue Code
because (1) you have not been notified that you are
subject to back-up withholding as a result of
failure to report all interest or dividends, (2)
the Internal Revenue Service has notified you that
you are no longer subject to back-up withholding or
(3) you are exempt.
[ ]
- --------------------------------------------------------------------------------
PAYOR'S REQUEST FOR
TAXPAYER
IDENTIFICATION NUMBER (TIN)
CERTIFICATE -- UNDER THE PENALTIES PART 3
OF PERJURY, I CERTIFY THAT THE CHECK IF
INFORMATION PROVIDED ON THIS FORM AWAITING TIN
IS TRUE, CORRECT AND COMPLETE. [ ]
SIGNATURE DATE
------------- -----------
- --------------------------------------------------------------------------------
BOX 4 BOX 5
- --------------------------------------- ---------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6) (SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if certificates To be completed ONLY if certificates
for Old Capital Securities in a for Old Capital Securities in a
liquidation amount not tendered, or liquidation amount not tendered, or
New Capital Securities are to be New Capital Securities, are to be
issued in the name of someone other delivered to someone other than the
than the person whose signature person whose signature appears in Box
appears in Box 2. 2 or to an address other than that
shown in Box 1.
Issue and deliver: Deliver:
(check appropriate boxes) (check appropriate boxes)
[ ] Old Capital Securities not tendered [ ] Old Capital Securities not tendered
[ ] New Capital Securities, to: [ ] New Capital Securities, to:
Name Name
---------------------------------- ----------------------------------
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
Please complete the Substitute Form Address
W-9 at Box 3 -------------------------------
--------------------------------------
Tax I.D. or Social Security
Number:
--------------------
- --------------------------------------- ---------------------------------------
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine
the number to give the payer.
- --------------------------------------- --------------------------------------
FOR THIS TYPE OF GIVE THE SOCIAL FOR THIS TYPE OF GIVE THE SOCIAL
ACCOUNT: SECURITY NUMBER ACCOUNT: SECURITY NUMBER
OF -- OF --
- --------------------------------------- --------------------------------------
1. An individual's The individual 8. Sole The owner (4)
account proprietorship
account
2. Two or more The actual owner 9. A valid The legal (Do
entity individuals of the account trust, estate, not furnish
(joint account) or, if combined or pension trust the identifying
funds, any one of number of the
the individuals personal
(1) representative or
trustee unless the
legal entity
itself is not
designated in the
account title.)(5)
3. Husband and The actual owner 10. Corporate The corporation
wife (joint of the account account
account) or, if joint
funds, either
person (1)
4. Custodian The minor (2) 11. Religious, The organization
account of a charitable, or
minor (Uniform educational
Gift to Minors organization
Act) account
5. Adult and minor The adult or, if 12. Partnership The partnership
(joint account) the minor is the account held in
only contributor, the name of the
the minor (1) business
6. Account in the The ward, minor, 13. Association, The organization
name of guardian or incompetent club, or other
or committee for person (3) tax exempt
a designated organization
ward, minor, or
incompetent
person
7. a. The usual The grantor- 14. A broker or The broker or
revocable trustee (1) registered nominee
savings trust nominee
account (grantor
is also trustee)
b. So-called trust The actual owner 15. Account with The public entity
account that is (1) the Department
not a legal or of Agriculture
valid trust in the name of
under State law a public entity
(such as a
State or local
government,
school
district, or
prison) that
receives
agricultural
program payments
- --------------------------------------- --------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup with-holding on ALL payments include
the following:
-- A corporation.
-- A financial institution.
-- An organization exempt from tax under section 501(a), or an individual
retirement plan.
-- The United States or any agency or instrumentality thereof.
-- A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
-- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
-- An international organization or any agency or instrumentality thereof.
-- A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
-- A real estate investment trust.
-- A common trust fund operated by a bank under section 584(a).
-- An exempt charitable remainder trust, or a non-exempt trust described
in section 4947(a)(I).
-- An entity registered at all times under the Investment Company Act of
1940.
-- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
-- Payments to nonresident aliens subject to withholding under section 1441.
-- Payments to partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
-- Payments of patronage dividends where the amount received is not paid in
money.
-- Payments made by certain foreign organizations.
-- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
-- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
-- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
-- Payments described in section 6049(b)(5) to nonresident aliens.
-- Payments on tax-free covenant bonds under section 1451.
-- Payments made by certain foreign organizations.
-- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payee. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMA-TION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment. FOR ADDITIONAL INFOR-MATION CONTACT YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE.
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are forwarded herewith or (b) tenders are to be made pursuant to
the procedures for tender by book-entry transfer set forth in "The Exchange
Offer - Procedures for Tendering Old Capital Securities" in the Prospectus.
Certificates for Old Capital Securities being tendered, or timely confirmation
of a book-entry transfer of such Old Capital Securities into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or a facsimile
therof), properly completed and duly executed, with any required siganture
guarantees, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at its address set forth herein prior to 5:00
p.m., New York City time, on the Expiration Date. Old Capital Securities may be
tendered in whole or in part in the liquidation amount of $100,000 (100 Old
Capital Securities) and integral multiples of $1,000 in excess thereof; provided
that, if any Old Capital Securities are tendered for exchange in part, the
untendered liquidation amount thereof must be $100,000 (100 Old Capital
Securities) or any integral multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Capital Securities and (i) whose Old
Capital Securities are not immediately available or (ii) who cannot deliver
their Old Capital Securities, this Letter of Transmittal and all other required
documents to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date or (iii) who cannot complete the procedures for delivery by
book-entry transfer on a timely basis may tender their Old Capital Securities by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedure set forth in "The Exchange Offer --
Procedures for Tendering Old Capital Securities -- Guaranteed Delivery" in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution (as defined below); (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Trust and the Guarantor, must be received by the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date; and (iii) the
Certificates (or a Book-Entry Confirmation) representing all tendered Old
Capital Securities, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer -- Procedures for
Tendering Old Capital Securities" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. As used herein and in
the Prospectus, "Eligible Institution" means a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker or
dealer; (iii) a credit union; (iv) a national securities exchange, registered
securities association or clearing agency; or (v) a savings association that is
a participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER
AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL IT IS
RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSUME
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. CERTIFICATES AND THIS
LETTER OF TRANSMITTAL SHOULD NOT BE SENT TO THE TRUST OR THE GUARANTOR.
TENDERING HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Old Capital Securities for exchange.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any participant in DTC
whose name appears on a security position listing as the owner of the Old
Capital Securities) of Old Capital Securities tendered herewith, unless such
holder has completed either the box entitled "Special Issuance Instructions" or
the box entitled "Special Delivery Instructions" above, or
(ii) such Old Capital Securities are tendered for the account of a
firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s) on this Letter of Transmittal.
3. INADEQUATE SPACE. If the space provided in the box entitled
"Description of Old Capital Securities Tendered" is inadequate, the Certificate
number(s) and/or liquidation amount of Old Capital Securities and any other
required information should be listed on a separate signed schedule which is
attached to this Letter of Transmittal.
4. PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Capital Securities will be
accepted in only in the liquidation amount of $100,000 (100 Old Capital
Securities) and integral multiples of $1,000 in excess thereof, provided that
any Old Capital Securities are tendered for exchange in part, the untendered
liquidation amount thereof must be $100,000 (100 Old Capital Securities) or any
integral multiple of $1,000 in excess thereof. If fewer than all the Old Capital
Securities evidenced by any Certificate submitted are to be tendered; fill in
the liquidation amount of Old Capital Securities which are to be tendered in the
box entitled "Liquidation Amount of Old Capital Securities Tendered (if
liquidation amount is less than all)." In such case, new Certificate(s) for the
remainder of the Old Capital Securities that were evidenced by such old
Certificate(s) will only be sent to the holder of Old Capital Securities,
promptly after the Expiration Date. All Old Capital Securities represented by
Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. In order for a withdrawal to be effective on or prior to that
time, a written, telegraphic, telex or facsimile transmission of such notice of
withdrawal must be timely received by the Exchange Agent at one of its addresses
set forth above or in the Prospectus prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must specify the name of the
person who tendered the Old Capital Securities to be withdrawn, the aggregate
liquidation amount of Old Capital Securities to be withdrawn, and (if
Certificates for Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Certificate
for the Old Capital Securities, if different from that of the person who
tendered such Old Capital Securities. If Certificates for the Old Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Certificates for the Old Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Certificates for the Old Capital Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been tendered
pursuant to the procedures for book-entry transfer set forth in "The Exchange
Offer -- Procedures for Tendering Old Capital Securities," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of Old Capital Securities, in which case a notice of
withdrawal will be effective if delivered to the Exchange Agent by written,
telegraphic, telex or facsimile transmission. Withdrawals of tenders of Old
Capital Securities may not be rescinded. Old Capital Securities properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time prior to 5:00 p.m., New York
City time, on the Expiration Date by following any of the procedures described
in the Prospectus under "The Exchange Offer--Procedures for Tendering Old
Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust and the
Guarantor, in their sole discretion, whose determination shall be final and
binding on all parties. None of the Trust, the Guarantor, any affiliate or
assign of the Trust or the Guarantor or the Exchange Agent or any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND Endorsements.
If this Letter of Transmittal is signed by the registered holder(s) of the Old
Capital Securities tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Old Capital Securities tendered hereby is owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Capital Securities are registered in different name(s)
on several Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, attorneys-in-fact, officers of corporations or others acting
in a fiduciary or representative capacity, such persons should so indicate when
signing and must submit proper evidence satisfactory to the Trust and the
Guarantor, in their sole discretion, of such persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of
the Old Capital Securities listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless New Capital
Securities are to be issued in the name of a person other than the registered
holder(s). Signature(s) on such Certificate(s) or bond power(s) must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Capital Securities listed, the Certificates must
be endorsed or accompanied by appropriate bond power(s), signed exactly as the
name or names of the registered owner(s) appear(s) on the Certificates.
Signatures on such Certificates or bond powers must be guaranteed by an Eligible
Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Capital Securities
are to be issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Capital Securities are to be sent to someone other than
the signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Capital Securities not exchanged will be returned by mail,
or, if tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Trust and the Guarantor will determine, in
their sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities, which determination shall be final and binding
on all parties. The Trust and the Guarantor reserve the absolute right to reject
any and all tenders determined by either of them not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the Trust
and the Guarantor, be unlawful. The Trust and the Guarantor also reserve the
absolute right, subject to applicable law, to waive any of the conditions of the
Exchange Offer set forth in the Prospectus under "The Exchange Offer --
Conditions to the Exchange Offer" or any conditions or irregularity in any
tender of Old Capital Securities of any particular holder whether or nor similar
conditions or irregularities are waived in the case of other holders. The
Trust's and the Guarantor's interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. None of the Trust, the Guarantor, any
affiliate or assign of the Trust or the Guarantor or the Exchange Agent nor any
other person shall be under any duty to give notification of any irregularities
in tenders or incur any liability for failure to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES.
Questions and requests for assistance may be directed to the Exchange Agent at
its address and telephone number set forth on of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under the U.S.
federal income tax law, a holder whose tendered Old Capital Securities are
accepted for exchange is required to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on the Substitute Form
W-9 above. If the Exchange Agent is not provided with the correct TIN, the
Internal Revenue Service (the "IRS") may subject the holder or the payee to a
$50 penalty. In addition, payments to such holders or other payees with respect
to New Capital Securities exchanged pursuant to the Exchange Offer may be
subject to 31% backup withholding.
The box in Part 3 of Substitute Form W-9 may be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
Old Capital Securities or of the last transferee appearing on the transfers
attached to, or endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" above for additional guidance on
which number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the Substitute Form W-9 below, and write "exempt" on the face thereof,
to avoid possible erroneous backup withholding. A foreign person may qualify as
an exempt recipient by submitting a properly completed IRS Form W-8, signed
under penalties of perjury, attesting to that holder's exempt status. Please
consult the "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" above for additional guidance on which holders are exempt
from backup withholding.
Backup withholding is not an additional U.S. federal income tax.
Rather, the U.S. federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Capital Securities have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
11. SECURITY TRANSFER TAXES. Holders who tender their Old Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, New Capital Securities are to be delivered
to, or are to be issued in the name of, any person other than the registered
holder of the Old Capital Securities tendered, or if a transfer tax is imposed
for any reason other than the exchange of Old Capital Securities in connection
with the Exchange Offer, then the amount of any such transfer tax (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with this Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL
OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ANY OR ALL OUTSTANDING
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES A (SKISSM*)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
COUNTRYWIDE CAPITAL III
IN EXCHANGE FOR ITS
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES B (SKISSM*)
Registered holders of outstanding 8.05% Subordinated Capital Income
Securities, Series A (the "Old Capital Securities") of Countrywide Capital III,
a Delaware statutory business trust (the "Trust"), who wish to tender their Old
Capital Securities in exchange for a like principal amount of 8.05% Subordinated
Capital Income Securities, Series B (the "New Capital Securities") of the Trust
and (i) whose certificates for such Old Capital Securities are not immediately
available, (ii) who cannot deliver their certificates for such Old Capital
Securities, the Letter of Transmittal and all other documents required by the
Letter of Transmittal to The Bank of New York (the "Exchange Agent"), on or
prior to 5:00 p.m., New York City time on the Expiration Date (as defined in the
Prospectus referred to below) or (iii) who cannot complete the procedures for
book-entry transfer on a timely basis, may use this Notice of Guaranteed
Delivery or one substantially equivalent hereto. This Notice of Guaranteed
Delivery may be delivered by hand or sent by facsimile transmission (receipt
confirmed by telephone and an original delivered by guaranteed overnight
delivery) or mail to the Exchange Agent. See "The Exchange Offer -- Procedures
for Tendering Old Capital Securities -- Guaranteed Delivery" in the Prospectus.
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Hand or Overnight By Registered or Certified By Facsimile:
Courier: Mail: (Eligible
Institutions Only)
The Bank of New York The Bank of New York (212) 815-6339
101 Barclay Street 101 Barclay Street
Corporate Trust Services Floor 7E Confirm by telephone
Window,Ground Floor New York, New York 10286 to:
New York, New York 10286 Attention: Reorganization (212) 815-2742
Attention: Reorganization Section
Section
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission to
a number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
Eligible Institution, such signature guarantee must appear in the applicable
space provided on the Letter of Transmittal for Guarantee of Signatures.
- ----------
* SKIS is a servicemark of Lehman Brothers Inc.
Ladies and Gentlemen:
The undersigned hereby tenders to the Trust, upon the terms and subject to
the conditions set forth in the Prospectus, dated , 1997 (as the same may
be amended or supplemented from time to time) (the "Prospectus") of the Trust
and Countrywide Credit Industries, Inc., a Delaware corporation, and the related
Letter of Transmittal (which together constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the aggregate liquidation amount of Old Capital
Securities set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer - Procedures for
Tendering Old Capital Securities." All capitalized terms used herein but not
defined herein shall the meanings given to them in the Prospectus.
The undersigned understands that tenders of Old Capital Securities will be
accepted only in a liquidation amount equal to $100,000 (100 Old Capital
Securities) and integral multiples of $1,000 in excess thereof. The undersigned
understands that tenders of Old Capital Securities pursuant to the Exchange
Offer may not be withdrawn after 5:00 p.m., New York City time, on the
Expiration Date. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on , 1997, unless the Exchange Offer is extended as provided in the
Prospectus, in which case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offer is extended.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Owner(s) Name(s) of Registered Holder(s):
or Authorized Signatory:
---------- --------------------------------------
- ---------------------------------- --------------------------------------
- ---------------------------------- Taxpayer Identification or
Social Security No(s).:
---------------
Aggregate Liquidation Amount of Old Address:
Capital Securities Tendered: ------------------------------
-------
--------------------------------------
Certificate No.(s) of Old Capital Area Code and Telephone No.:
Securities (if available): ----------
--------- Date:
---------------------------------
- -----------------------------------
If Tendered Old Capital Securities
will be delivered by book-entry
transfer, provide DTC Account No.
And Transaction Code No.
(if available):
--------------------
- -----------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Old Capital Securities exactly as its (their) name(s) appear on
certificates for Old Capital Securities or on a security position listing as the
owner of Old Capital Securities, or by person(s) authorized to become registered
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If a signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
such representative capacity, such person must provide the following
information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
-------------------------------------------------------------------
-------------------------------------------------------------------
Capacity:
-------------------------------------------------------------------
Address(es):
-------------------------------------------------------------------
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified as an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), hereby (a) represents
that each holder of Old Capital Securities on whose behalf this tender is being
made "own(s)" the Old Capital Securities covered hereby within the meaning of
Rule 14e-4 under the Exchange Act, (b) represents that such tender of Old
Capital Securities complies with such Rule 14e-4, and (c) guarantees that,
within three New York Stock Exchange trading days from the date of this Notice
of Guaranteed Delivery, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with certificates representing
the Old Capital Securities covered hereby in proper form for transfer and any
other required documents, will be deposited by the undersigned with the Exchange
Agent.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF
TRANSMITTAL AND OLD CAPITAL SECURITIES TENDERED HEREBY TO THE EXCHANGE AGENT
WITHIN THE TIME SET FORTH ABOVE AND THAT FAILURE TO DO SO COULD RESULT IN
FINANCIAL LOSS TO THE UNDERSIGNED.
Name of Firm: Authorized Signature:
------------------------ -------------------
Address:
-----------------------------
Name:
- ------------------------------------- -----------------------------------
Area Code and Telephone No.: Title:
--------- ----------------------------------
Date:
- ------------------------------------- -----------------------------------
- --------------------------------------------------------------------------------
DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE OF GUARANTEED
DELIVERY. OLD CAPITAL SECURITIES SHOULD BE SENT TO THE EXCHANGE AGENT
TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS.
EXHIBIT 99.3
COUNTRYWIDE CAPITAL III
TENDER OF ANY OR ALL OUTSTANDING
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES A (SKIS[Servicemark]*)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
IN EXCHANGE FOR
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES B (SKIS[Servicemark]*)
To Registered Holders:
We are enclosing herewith the material listed below relating to the offer
(the "Exchange Offer") by Countrywide Capital III, a Delaware statutory business
trust (the "Trust"), and Countrywide Credit Industries, Inc., a Delaware
corporation (the "Guarantor"), to exchange the Trust's 8.05% Subordinated
Capital Income Securities, Series B (the "New Capital Securities"), which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), for a like principal amount of the Trust's issued and outstanding 8.05%
Subordinated Capital Income Securities, Series A (the "Old Capital Securities")
upon the terms and subject to the conditions set forth in the Prospectus, dated
, 1997, of the Trust and the Guarantor and the related Letter of Transmittal.
Enclosed herewith are copies of the following documents:
1. Prospectus, dated , 1997;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder from Beneficial Owner; and
5. Letter which may be sent to your clients for whose account you hold
Old Capital Securities in your name or in the name of your nominee, to
accompany the instruction form referred to above, for obtaining such
client's instruction with regard to the Exchange Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE
EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997,
UNLESS EXTENDED.
The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered.
Pursuant to the Letter of Transmittal, each holder of Old Capital
Securities will represent to the Trust that (i) it is not an "affiliate" of the
Trust, the Guarantor or Countrywide Home Loans, Inc., a wholly-owned subsidiary
of the Guarantor ("CHL"), (ii) any New Capital Securities to be received by it
are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such New Capital Securities to be
received in the Exchange Offer and (iv) if it is not a broker-dealer or is a
broker-dealer but will not receive New Capital Securities for its own account in
exchange for Old Capital Secutities, it is not engaged in, and does not intend
to engage in, a distribution (within the meaning of the Securities Act) of such
New Capital Securities. If the tendering holder of Old Capital Securities is a
broker-dealer, you will represent on behalf of such broker-dealer that (a) such
Old Capital Securities held by such broker-dealer are held only as a nominee or
(b) such Old Capital Securities were acquired by such broker-dealer for its own
account as a result of market-making activities or other trading activities and
acknowledge on behalf of such broker-dealer that such broker-dealer will deliver
a prospectus (as amended or supplemented from time to time) meeting the
requirements of the Securities Act in connection with any resale of New Capital
Securities. By acknowledging that it will deliver and by delivering such a
prospectus, such broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The enclosed Instruction to Registered Holder from Beneficial Owner
contains an authorization by the beneficial owners of the Old Capital Securities
for you to make the foregoing representations.
Neither the Trust nor the Guarantor will pay or cause to be paid any fee
or commission to any broker or dealer or to any other persons (other than the
Exchange Agent for the Exchange Offer) in connection with the solicitation of
tenders of Old Capital Securities pursuant to the Exchange Offer. CHL will pay
or cause to be paid any transfer taxes payable on the transfer of Old Capital
Securities, except as otherwise provided in Instruction 11 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
THE BANK OF NEW YORK
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE TRUST OR THE GUARANTOR, OR AUTHORIZE YOU TO USE ANY DOCUMENT OR
MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH THE EXCHANGE OFFER OTHER
THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
- --------
* SKIS is a servicemark of Lehman Brothers Inc.
EXHIBIT 99.4
COUNTRYWIDE CAPITAL III
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES A (SKISSM*)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
To Registered Holder:
The undersigned hereby acknowledges receipt of the Prospectus, dated
, 1997 (the "Prospectus"), of Countrywide Capital III, a Delaware
statutory business trust (the "Trust"), and Countrywide Credit Industries, Inc.,
a Delaware corporation, and the accompanying Letter of Transmittal (the "Letter
of Transmittal"), that together constitute the Trust's offer (the "Exchange
Offer") to exchange its 8.05% Subordinated Capital Income Securities, Series B
(the "New Capital Securities"), for a like aggregate liquidation amount of its
issued and outstanding 8.05% Subordinated Capital Income Securities, Series A
(the "Old Capital Securities"). Capitalized terms used but not defined herein
have the meanings given to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be taken
by you relating to the Exchange Offer with respect to the Old Capital Securities
held by you for the account of the undersigned.
1. The aggregate liquidation amount of the Old Capital Securities held
by you for the account of the undersigned is (fill in amount):
$ of 8.05% Subordinated Capital Income Securities, Series A.
2. With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[ ] To TENDER the following Old Capital Securities held by you for the
account of the undersigned (insert liquidation amount of Old Capital
Securities to be tendered (if any)):
$ of 8.05% Subordinated Capital Income Securities, Series A.
[ ] NOT to TENDER any Old Capital Securities held by you for the account
of the undersigned.
- --------
* SKIS is a servicemark of Lehman Brothers Inc.
If the undersigned instructs you to tender Old Capital Securities held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
undersigned is not an "affiliate" of the Trust, the Guarantor or Countrywide
Home Loans, Inc., a wholly-owned subsidiary of the Guarantor, (ii) any New
Capital Securities to be received by the undersigned are being acquired in the
ordinary course of its business, (iii) the undersigned has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities to be received in
the Exchange Offer and (iv) if the undersigned is not a broker-dealer or is a
broker-dealer but will not receive New Capital Securities for its own account in
exchange for Old Capital Secutities, the undersigned is not engaged in, and does
not intend to engage in, a distribution (within the meaning of the Securities
Act) of such New Capital Securities. If the undersigned is a broker-dealer, it
represents that (a) such Old Capital Securities held by the undersigned are held
only as a nominee or (b) such Old Capital Securities were acquired by the
undersigned for the undersigned's own account as a result of market-making
activities or other trading activities and the undersigned acknowledges that it
will deliver a prospectus (as amended or supplemented from time to time) meeting
the requirements of the Securities Act in connection with any resale of such New
Capital Securities. By acknowledging that it will deliver and by delivering such
a prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
- --------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s) (please print):
----------------------------------
Signature(s):
----------------------------------------------------------------
Address:
---------------------------------------------------------------------
Telephone Number:
------------------------------------------------------------
Taxpayer identification or Social Security Number:
---------------------------
Date:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 99.5
COUNTRYWIDE CAPITAL III
TENDER OF ANY OR ALL OUTSTANDING
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES A (SKISSM*)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
IN EXCHANGE FOR
8.05% SUBORDINATED CAPITAL INCOME SECURITIES, SERIES B (SKISSM*)
To Our Clients:
We are enclosing herewith a Prospectus, dated , 1997 of Countrywide Capital
III, a Delaware statutory business trust (the "Trust"), and Countrywide Credit
Industries, Inc., a Delaware corporation (the "Guarantor"), and a related Letter
of Transmittal (which together constitute the "Exchange Offer") relating to the
offer by the Trust, to exchange its 8.05% Subordinated Capital Income
Securities, Series B (the "New Capital Securities"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), for a like
aggregate liquidation amount of its issued and outstanding 8.05% Subordinated
Capital Income Securities, Series A (the "Old Capital Securities") upon the
terms and subject to the conditions set forth in the Exchange Offer.
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997 UNLESS EXTENDED.
THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM LIQUIDATION AMOUNT OF
OLD CAPITAL SECURITIES BEING TENDERED.
We are the holder of record of Old Capital Securities held by us for your
account. A tender of such Old Capital Securities can be made only by us as the
record holder and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
Old Capital Securities held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Old Capital Securities held by us for your account pursuant to the terms and
conditions of the Exchange Offer. We also request that you confirm that we may
on your behalf make the representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each Holder of Old Capital
Securities will represent to the Trust that (i) it is not an "affiliate" of the
Trust, the Guarantor or Countrywide Home Loans, Inc., a wholly-owned subsidiary
of the Guarantor, (ii) any New Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities to be received in
the Exchange Offer and (iv) if it is not a broker-dealer or is a broker-dealer
but will not receive New Capital Securities for its own account in exchange for
Old Capital Secutities, it is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. If the tendering holder of Old Capital Securities a broker-dealer,
we will represent on behalf of such broker-dealer that (a) such Old Capital
Securities held by such broker-dealer are held only as a nominee or (b) such Old
Capital Securities were acquired by such broker-dealer for its own account as a
result of market-making activities or other trading activities and acknowledge
on behalf of such broker-dealer that such broker-dealer will deliver a
prospectus (as amended or supplemented from time to time) meeting the
requirements of the Securities Act in connection with any resale of New Capital
Securities. By acknowledging that it will deliver and by delivering such a
prospectus, such broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Very truly yours,
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* SKIS is a servicemark of Lehman Brothers Inc.
