UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to __________________________
Commission File Number: 1-8422
COUNTRYWIDE CREDIT INDUSTRIES, INC.
----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-2641992
- -------------------------------------- -----------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4500 Park Granada, Calabasas, California 91302
- ------------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
(818) 225-3000
-----------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
-------- --------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 13, 1998
----- ----------------------------
Common Stock $.05 par value 111,050,012
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
COUNTRYWIDE CREDIT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
A S S E T S
May 31, February 28,
1998 1998
------------------ -------------------
<S> <C> <C>
Cash $ 24,805 $ 10,707
Mortgage loans and mortgage-backed securities held for sale 6,013,739 5,292,191
Property, equipment and leasehold improvements, at cost - net of
accumulated depreciation and amortization 240,084 226,330
Mortgage servicing rights, net 3,877,680 3,612,010
Other assets 3,465,387 3,077,943
------------------ -------------------
Total assets $13,621,695 $12,219,181
================== ===================
Borrower and investor custodial accounts (segregated in special
accounts - excluded from corporate assets) $3,927,488 $3,945,606
================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $8,351,621 $7,475,221
Drafts payable issued in connection with mortgage loan closings 835,914 764,285
Accounts payable, accrued liabilities and other 788,419 518,648
Deferred income taxes 934,265 873,084
------------------ -------------------
Total liabilities 10,910,219 9,631,238
Commitments and contingencies - -
Company-obligated mandatorily redeemable capital trust pass-through securities
of subsidiary trusts holding solely Company
guaranteed related subordinated debt 500,000 500,000
Shareholders' equity
Preferred stock - authorized, 1,500,000 shares of $0.05 par value;
issued and outstanding, none - -
Common stock - authorized, 240,000,000 shares of $0.05 par
value; issued and outstanding, 110,608,792 shares at May
31, 1998 and 109,205,579 shares at February 28, 1998 5,530 5,460
Additional paid-in capital 1,082,921 1,049,365
Accumulated other comprehensive income 11,662 3,697
Retained earnings 1,111,363 1,029,421
------------------ -------------------
Total shareholders' equity 2,211,476 2,087,943
------------------ -------------------
Total liabilities and shareholders' equity $13,621,695 $12,219,181
================== ===================
Borrower and investor custodial accounts $3,927,488 $3,945,606
================== ===================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
COUNTRYWIDE CREDIT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(Dollar amounts in thousands, except earnings per share)
<TABLE>
<CAPTION>
Three Months
Ended May 31,
<S> <C> <C>
1998 1997
-------------- -------------
Revenues
Loan origination fees $ 138,770 $ 53,499
Gain on sale of loans, net of commitment fees 159,027 90,235
-------------- -------------
Loan production revenue 297,797 143,734
Interest earned 179,952 82,180
Interest charges (168,420) (81,834)
-------------- -------------
Net interest income 11,532 346
Loan servicing income 242,691 214,315
Amortization and impairment/recovery of
mortgage servicing rights (149,342) (25,956)
Servicing hedge benefit (expense) 631 (44,743)
-------------- -------------
Net loan administration income 93,980 143,616
Commissions, fees and other income 46,956 30,949
-------------- -------------
Total revenues 450,265 318,645
Expenses
Salaries and related expenses 146,487 88,041
Occupancy and other office expenses 62,677 38,066
Guarantee fees 44,667 42,576
Marketing expenses 14,515 10,320
Other operating expenses 33,142 24,939
-------------- -------------
Total expenses 301,488 203,942
-------------- -------------
Earnings before income taxes 148,777 114,703
Provision for income taxes 58,023 44,734
-------------- -------------
NET EARNINGS $ 90,754 $ 69,969
============== =============
Earnings per share
Basic $0.82 $0.66
Diluted $0.78 $0.64
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
COUNTRYWIDE CREDIT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollar amounts in thousands)
Three Months
Ended May 31,
<S> <C> <C>
1998 1997
---------------- ---------------
Cash flows from operating activities:
Net earnings $ 90,754 $ 69,969
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Gain on sale of available-for-sale securities (2,387) -
Amortization and impairment/recovery of mortgage
servicing rights 149,342 25,956
Depreciation and other amortization 12,996 11,224
Deferred income taxes 58,023 44,734
Origination and purchase of loans held for sale (20,876,079) (9,360,306)
Principal repayments and sale of loans 20,154,531 7,359,509
---------------- ---------------
Increase in mortgage loans and mortgage-backed
securities held for sale (721,548) (2,000,797)
Increase in other assets (385,113) (28,088)
Increase in accounts payable and accrued liabilities 269,771 13,548
---------------- ---------------
Net cash used by operating activities (528,162) (1,863,454)
---------------- ---------------
Cash flows from investing activities:
Additions to mortgage servicing rights (415,012) (220,512)
Purchase of property, equipment and leasehold
improvements - net (23,022) (13,497)
Proceeds from sale of available-for-sale securities 8,619 -
---------------- ---------------
Net cash used by investing activities (429,415) (234,009)
---------------- ---------------
Cash flows from financing activities:
Net (decrease) increase in warehouse debt and other
short-term borrowings 601,662 1,920,516
Issuance of long-term debt 394,315 215,000
Repayment of long-term debt (47,948) (44,665)
Issuance of common stock 32,458 19,140
Cash dividends paid (8,812) (8,498)
---------------- ---------------
Net cash provided by financing activities 971,675 2,101,493
---------------- ---------------
Net increase (decrease) in cash 14,098 4,030
Cash at beginning of period 10,707 18,269
================ ===============
Cash at end of period $ 24,805 $ 22,299
================ ===============
Supplemental cash flow information:
Cash used to pay interest $ 145,206 $ 66,160
Cash used to pay income taxes $ 675 $ 2
Noncash financing activities:
Unrealized gain (loss) on available-for-sale securities,
net of tax $ 7,965 $ (9,173)
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
COUNTRYWIDE CREDIT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(Dollar amounts in thousands)
Three Months
Ended May 31,
<S> <C> <C>
1998 1997
--------------- --------------
NET EARNINGS $90,754 $69,969
Other comprehensive income, net of taxes:
Unrealized gains (losses) on available for sale securities:
Unrealized holding gains (losses) arising during the 9,421 (9,173)
period
Less: reclassification adjustment for gains included in
net earnings (1,456) -
--------------- --------------
Other comprehensive income 7,965 (9,173)
--------------- --------------
COMPREHENSIVE INCOME $98,719 $60,796
=============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
COUNTRYWIDE CREDIT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the quarter ended May 31, 1998 are not
necessarily indicative of the results that may be expected for the fiscal year
ending February 28, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the annual report on Form
10-K for the fiscal year ended February 28, 1998 of Countrywide Credit
Industries, Inc. (the "Company").
Certain amounts reflected in the consolidated financial statements for the
periods ended May 31, 1997 have been reclassified to conform to the presentation
for the three-month period ended May 31, 1998.
NOTE B - MORTGAGE SERVICING RIGHTS
<TABLE>
<CAPTION>
The activity in mortgage servicing rights was as follows.
--------------------------------------------- ---------------------- ---------------------
Quarter Ended
May 31,
----------------
(Dollar amounts in thousands) 1998
--------------------------------------------- -- ---------------- -- ---------------- ----
Mortgage Servicing Rights
<S> <C>
Balance at beginning of period $3,653,318
Additions 415,012
Scheduled amortization (132,903)
Hedge losses (gains) applied (15,449)
----------------
Balance before valuation reserve
at end of period 3,919,978
----------------
Reserve for Impairment of Mortgage Servicing Rights
Balance at beginning of period (41,308)
Reductions (additions) (990)
----------------
Balance at end of period (42,298)
================
Mortgage Servicing Rights, net $3,877,680
================
--------------------------------------------- -- ---------------- -- ---------------- ----
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
<TABLE>
<CAPTION>
NOTE C - OTHER ASSETS
Other assets consisted of the following.
---------------------------------------------------------- -----------------------------------------------------
May 31, February 28,
----------------- ----------------
(Dollar amounts in thousands) 1998 1998
------------------------------------------------------------------ -- ----------------- --- ---------------- ---
<S> <C> <C>
Servicing hedge instruments $ 937,645 $ 801,335
Trading securities 544,967 255,216
Mortgage-backed securities retained in securitization 479,443 466,259
Rewarehoused FHA and VA loans 343,124 426,407
Servicing related advances 223,359 231,437
Receivables related to broker-dealer activities 207,036 148,976
Loans held for investment 135,845 115,713
Equity securities 93,579 96,152
Accrued interest 73,892 84,601
Other 426,497 451,847
----------------- ----------------
$3,465,387 $3,077,943
================= ================
</TABLE>
<TABLE>
<CAPTION>
NOTE D - AVAILABLE FOR SALE SECURITIES
Amortized cost and fair value of available for sale securities were as
follows.
-------------------------------- ---------------- - ------------------------------------ -- ---------------- ---
May 31, 1998
---------------- - ------------------------------------ -- ----------------
Gross Gross
Amortized Unrealized Unrealized Fair
(Dollar amounts in thousands) Cost Gains Losses Value
-------------------------------- ---------------- - ----------------- - ---------------- -- ---------------- ---
<S> <C> <C> <C> <C>
CMOs $199,209 $16,905 ($13,686) $202,428
Equity Securities 77,680 15,899 - 93,579
================ ================= ================ ================
$276,889 $32,804 ($13,686) $296,007
================ ================= ================ ================
-------------------------------- ---------------- - ------------------------------------ -- ---------------- ---
February 28, 1998
---------------- - ------------------------------------ -- ----------------
Gross Gross
Amortized Unrealized Unrealized Fair
(Dollar amounts in thousands) Cost Gains Losses Value
-------------------------------- ---------------- - ----------------- - ---------------- -- ---------------- ---
CMOs $204,234 - ($12,411) $191,823
Equity Securities 7,315 18,471 - 25,786
================ ================= ================ ================
$211,549 $18,471 ($12,411) $217,609
================ ================= ================ ================
-------------------------------- ---------------- - ----------------- - ---------------- -- ---------------- ---
</TABLE>
<PAGE>
NOTE E - NOTES PAYABLE
<TABLE>
<CAPTION>
Notes payable consisted of the following.
---------------------------------------------------------- -----------------------------------------------------
May 31, February 28,
----------------- ----------------
(Dollar amounts in thousands) 1998 1998
------------------------------------------------------------------ -- ----------------- --- ---------------- ---
<S> <C> <C>
Commercial paper $2,879,354 $2,119,330
Medium-term notes, Series A, B, C, D, E and F 4,484,500 4,137,185
Repurchase agreements 586,135 181,121
Subordinated notes 200,000 200,000
Unsecured notes payable 199,995 835,000
Other notes payable 1,637 2,585
================= ================
$8,351,621 $7,475,221
================= ================
------------------------------------------------------------------ -- ----------------- --- ---------------- ---
</TABLE>
Revolving Credit Facility and Commercial Paper
As of May 31, 1998, Countrywide Home Loans, Inc. ("CHL"), the Company's
mortgage banking subsidiary, had an unsecured credit agreement (revolving credit
facility) with forty-five commercial banks permitting CHL to borrow an aggregate
maximum amount of $4.0 billion. This revolving credit facility consists of a
five year facility of $3.0 billion which expires on September 24, 2002 and a one
year facility of $1.0 billion which expires on September 24, 1998. The purpose
of the revolving credit facility is to provide liquidity back-up for CHL's $4.0
billion commercial paper program. The facility contains various financial
covenants and restrictions, certain of which limit the amount of dividends that
can be paid by the Company or CHL. As consideration for the facility, CHL pays
annual commitment fees of $3.8 million. On April 15, 1998, CHL entered into an
additional one year unsecured credit agreement (revolving credit facility) with
sixteen of the forty-five banks referenced above for total commitments of $1.3
billion which expires April 14, 1999. This facility contains terms consistent
with the $4.0 billion revolving credit facility and as consideration for the
facility, CHL pays annual commitment fees of $1.5 million. This facility will
serve as additional liquidity backup to CHL's commercial paper program. No
amount was outstanding under either revolving credit facility at May 31, 1998.
The interest rate on direct borrowings is based on a variety of sources,
including the prime rate and the London Interbank Offered Rates ("LIBOR") for
U.S. dollar deposits. This interest rate varies, depending on CHL's credit
ratings. The weighted average borrowing rate on commercial paper borrowings for
the quarter ended May 31, 1998 was 5.59%. The weighted average borrowing rate on
commercial paper outstanding as of May 31, 1998 was 5.63%.
<PAGE>
NOTE E - NOTES PAYABLE (Continued)
Medium-Term Notes
As of May 31, 1998, outstanding medium-term notes issued by CHL under
various shelf registrations filed with the Securities and Exchange Commission
were as follows.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
Outstanding Balance Interest Rate Maturity Date
----------------------- ----------------------------
------------------------------------------
Floating-Rate Fixed-Rate Total From To From To
------------------------------------------ ----------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Series A $ - $ 228,500 $ 228,500 6.86% 8.79% Jun. 1998 Mar. 2002
Series B - 351,000 351,000 6.08% 6.98% Jul. 1999 Aug. 2005
Series C 208,000 197,000 405,000 5.27% 8.43% Apr. 1999 Mar. 2004
Series D 115,000 402,000 517,000 5.88% 6.88% Aug. 1998 Oct. 2006
Series E 310,000 673,000 983,000 5.75% 7.45% Feb. 2000 Oct. 2008
Series F 656,000 1,344,000 2,000,000 5.59% 7.00% Oct. 1999 May 2013
------------------------------------------
Total $ 1,289,000 $ 3,195,500 $ 4,484,500
==========================================
</TABLE>
As of May 31, 1998, all of the outstanding fixed-rate notes had been
effectively converted through interest rate swap agreements to floating-rate
notes. The weighted average borrowing rate on medium-term note borrowings for
the quarter ended May 31, 1998, including the effect of the interest rate swap
agreements, was 6.07%.
Repurchase Agreements
As of May 31, 1998, the Company had entered into short-term financing
arrangements to sell MBS under agreements to repurchase. The weighted average
borrowing rate for the quarter ended May 31, 1998 was 5.61%. The weighted
average borrowing rate on repurchase agreements outstanding as of May 31, 1998
was 5.65%. The repurchase agreements were collateralized by MBS. All MBS
underlying repurchase agreements are held in safekeeping by broker-dealers, and
all agreements are to repurchase the same or substantially identical MBS.
Subordinated Notes
The 8.25% subordinated notes are due July 15, 2002. Interest is payable
semi-annually on each January 15 and July 15. The subordinated notes are not
redeemable prior to maturity and are not subject to any sinking fund
requirements.
NOTE E - NOTES PAYABLE (Continued)
Pre-Sale Funding Facilities
As of May 31, 1998, CHL had uncommitted revolving credit facilities with the
Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan
Mortgage Corporation ("Freddie Mac"). The credit facilities are secured by
conforming mortgage loans which are in the process of being pooled into MBS.
Interest rates are based on LIBOR, federal funds and/or the prevailing rates for
MBS repurchase agreements. The weighted average borrowing rate for all such
facilities for the quarter ended May 31, 1998 was 5.71%. As of May 31, 1998, the
Company had no outstanding borrowings under any of these facilities.
NOTE F - FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
The following summarizes the notional amounts of Servicing Hedge derivative
contracts.
- ------------------------------------- ------------------- -------------------- ------------------- ---------------------
(Dollar amounts in millions) Balance, Balance,
February 28, 1998 Dispositions/ May 31,
Additions Expirations 1998
- ------------------------------------- ------------------- -------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Interest Rate Floors $33,000 6,500 ( 3,000) $36,500
Long Call Options on
Interest Rate Futures $79,400 7,520 (19,720) $67,200
Long Put Options on
Interest Rate Futures $ 9,800 350 - $10,150
Interest Rate Futures $ 5,000 - - $ 5,000
Capped Swaps $ 1,000 - - $ 1,000
Interest Rate Swaps $ 3,900 2,000 - $ 5,900
Interest Rate Cap $ 4,500 - - $ 4,500
Swaptions $ 1,850 6,000 - $ 7,850
Options on Callable
Pass-through Certificates $ 2,561 800 - $ 3,361
- ------------------------------------- ------------------- -------------------- ------------------- ---------------------
</TABLE>
NOTE G - LEGAL PROCEEDINGS
On September 29, 1997, the United States District Court adopted the
recommendation of a magistrate denying class certification in a lawsuit which
was filed against CHL and a mortgage broker by Jeff and Kathy Briggs as a
purported class action. The effect of the ruling is that the lawsuit will not
proceed as a class action and will be limited to the Briggs' own claims. The
Briggs are seeking reconsideration of the Court's ruling. The suit entitled
Briggs v. Countywide, et. al and filed in the Northern Division of the United
States District Court for the Middle District of Alabama, alleges that in
connection with residential mortgage loan closings, CHL made certain payments to
mortgage brokers in violation of the Real Estate Settlement Procedures Act and
induced mortgage brokers to breach their alleged fiduciary duties to their
customers. The plaintiffs seek unspecified compensatory and punitive damages
plus, as to certain claims, treble damages. In early 1998, two additional
purported class action lawsuits were filed making essentially the same
allegations about broker compensation as were made in Briggs. William C. Elliott
et. al v. Countrywide Home Loans, Inc. was filed on February 18, 1998 in the
United States District Court for Northern District of Mississippi and Joseph W.
Gann, Sr., et. al v. America's Wholesale Lender was filed on February 14, 1998
in the United States District Court for the Middle District of Alabama.
<PAGE>
NOTE G - LEGAL PROCEEDINGS (Continued)
CHL's management believes that its compensation programs to mortgage brokers
comply with applicable laws and long standing industry practice, and that it has
meritorious defenses to these actions. CHL intends to defend vigorously against
these actions and believes that the ultimate resolution of such claims will not
have a material adverse effect on the Company's financial position or results of
operations.
The Company and certain subsidiaries are defendants in various lawsuits
involving matters generally incidental to their business. Although it is
difficult to predict the ultimate outcome of these cases, management believes,
based on discussions with counsel, that any ultimate liability will not
materially affect the consolidated financial position or results of operations
of the Company and its subsidiaries.
NOTE H - SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARY
<TABLE>
<CAPTION>
Summarized financial information for Countrywide Home Loans, Inc. was as follows.
-- ----------------------------------------- ---- ------------------------------------------------- ---------
May 31, February 28,
-------------- --------------
(Dollar amounts in thousands) 1998 1998
-- ---------------------------------------------- ------- -------------- ----------- -------------- ---------
Balance Sheets:
Mortgage loans and mortgage-backed
<S> <C> <C>
securities held for sale $ 6,013,739 $ 5,292,191
Other assets 7,102,704 6,216,382
============== ==============
Total assets $13,116,443 $11,508,573
============== ==============
Short- and long-term debt $ 9,703,014 $ 8,747,794
Other liabilities 1,334,158 1,027,884
Equity 2,079,271 1,732,895
============== ==============
Total liabilities and equity $13,116,443 $11,508,573
============== ==============
-- ---------------------------------------------- ------- -------------- ----------- -------------- ---------
</TABLE>
<TABLE>
<CAPTION>
--- ----------------------------------------- --- -------------------------------------------------- --------
(Dollar amounts in thousands) Three Months Ended May 31,
--------------- ---------- ---------------
1998 1997
--- --------------------------------------------- ------- --------------- ---------- --------------- --------
Statements of Earnings:
<S> <C> <C>
Revenues $382,167 $282,487
Expenses 261,114 184,518
Provision for income taxes 47,211 37,892
=============== ===============
Net earnings $ 73,842 $ 60,077
=============== ===============
--- --------------------------------------------- ------- --------------- ---------- --------------- --------
</TABLE>
NOTE I - IMPLEMENTATION OF NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133).
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (a) a hedge of the exposure
to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows
of a forecasted transaction, or (c) a hedge of the foreign currency exposure of
a net investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. This statement becomes effective in fiscal year ended February 28,
2001. The Company has not yet determined the impact on the Consolidated
Financial Statements upon adoption of this Standard.
<PAGE>
NOTE J - SUBSEQUENT EVENTS
On June 3, 1998 CHL issued $400 million of Floating Rate Notes due 2003 listed
on the Luxembourg Stock Exchange (the "Euro Notes"). On July 13, 1998, CHL
entered into a commitment to sell to qualified purchasers an additional $10
million of Euro Notes which are Floating Rate Notes due July 1999 to be listed
on the Luxembourg Stock Exchange. The Euro Notes are fully and unconditionally
guaranteed by the Company and are to be issued under the Euro Medium Term Note
program established by CHL. The maximum aggregate principal amount of Euro Notes
outstanding at any one time under the program will not exceed $2.0 billion. The
Euro Notes will not be registered under the Securities Act of 1933, as amended
(the "Securities Act") and as such, they may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with an exemption from the registration requirements of the
Securities Act.
On June 30, 1998, the Company filed a shelf registration statement with the
Securities and Exchange Commission ("SEC") which provides for the issuance of
common stock, preferred stock and debt securities with an aggregate public
offering price of up to $2.0 billion.. The Company intends to allocate up to
$1.5 billion of the securities issued under this shelf as Series G Medium-Term
Notes. The Company intends to use the proceeds from the sale of the medium-term
notes for general corporate purposes, which may include retirement of
indebtedness of the Company, financing mortgage loan inventory and investment in
servicing rights through the current production of loans and the bulk
acquisition of contracts to service loans.
NOTE K - EARNINGS PER SHARE
On February 28, 1998, the Company adopted Statement of Financial Accounting
Standards No. 128, Earnings per Share, ("SFAS No. 128") which supersedes
Accounting Principles Board Opinion No. 15, of the same name. SFAS No. 128
simplifies the standards for computing earnings per share ("EPS") and makes them
comparable to international standards. SFAS No. 128 was effective for financial
statements issued for periods ending after December 15, 1997, with earlier
application not permitted. Upon adoption, all prior EPS data was restated.
Basic EPS is determined using net income divided by the weighted average
shares outstanding during the period. Diluted EPS is computed by dividing net
income by the weighted average shares outstanding, assuming all dilutive
potential common shares were issued.
The following table presents basic and diluted EPS for the three months
ended May 31, 1998 and 1997, computed under the provisions of SFAS No. 128.
<TABLE>
<CAPTION>
- ------------------------ -- -- ----- ------------------------------------ -- ----- ----
Three Months Ended May 31,
-- -- ----- ------------------------------------ -- ----- ----
1998 1997
--------- --------- --------- ---------- --------- ---------
(Dollar amounts in Per-Share Per-Share
thousands, except per Net Amount Net Amount
share data) Earnings Shares Earnings Shares
- ------------------------ --------- --------- --------- ---------
========= ==========
Net earnings $90,754 $69,969
========= ==========
Basic EPS
Net earnings available
<S> <C> <C> <C> <C> <C> <C>
to common shareholders $90,754 110,127 $0.82 $69,969 106,257 $0.66
Effect of dilutive
stock options - 6,416 - 3,000
--------- --------- ---------- ---------
Diluted EPS
Net earnings available
to common shareholders $90,754 116,543 $0.78 $69,969 109,257 $0.64
========= ========= ========= ========== ========= ---------
- ------------------------ --------- --------- --------- - ---------- --------- ---------
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. This Quarterly Report on Form
10-Q may contain 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 actual results to differ
materially from historical results or those anticipated. The words "believe,"
"expect," "anticipate," "intend," "estimate," "should" 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 could cause actual 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.
RESULTS OF OPERATIONS
Quarter Ended May 31, 1998 Compared to Quarter Ended May 31, 1997
Revenues for the quarter ended May 31, 1998 increased 41% to $450.3 million
from $318.6 million for the quarter ended May 31, 1997. Net earnings increased
30% to $90.8 million for the quarter ended May 31, 1998 from $70.0 million for
the quarter ended May 31, 1997. The increase in revenues and net earnings for
the quarter ended May 31, 1998 compared to the quarter ended May 31, 1997 was
primarily attributable to higher loan production volume and greater sales of
home equity loans and sub-prime loans for the quarter ended May 31, 1998. An
increase in the size of the Company's servicing portfolio and an increase in the
income of the non-mortgage banking subsidiaries also contributed to the increase
in revenues and net earnings for the quarter ended May 31, 1998 compared to the
quarter ended May 31, 1997. These positive factors were partially offset by an
increase in amortization of the servicing asset and an increase in expenses for
the quarter ended May 31, 1998 over the quarter ended May 31, 1997.
The total volume of loans produced increased 123% to $20.9 billion for the
quarter ended May 31, 1998 from $9.4 billion for the quarter ended May 31, 1997.
The increase in loan production was primarily due to generally lower interest
rates that prevailed during the quarter ended May 31, 1998 compared to the
quarter ended May 31, 1997, as well as to the continuing expansion of the
Company's Consumer Markets and Wholesale Lending Divisions. Refinancings totaled
$11.9 billion, or 57% of total fundings, for the quarter ended May 31, 1998, as
compared to $2.8 billion, or 30% of total fundings, for the quarter ended May
31, 1997. Fixed-rate mortgage loan production totaled $19.4 billion, or 93% of
total fundings, for the quarter ended May 31, 1998, as compared to $6.4 billion,
or 68% of total fundings, for the quarter ended May 31, 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANLAYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Total loan volume in the Company's production Divisions is summarized below.
<TABLE>
<CAPTION>
- ------------------------------------- --------------------------------- --------
(Dollar amounts in millions) Three Months Ended May 31,
- ---------------------------------- ------------------------------------ --------
1998 1997
------------- -------------
<S> <C> <C>
Consumer Markets Division $6,001 $2,347
Wholesale Lending Division 7,462 2,662
Correspondent Lending Division 7,287 4,351
Full Spectrum Lending, Inc. 126 -
============= =============
Total Loan Volume $20,876 $9,360
============= =============
- -------------------------------------------- ------------- -------- ------------
</TABLE>
The factors which affect the relative volume of production among the
Company's Divisions include the price competitiveness of each Division's product
offerings, the level of mortgage lending activity in each Division's market and
the success of each Division's sales and marketing efforts.
Included in the Company's total volume of loans produced is $452 million of
home equity loans funded in the quarter ended May 31, 1998 and $295 million
funded in the quarter ended May 31, 1997. Sub-prime loan production, which is
also included in the Company's total production volume, was $521 million in the
quarter ended May 31, 1998 and $282 million in the quarter ended May 31, 1997.
At May 31, 1998 and 1997, the Company's pipeline of loans in process was
$14.6 billion and $5.2 billion, respectively. Historically, approximately 43% to
77% of the pipeline of loans in process has funded. In addition, at May 31,
1998, the Company had committed to make loans in the amount of $1.5 billion,
subject to property identification and approval of the loans (the "LOCK 'N SHOP
(R) Pipeline"). At May 31, 1997, the LOCK 'N SHOP Pipeline was $2.1 billion. For
the quarters ended May 31, 1998 and 1997, the Company received 278,448 and
139,845 new loan applications, respectively, at an average daily rate of $495
million and $222 million, respectively. The factors that affect the percentage
of applications received and funded during a given time period include the
movement and direction of interest rates, the average length of loan commitments
issued, the creditworthiness of applicants, the production Divisions' loan
processing efficiency and loan pricing decisions.
Loan origination fees increased during the quarter ended May 31, 1998 as
compared to the quarter ended May 31, 1997 due to higher production and a change
in the Divisional mix. The Consumer Markets and Wholesale Lending Divisions
(which, due to their higher cost structure, charge higher origination fees per
dollar loaned) comprised a greater percentage of total production in the quarter
ended May 31, 1998 than in the quarter ended May 31, 1997. Gain on sale of loans
improved in the quarter ended May 31, 1998 as compared to the quarter ended May
31, 1997 primarily due to higher loan production volume and increased sales
during the quarter ended May 31, 1998 of higher-margin home equity and sub-prime
loans. The sale of home equity loans contributed $17.5 million and $13.2 million
to gain on sale of loans in the quarters ended May 31, 1998 and 1997,
respectively. Sub-prime loans contributed $16.4 million and $14.8 million to the
gain on sale of loans for the quarters ended May 31, 1998 and 1997,
respectively. In general, loan origination fees and gain (loss) on sale of loans
are affected by numerous factors including the volume and mix of loans produced
and sold, loan pricing decisions, interest rate volatility and the general
direction of interest rates.
<PAGE>
Net interest income (interest earned net of interest charges) increased to
$11.5 million for the quarter ended May 31, 1998 from $0.3 million for the
quarter ended May 31, 1997. Net interest income is principally a function of:
(i) net interest income earned from the Company's mortgage loan inventory ($30.0
million and $13.8 million for the quarters ended May 31, 1998 and 1997,
respectively); (ii) interest expense related to the Company's investment in
servicing rights ($85.8 million and $44.7 million for the quarters ended May 31,
1998 and 1997, respectively) and (iii) interest income earned from the custodial
balances associated with the Company's servicing portfolio ($64.6 million and
$29.5 million for the quarters ended May 31, 1998 and 1997, respectively). The
Company earns interest on, and incurs interest expense to carry, mortgage loans
held in inventory. The increase in net interest income from the mortgage loan
inventory was primarily attributable to higher production levels. The increase
in interest expense on the investment in servicing rights resulted primarily
from a larger servicing portfolio and an increase in the payments of interest to
certain investors pursuant to customary servicing arrangements with regard to
paid-off loans in excess of the interest earned on these loans through their
respective payoff dates ("Interest Costs Incurred on Payoffs"). The increase in
net interest income earned from the custodial balances was related to an
increase in the average custodial balances (caused by growth of the servicing
portfolio and an increase in the amount of prepayments) partially offset by a
decrease in the earnings rate on custodial balances from the quarter ended May
31, 1997 to the quarter ended May 31, 1998.
During the quarter ended May 31, 1998, loan administration income was
positively affected by the continued growth of the loan servicing portfolio. At
May 31, 1998, the Company serviced $191.6 billion of loans (including $8.3
billion of loans subserviced for others) compared to $163.5 billion (including
$4.5 billion of loans subserviced for others) at May 31, 1997, a 17% increase.
The growth in the Company's servicing portfolio during the quarter ended May 31,
1998 was the result of loan production volume and the acquisition of bulk
servicing rights, partially offset by prepayments, partial prepayments and
scheduled amortization of mortgage loans. The weighted average interest rate of
the mortgage loans in the Company's servicing portfolio at May 31, 1998 and 1997
was 7.7% and 7.8%, respectively. It is the Company's strategy to build and
retain its servicing portfolio because of the returns the Company can earn from
such investment and because the Company believes that servicing income is
counter-cyclical to loan production income. See "Prospective Trends - Market
Factors."
During the quarter ended May 31 1998, the prepayment rate of the Company's
servicing portfolio was 28% compared to 11% for the quarter ended May 31, 1997.
In general, the prepayment rate is affected by the level of refinance activity,
which in turn is driven by the relative level of mortgage interest rates, and
activity in the home purchase market. The increase in the prepayment rate from
the quarter ended May 31, 1997 to the quarter ended May 31, 1998 was primarily
attributable to the increase in refinance activity caused by lower interest
rates during the quarter ended May 31, 1998 than during the quarter ended May
31, 1997.
The primary means used by the Company to reduce the sensitivity of its
earnings to changes in interest rates is through a strong production capability
and a growing servicing portfolio. In addition, to mitigate the effect on
earnings of impairment that may result from increased current and projected
future prepayment activity, the Company acquires financial instruments,
including derivative contracts, that increase in aggregate value when interest
rates decline (the "Servicing Hedge"). These financial instruments include
options on interest rate futures and MBS, interest rate futures, interest rate
floors, interest rate swaps (with the Company's maximum payment capped) ("Capped
Swaps"), options on interest rate swaps ("Swaptions"), interest rate caps,
certain tranches of collateralized mortgage obligations ("CMOs") and options on
callable pass-through certificates ("options on CPC").
With the Capped Swaps, the Company receives and pays interest on a specified
notional amount. The rate received is fixed; the rate paid is adjustable, is
indexed to the London Interbank Offered Rates for U.S.
dollar deposits ("LIBOR") and has a specified maximum or "cap".
With Swaps, the Company receives and pays interest on a specified notional
amount. The rate received is fixed; the rate paid is adjustable and is indexed
to LIBOR.
With the Swaptions, the Company has the option to enter into a
receive-fixed, pay-floating interest rate swap at a future date or to settle the
transaction for cash.
The CMOs, which consist primarily of P/O securities, have been purchased at
deep discounts to their par values. As interest rates decrease, prepayments on
the collateral underlying the CMOs should increase. This should result in a
decline in the average lives of the P/O securities and a corresponding increase
in the present values of their cash flows. Conversely, as interest rates
increase, prepayments on the collateral underlying the CMOs should decrease.
These changes should result in an increase in the average lives of the P/O
securities and a decrease in the present values of their cash flows.
An option on CPC gives the holder the right to call a mortgage-backed
security at par and receive the remaining cash flows from the particular pool.
This option has a one year lockout, meaning it cannot be exercised until the end
of the first year. After the lockout period, the option can be exercised at
anytime.
The Servicing Hedge is designed to protect the value of the investment in
mortgage servicing rights ("MSRs") from the effects of increased prepayment
activity that generally results from declining interest rates. To the extent
that interest rates increase, the value of the MSRs increases while the value of
the hedge instruments declines. With respect to the floors, options, caps,
Swaptions, options on CPC and CMOs, the Company is not exposed to loss beyond
its initial outlay to acquire the hedge instruments. The Company's exposure to
loss on futures is related to changes in the Eurodollar rate over the life of
the contract. The Company estimates that its maximum exposure to loss over the
contractual term is $16.6 million. With respect to the Capped Swaps contracts
entered into by the Company as of May 31, 1998, the Company estimates that its
maximum exposure to loss over the contractual term is $23.3 million. With
respect to the Swap contracts entered into by the Company as of May 31, 1998,
the Company estimates that its maximum exposure to loss over the contractual
term is $167.8 million. In the quarter ended May 31, 1998, the Company
recognized a net benefit of $0.6 million from its Servicing Hedge. The net
benefit included unrealized net gains of $4.6 million and net realized losses of
$4.0 million from premium amortization and the sale of various financial
instruments that comprise the Servicing Hedge. In the quarter ended May 31,
1997, the Company recognized a net expense of $44.7 million from its Servicing
Hedge. The net expense included unrealized losses of $39.2 million and net
realized losses of $5.5 million from the sale of various financial instruments
that comprise the Servicing Hedge. There can be no assurance that the Servicing
Hedge will generate gains in the future, or if gains are generated, that they
will fully offset impairment of the MSRs.
The Company recorded amortization and impairment of its MSRs in the quarter
ended May 31, 1998 totaling $149.3 million (consisting of amortization amounting
to $132.9 million and impairment of $16.4 million), compared to $26.0 million of
amortization and impairment (consisting of amortization amounting to $65.8
million and recovery of previous impairment of $39.8 million) in the quarter
ended May 31, 1997. The factors affecting the amount of amortization and
impairment or recovery of the MSRs recorded in an accounting period include the
level of prepayments during the period, the change in estimated future
prepayments and the amount of Servicing Hedge gains or losses.
<PAGE>
<TABLE>
<CAPTION>
Salaries and related expenses are summarized below for the quarters ended
May 31, 1998 and 1997.
-- --------------------------- -- -- ------ ------------------------------------------------- ----- -- ---- -----
(Dollar amounts in Quarter Ended May 31, 1998
thousands)
-- ------ ------------------------------------------------- ----- -- ---- -----
-- --------------------------- --
Production Loan Corporate Other
Activities Administration Administration Activities Total
-- --------------------------- -- ------------ -- ------------- -- ------------- -- ------------- -- ------------
<S> <C> <C> <C> <C> <C>
Base Salaries $43,485 $11,960 $20,211 $7,806 $83,462
Incentive Bonus 33,539 329 5,122 3,640 42,630
Payroll Taxes and Benefits 12,062 2,826 4,274 1,233 20,395
------------ ------------- ------------- ------------- ------------
Total Salaries and Related
Expenses $89,086 $15,115 $29,607 $12,679 $146,487
============ ============= ============= ============= ------------
Average Number of 4,597 1,839 1,622 641 8,699
Employees
-- --------------------------- -- ------------ -- ------------- -- ------------- -- ------------- -- ------------
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
-- --------------------------- -- -- ------ ------------------------------------------------- ----- -- ---- -----
(Dollar amounts in Quarter Ended May 31, 1997
thousands)
-- ------ ------------------------------------------------- ----- -- ---- -----
-- --------------------------- --
Production Loan Corporate Other
Activities Administration Administration Activities Total
-- --------------------------- -- ------------ -- ------------- -- ------------- -- ------------- -- ------------
<S> <C> <C> <C> <C> <C>
Base Salaries $28,562 $10,754 $16,057 $5,258 $60,631
Incentive Bonus 11,692 267 4,248 2,062 18,269
Payroll Taxes and Benefits 4,945 2,115 1,558 523 9,141
------------ ------------- ------------- ------------- ------------
Total Salaries and Related
Expenses $45,199 $13,136 $21,863 $ 7,843 $88,041
============ ============= ============= ============= ------------
Average Number of 2,851 1,622 1,291 393 6,157
Employees
-- --------------------------- -- ------------ -- ------------- -- ------------- -- ------------- -- ------------
</TABLE>
The amount of salaries increased during the quarter ended May 31, 1998
reflecting the Company's strategy of expanding and enhancing its Consumer
Markets and Wholesale branch networks, including new retail sub-prime branches.
In addition, a larger servicing portfolio and growth in the Company's
non-mortgage banking subsidiaries also contributed to the increase. Incentive
bonuses earned during the quarter ended May 31, 1998 increased primarily due to
higher production and a change in production mix.
Occupancy and other office expenses for the quarter ended May 31, 1998
increased to $62.7 million from $38.1 million for the quarter ended May 31, 1997
primarily due to: (i) the continued effort by the Company to expand its retail
branch network, particularly outside of California; (ii) higher loan production;
(iii) a larger servicing portfolio; and (iv) growth in the Company's
non-mortgage banking activities.
Guarantee fees represent fees paid to guarantee timely and full payment of
principal and interest on MBS and whole loans sold to permanent investors and to
transfer the credit risk of the loans in the servicing portfolio. For the
quarter ended May 31, 1998, guarantee fees increased 5% to $44.7 million from
$42.6 million for the quarter ended May 31, 1997. The increase resulted from an
increase in the servicing portfolio, changes in the mix of permanent investors
and terms negotiated at the time of loan sales.
Marketing expenses for the quarter ended May 31, 1998 increased 41% to $14.5
million from $10.3 million for the quarter ended May 31, 1997, reflecting the
Company's continued implementation of a marketing plan to increase consumer
brand awareness of the Company in the residential mortgage market.
Other operating expenses for the quarter ended May 31, 1998 increased from
the quarter ended May 31, 1997 by $8.2 million, or 33%. This increase was due
primarily to higher loan production, a larger servicing portfolio, increased
systems development and growth in the Company's non-mortgage banking
subsidiaries in the quarter ended May 31, 1998 as compared to the quarter ended
May 31, 1997.
Profitability of Loan Production and Servicing Activities
In the quarter ended May 31, 1998, the Company's pre-tax earnings from its
loan production activities (which include loan origination and purchases,
warehousing and sales) were $136.0 million. In the quarter ended May 31, 1997,
the Company's comparable pre-tax earnings were $45.7 million. The increase of
$90.3 million was primarily attributable to increased production, a shift in
production mix towards Consumer Markets and Wholesale Divisions and greater
sales of higher-margin home equity and sub-prime loans at significantly higher
margins than prime credit quality first mortgages. These positive results were
partially offset by higher production costs. In the quarter ended May 31, 1998,
the Company's pre-tax loss from its loan servicing activities (which include
administering the loans in the servicing portfolio, selling homeowners and other
insurance, acting as tax payment agent, marketing foreclosed properties and
acting as reinsurer) was $0.6 million as compared to pre-tax income of $59.7
million in the quarter ended May 31, 1997. The decrease of $60.3 million was
primarily attributed to the increased amortization of the servicing asset and
Interest Costs Incurred on Payoffs due to declining interest rates and increase
in prepayments from May 31, 1997 to May 31, 1998. These negative factors were
partially offset by the increase in servicing fees, miscellaneous income and
interest earned on escrow balances derived by the larger servicing portfolio.
Profitability of Other Activities
In addition to loan production and loan servicing, the Company offers
ancillary products and services related to its mortgage banking activities.
These include title insurance and escrow services, home appraisals, securities
brokerage and servicing rights brokerage. For the quarter ended May 31, 1998,
these activities contributed $13.4 million to the Company's pre-tax income
compared to $9.4 million for the quarter ended May 31, 1997. This increase in
pre-tax income primarily results from improved performance of the title
insurance, escrow and capital markets businesses.
QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
The primary market risk facing the Company is interest rate risk. From an
enterprise perspective, the Company manages this risk by striving to balance its
loan origination and loan servicing business segments, which are
counter-cyclical in nature. In addition, the Company utilizes various financial
instruments, including derivatives contracts, to manage the interest rate risk
related specifically to its committed pipeline, mortgage loan inventory and MBS
held for sale, MSRs, mortgage-backed securities retained in securitizations and
debt securities. The overall objective of the Company's interest rate risk
management policies is to offset changes in the values of these items resulting
from changes in interest rates. The Company does not speculate on the direction
of interest rates in its management of interest rate risk.
As part of its interest rate risk management process, the Company performs
various sensitivity analyses that quantify the net financial impact of changes
in interest rates on its interest rate-sensitive assets, liabilities and
commitments. These analyses incorporate scenarios including selected
hypothetical (instantaneous) parallel shifts in the yield curve. Various
modeling techniques are employed to value the financial instruments. For
mortgages, MBS and MBS forward contracts and CMOs, an option-adjusted spread
("OAS") model is used. The primary assumptions used in this model are the
implied market volatility of interest rates and prepayment speeds. For options
and interest rate floors, an option-pricing model is used. The primary
assumption used in this model is implied market volatility of interest rates.
MSRs and residual interests are valued using discounted cash flow models. The
primary assumptions used in these models are prepayment rates, discount rates
and credit losses.
<PAGE>
Utilizing the sensitivity analyses described above, as of the quarter ended
May 31, 1998, the Company estimates that a permanent 0.50% reduction in interest
rates, all else being constant, would result in a $16 million after-tax loss
related to its trading securities and a $18 million after-tax loss related to
its other financial instruments, for the fiscal year ended February 28, 1999.
The Company estimates that this combined after-tax loss of $34 million is the
largest such loss that would occur within the range of reasonably possible
interest rate changes. These sensitivity analyses are limited by the fact that
they are performed at a particular point in time and do not incorporate other
factors that would impact the Company's financial performance in such a
scenario. Consequently, the preceding estimates should not be viewed as a
forecast.
INFLATION
Inflation affects the Company in the areas of loan production and servicing.
Interest rates normally increase during periods of high inflation and decrease
during periods of low inflation. Historically, as interest rates increase, loan
production, particularly from loan refinancings, decreases, although in an
environment of gradual interest rate increases, purchase activity may actually
be stimulated by an improving economy or the anticipation of increasing real
estate values. In such periods of reduced loan production, production margins
may decline due to increased competition resulting from overcapacity in the
market. In a higher interest rate environment, servicing-related earnings are
enhanced because prepayment rates tend to slow down thereby extending the
average life of the Company's servicing portfolio and reducing amortization and
impairment of the MSRs, decreasing Interest Costs Incurred on Payoffs and
because the rate of interest earned from the custodial balances tends to
increase. Conversely, as interest rates decline, loan production, particularly
from loan refinancings, increases. However, during such periods, prepayment
rates tend to accelerate (principally on the portion of the portfolio having a
note rate higher than the then-current interest rates), thereby decreasing the
average life of the Company's servicing portfolio and adversely impacting its
servicing-related earnings primarily due to increased amortization and
impairment of the MSRs, a decreased rate of interest earned from the custodial
balances and increased Interest Costs Incurred on Payoffs. The impacts of
changing interest rates on servicing-related earnings are reduced by performance
of the Servicing Hedge, which is designed to mitigate the impact on earnings of
impairment that may result from declining interest rates.
SEASONALITY
The mortgage banking industry is generally subject to seasonal trends. These
trends reflect the general national pattern of sales and resales of homes,
although refinancings tend to be less seasonal and more closely related to
changes in interest rates. Sales and resales of homes typically peak during the
spring and summer seasons and decline to lower levels from mid-November through
February. In addition, delinquency rates typically rise in the winter months,
which results in higher servicing costs. However, late charge income has
historically been sufficient to offset such incremental expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal financing needs are the financing of loan funding
activities and the investment in servicing rights. To meet these needs, the
Company currently utilizes commercial paper supported by the revolving credit
facility, medium-term notes, MBS repurchase agreements, subordinated notes,
pre-sale funding facilities, an optional cash purchase feature in the dividend
reinvestment plan, redeemable capital trust pass-through securities and cash
flow from operations. In addition, in the past the Company has utilized whole
loan repurchase agreements, servicing-secured bank facilities, private
placements of unsecured notes and other financings, direct borrowings from the
revolving credit facility and public offerings of common and preferred stock.
Certain of the debt obligations of the Company and Countrywide Home Loans,
Inc. ("CHL") contain various provisions that may affect the ability of the
Company and CHL to pay dividends and remain in compliance with such obligations.
These provisions include requirements concerning net worth, current ratio and
other financial covenants. These provisions have not had, and are not expected
to have, an adverse impact on the ability of the Company and CHL to pay
dividends.
The Company continues to investigate and pursue alternative and
supplementary methods to finance its operations through the public and private
capital markets. These may include such methods as mortgage loan sale
transactions designed to expand the Company's financial capacity and reduce its
cost of capital and the securitization of servicing income cash flows.
In connection with its derivative contracts, the Company may be required to
deposit cash or certain government securities or obtain letters of credit to
meet margin requirements. The Company considers such potential margin
requirements in its overall liquidity management.
In the course of the Company's mortgage banking operations, the Company
sells to investors the mortgage loans it originates and purchases but generally
retains the right to service the loans, thereby increasing the Company's
investment in loan servicing rights. The Company views the sale of loans on a
servicing-retained basis in part as an investment vehicle. Significant
unanticipated prepayments in the Company's servicing portfolio could have a
material adverse effect on the Company's future operating results and liquidity.
Cash Flows
Operating Activities In the quarter ended May 31, 1998, the Company's
operating activities used cash of approximately $0.5 billion on a short-term
basis primarily to support the increase in its mortgage loans and MBS held for
sale. Mortgage loans and MBS held for sale are generally financed with
short-term borrowings. In the quarter ended May 31, 1997, operating activities
used approximately $1.9 billion on a short-term basis primarily to support the
increase in its mortgage loans and MBS held for sale.
Investing Activities The primary investing activity for which cash was used
by the Company was the investment in servicing. Net cash used by investing
activities was $0.4 billion for the quarter ended May 31, 1998 and $0.2 billion
for the quarter ended May 31, 1997.
Financing Activities Net cash provided by financing activities amounted to
$1.0 billion for the quarter ended May 31, 1998. Net cash provided by financing
activities amounted to $2.1 billion for the quarter ended May 31, 1997. The
increase in cash flow from financing activities was primarily the result of net
short-term and long-term debt issuance or repayment by the Company.
PROSPECTIVE TRENDS
Applications and Pipeline of Loans in Process
For the month ended June 30, 1998, the Company received new loan
applications at an average daily rate of $505 million and at June 30, 1998, the
Company's pipeline of loans in process was $14.7 billion. This compares to a
daily application rate in the month end June 30, 1997 of $232 million and a
pipeline of loans in process at June 30, 1997 of $5.3 billion. The size of the
pipeline is generally an indication of the level of future fundings, as
historically 43% to 77% of the pipeline of loans in process has funded. In
addition, the Company's LOCK `N SHOP(R) Pipeline at June 30, 1998 was $1.4
billion and at June 30, 1997 was $1.5 billion. Future application levels and
loan fundings are dependent on numerous factors, including the level of demand
for mortgage credit, the extent of price competition in the market, the
direction of interest rates, seasonal factors and general economic conditions.
<PAGE>
Market Factors
Loan production increased 123% from quarter ended May 31, 1997 to quarter
ended May 31, 1998. This increase was primarily due to several factors. First,
mortgage interest rates generally decreased in the quarter ended May 31, 1998.
Second, sub-prime and home equity loan fundings, which are generally less
sensitive to interest rate fluctuations than prime credit quality first
mortgages, increased from the quarter ended May 31, 1997 to the quarter ended
May 31, 1998. Further, home purchase market activity was stronger during the
quarter ended May 31, 1998 than in the quarter ended May 31, 1997.
The prepayment rate in the servicing portfolio increased from 11% for the
quarter ended May 31, 1997 to 28% for the quarter ended May 31, 1998 due to
lower interest rates in the quarter ended May 31, 1998 than in the quarter ended
May 31, 1997.
The Company's primary competitors are commercial banks, savings and loans,
mortgage banking subsidiaries of diversified companies, as well as other
mortgage bankers. Over the past three years, certain commercial banks have
expanded their mortgage banking operations through acquisition of formerly
independent mortgage banking companies or through internal growth. The Company
believes that these transactions and activities have not had a material impact
on the Company or on the degree of competitive pricing in the market.
The Company's California mortgage loan production (measured by principal
balance) constituted 26% of its total production during the quarter ended May
31, 1998 and 24% during the quarter ended May 31, 1997. The Company is
continuing its efforts to expand its production capacity outside of California.
Some regions in which the Company operates have experienced slower economic
growth, and real estate financing activity in these regions has been negatively
impacted. As a result, home lending activity for single- (one-to-four) family
residences in these regions may also have experienced slower growth. To the
extent that any geographic region's mortgage loan production constitutes a
significant portion of the Company's production, there can be no assurance that
the Company's operations will not be adversely affected if that region
experiences slow or negative economic growth resulting in decreased residential
real estate lending activity, or market factors further impact the Company's
competitive position in that region.
The delinquency rate in the Company-owned servicing portfolio decreased to
3.38% at May 31, 1998 from 3.53% at May 31, 1997. The proportion of government
and high loan-to-value conventional loans, which tend to experience higher
delinquency rates than low loan-to-value conventional loans, was 47% and 49% of
the portfolio at May 31, 1998 and May 31, 1997, respectively. In addition, the
weighted average age of the portfolio is 30 months at May 31, 1998, up from 29
months at May 31, 1997. Delinquency rates tend to increase as loans age,
generally reaching a peak at three to five years of age. However, because the
loans in the portfolio are generally serviced on a non-recourse basis, the
Company's exposure to credit loss resulting from increased delinquency rates is
substantially limited. Further, related late charge income has historically been
sufficient to offset incremental servicing expenses resulting from an increased
delinquency rate.
The percentage of loans in the Company's owned servicing portfolio that are
in foreclosure decreased to 0.39% at May 31, 1998 from 0.70% at May 31, 1997
primarily due to the sale of $644 million of defaulted mortgage loans on
February 27, 1998. Generally, the Company is not exposed to credit risk. Because
the Company services substantially all conventional loans on a non-recourse
basis, foreclosure losses are generally the responsibility of the investor or
insurer and not the Company. The Company retains credit risk on the home equity
and sub-prime loans it sells in the form of pools backing securities. As such,
through retention of a subordinated interest in the trust, the Company bears
primary responsibility for credit losses on the loans. At May 31, 1998, the
Company had investments in such subordinated interests amounting to $253
million, which represents the maximum exposure to credit losses on the
securitized home equity and sub-prime loans. While the Company generally does
not retain credit risk with respect to the prime credit quality first mortgage
loans it sells, it does have potential liability under representations and
warranties made to purchasers and insurers of the loans. In the event of a
breach of the representations and warranties, the Company may be required to
repurchase a mortgage loan and any subsequent loss on the mortgage loan may be
borne by the Company. Similarly, government loans serviced by the Company (28%
of the Company's servicing portfolio at May 31, 1998) are insured by the Federal
Housing Administration or partially guaranteed against loss by the Department of
Veterans Administration. The Company is exposed to credit losses to the extent
that the partial guarantee provided by the Department of Veterans Administration
is inadequate to cover the total credit losses incurred.
Servicing Hedge
As previously discussed, the Company's Servicing Hedge is designed to
protect the value of its investment in servicing rights from the effects of
increased prepayment activity that generally results from declining interest
rates. In periods of increasing interest rates, the value of the Servicing Hedge
generally declines and the value of MSRs generally increases. There can be no
assurance that, in periods of increasing interest rates, the increase in value
of the MSRs will offset the amount of Servicing Hedge expense; or in periods of
declining interest rates, that the Company's Servicing Hedge will generate
gains, or if gains are generated, that they will fully offset impairment of the
MSRs.
Implementation of New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133).
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (a) a hedge of the exposure
to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows
of a forecasted transaction, or (c) a hedge of the foreign currency exposure of
a net investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. This statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. The Company has not yet determined the impact
upon adoption of this Standard.
Year 2000 Compliance
The Company has made and will continue to make investments to identify,
modify or replace any computer systems which are not Year 2000 compliant and to
address other issues associated with the change of the millennium. These costs
are being expensed by the Company during the period in which they are incurred.
The financial impact to the Company of implementing the systems changes
necessary to become Year 2000 compliant has not been and is not anticipated to
be material to its financial position or results of operations in any given
year. However, the Company's expectations about future costs associated with the
Year 2000 are subject to uncertainties that could cause the actual results to
differ materially from the Company's expectations. Factors that could influence
the amount and timing of future costs include the success of the Company in
identifying systems and programs that are not Year 2000 compliant, the nature
and amount of programming required to upgrade or replace each of the affected
programs, the availability, rate and magnitude of related labor and consulting
costs and the success of the Company's business partners, vendors and clients in
addressing the Year 2000 issue.
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
Any proposal that a stockholder wishes to present for consideration at
the 1999 Annual Meeting of Stockholders must be received by the Company no later
than February 9, 1999 for inclusion in the 1999 Notice of Annual Meeting, Proxy
Statement and Proxy. Any other proposal that a stockholder wishes to bring
before the 1999 Annual Meeting of Stockholders must also be received by the
Company no later than February 9, 1999. All proposals must comply with the
applicable requirements or conditions established by the Securities and Exchange
Commission and Article II, Section 13 of the Company's Bylaws, which requires
among other things, certain information to be provided in connection with the
submission of stockholder proposals. All proposals must be directed to the
Secretary of the Company at 4500 Park Granada, MSN CH-19, Calabasas, California
91302.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.15 Trust Deed dated 1st May, 1998 among CHL, the Company and Bankers Trustee
Company Limited, as Trustee for Euro Medium Notes of CHL.
10.5.1 Supplemental Form of Countrywide Credit Industries, Inc. Deferred
Compensation Agreement for Non-Employee Directors.
10.8.1 Revolving Credit Agreement dated as of the 15th day of April, 1998, by
and among Countrywide Home Loans, Inc., Royal Bank of Canada, The Bank of New
York, Morgan Guaranty Trust Company of New York, Credit Lyonnais, San Francisco
Branch and the Lenders Party Thereto.
10.11.4 Fourth Amendment to the 1987 Stock Option Plan as Amended and Restated.
10.20.8 Eighth Amendment to the 1991 Stock Option Plan.
10.21.3 Third Amendment to the 1992 Stock Option Plan.
10.22.4 Fourth Amendment to the Amended and Restated 1993 Stock Option Plan.
11.1 Statement Regarding Computation of Per Share Earnings.
12.1 Computation of the Ratio of Earnings to Fixed Charges.
27 Financial Data Schedules (included only with the electronic filing with the
SEC).
(b) Reports on Form 8-K. None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(Registrant)
DATE: July 14, 1998
--------------------------------------
Stanford L. Kurland
Senior Managing Director and
Chief Operating Officer
DATE: July 14, 1998
--------------------------------------
Carlos M. Garcia
Managing Director; Chief Financial
Officer and Chief Accounting Officer
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(Registrant)
DATE: July 14, 1998 /s/ Stanford L. Kurland
-------------------------------
Senior Managing Director and
Chief Operating Officer
DATE: July 14, 1998 /s/ Carlos M. Garcia
--------------------------------
Managing Director; Chief Financial
Officer and Chief Accounting Officer
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit Number Document Description
4.15 Trust Deed dated 1st May, 1998 among CHL, the Company and Bankers Trustee
Company Limited, as Trustee for Euro Medium Notes of CHL.
10.5.1 Supplemental Form of Countrywide Credit Industries, Inc. Deferred
Compensation Agreement for Non-Employee Directors.
10.8.1 Revolving Credit Agreement dated as of the 15th day of April, 1998, by
and among Countrywide Home Loans, Inc., Royal Bank of Canada, The Bank of New
York, Morgan Guaranty Trust Company of New York, Credit Lyonnais, San Francisco
Branch and the Lenders Party Thereto.
10.11.4 Fourth Amendment to the 1987 Stock Option Plan as Amended and Restated.
10.20.8 Eighth Amendment to the 1991 Stock Option Plan.
10.21.3 Third Amendment to the 1992 Stock Option Plan.
10.22.4 Fourth Amendment to the Amended and Restated 1993 Stock Option Plan.
11.1 Statement Regarding Computation of Per Share Earnings.
12.1 Computation of the Ratio of Earnings to Fixed Charges.
27 Financial Data Schedules (included only with the electronic filing with the
SEC).
<PAGE>
THIS TRUST DEED is made on 1st May, 1998 BETWEEN:
(1) COUNTRYWIDE HOME LOANS, INC., a company incorporated with limited
liability in the State of New York, whose principal office is at 4500
Park Granada, Calabasas, California 91302, United States of America
(the "Issuer");
(2) COUNTRYWIDE CREDIT INDUSTRIES, INC., a company incorporated with
limited liability in the State of Delaware, whose principal office is
at 4500 Park Granada aforesaid (the "Guarantor"); and
(3) BANKERS TRUSTEE COMPANY LIMITED, a company incorporated with limited
liability in England and Wales, whose registered office is at 1 Appold
Street, Broadgate, London EC2A 2HE, England (the "Trustee", which
expression shall, wherever the context so admits, include such company
and all other persons or companies for the time being the trustee or
trustees of these presents) as trustee for the Noteholders, the
Receiptholders and the Couponholders (each as defined below).
WHEREAS:
(1) By a resolution of the Board of Directors of the Issuer passed on 1st
April, 1998 the Issuer has resolved to establish a Euro Medium Term
Note Programme pursuant to which the Issuer may from time to time issue
Notes as set out herein. Notes up to a maximum nominal amount
(calculated in accordance with Clause 3(5) of the Programme Agreement
(as defined below)) from time to time outstanding of U.S.$2,000,000,000
(subject to increase as provided in the Programme Agreement) (the
"Programme Limit") may be issued pursuant to the said Programme.
(2) By a resolution of the Board of Directors of the Guarantor passed on
24th March, 1998 the Guarantor has resolved to guarantee all Notes
issued under the said Programme and to enter into certain covenants as
set out in this Trust Deed.
(3) The Trustee has agreed to act as trustee of these presents for the
benefit of the Noteholders, the Receiptholders and the Couponholders
upon and subject to the terms and conditions of these presents.
NOW THIS TRUST DEED WITNESSES AND IT IS AGREED AND DECLARED as follows:
1. DEFINITIONS
(A) IN these presents unless there is anything in the subject or context
inconsistent therewith the following expressions shall have the
following meanings:
"Agency Agreement" means the agreement dated 1st May, 1998, as amended
and/or supplemented and/or restated from time to time, pursuant to
which the Issuer and the Guarantor have appointed the Agent and the
other Paying Agents in relation to all or any Series of the Notes and
any other agreement for the time being in force appointing another
Agent or further or other Paying Agents in relation to all or any
Series of the Notes, or in connection with their duties, the terms of
which have previously been approved in writing by the Trustee, together
with any agreement for the time being in force amending or modifying
with the prior written approval of the Trustee any of the aforesaid
agreements;
"Agent" means, in relation to all or any Series of the Notes, Bankers
Trust Company at its office at 1 Appold Street, London EC2A 2HE,
England, or, if applicable, any Successor agent in relation thereto
which shall become such pursuant to the provisions of the Agency
Agreement;
"Appointee" means any attorney, manager, agent, delegate or other person
appointed by the Trustee under these presents;
"Auditors" means the auditors for the time being of the Issuer or, as
the case may be, the Guarantor or, in the event of their being unable
or unwilling promptly to carry out any action requested of them
pursuant to the provisions of these presents, such other firm of
accountants as may be nominated or approved by the Trustee for the
purposes of these presents;
"Calculation Agent" means, in relation to all or any Series of the
Notes, the person appointed as such from time to time pursuant to the
provisions of the Agency Agreement or, if applicable, any Successor
calculation agent in relation thereto which shall become such pursuant
to the provisions of the Agency Agreement;
"Cedel Bank" means Cedel Bank, societe anonyme;
"Conditions" means, in relation to the Notes of any Series, the terms
and conditions endorsed on or incorporated by reference into the Note
or Notes constituting such Series, such terms and conditions being in
or substantially in the form set out in the First Schedule or in such
other form, having regard to the terms of issue of the Notes of the
relevant Series, as may be agreed between the Issuer, the Agent, the
Trustee and the relevant Dealer(s) as modified and supplemented by the
Pricing Supplement applicable to the Notes of the relevant Series, in
each case as from time to time modified in accordance with the
provisions of these presents;
"Couponholders" means the several persons who are for the time being holders of
the Coupons and includes, where applicable, the Talonholders;
"Coupon" means an interest coupon appertaining to a Definitive Note
(other than a Zero Coupon Note), such coupon being:
(i) if appertaining to a Fixed Rate Note, in the form or
substantially in the form set out in Part V A of the Second
Schedule or in such other form, having regard to the terms of
issue of the Notes of the relevant Series, as may be agreed
between the Issuer, the Agent, the Trustee and the relevant
Dealer(s); or
(ii) if appertaining to a Floating Rate Note or an Indexed Interest
Note, in the form or substantially in the form set out in Part
V B of the Second Schedule or in such other form, having
regard to the terms of issue of the Notes of the relevant
Series, as may be agreed between the Issuer, the Agent, the
Trustee and the relevant Dealer(s); or
(iii) if appertaining to a Definitive Note which is neither a Fixed
Rate Note nor a Floating Rate Note nor an Indexed Interest
Note, in such form as may be agreed between the Issuer, the
Agent, the Trustee and the relevant Dealer(s),
and includes, where applicable, the Talon(s) appertaining thereto and any
replacements for Coupons and Talons issued pursuant to Condition 10;
"Dealers" means ABN AMRO Bank N.V., Banque Lehman Brothers, Banque
Paribas, Barclays de Zoete Wedd Limited, Countrywide Securities
Corporation, Deutsche Bank AG London, Goldman Sachs International,
Lehman Brothers International (Europe), Merrill Lynch International,
J.P. Morgan Securities Ltd., Morgan Stanley & Co. International Limited
and Salomon Brothers International Limited and any other entity which
the Issuer may appoint as a Dealer and notice of whose appointment has
been given to the Agent and the Trustee by the Issuer in accordance
with the provisions of the Programme Agreement but excluding any entity
whose appointment has been terminated in accordance with the provisions
of the Programme Agreement and notice of which termination has been
given to the Agent and the Trustee by the Issuer in accordance with the
provisions of the Programme Agreement and references to a "relevant
Dealer" or "relevant Dealer(s)" mean, in relation to any Tranche or
Series of Notes, the Dealer or Dealers with whom the Issuer has agreed
the issue of the Notes of such Tranche or Series and "Dealer" means any
one of them;
"Definitive Note" means a Note in definitive form issued or, as the
case may require, to be issued by the Issuer in accordance with the
provisions of the Programme Agreement or any other agreement between
the Issuer and the relevant Dealer(s), the Agency Agreement and these
presents in exchange for either a Temporary Global Note or part thereof
or a Permanent Global Note (all as indicated in the applicable Pricing
Supplement), such Note in definitive form being in the form or
substantially in the form set out in Part III of the Second Schedule
with such modifications (if any) as may be agreed between the Issuer,
the Agent, the Trustee and the relevant Dealer(s) and having the
Conditions endorsed thereon or, if permitted by the relevant Stock
Exchange, incorporating the Conditions by reference (where applicable
to this Trust Deed) as indicated in the applicable Pricing Supplement
and having the relevant information supplementing, replacing or
modifying the Conditions appearing in the applicable Pricing Supplement
endorsed thereon or attached thereto and (except in the case of a Zero
Coupon Note in bearer form) having Coupons and, where appropriate,
Receipts and/or Talons attached thereto on issue;
"Dual Currency Note" means a Note in respect of which payments of
principal and/or interest are made or to be made in such different
currencies, and at rates of exchange calculated upon such basis or
bases, as the Issuer and the relevant Dealer(s) may agree (as indicated
in the applicable Pricing Supplement);
"Early Redemption Amount" has the meaning ascribed thereto in Condition 6(e);
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System;
"Event of Default" means any of the conditions, events or acts provided
in Condition 9 to be Events of Default (being events upon the happening
of which the Notes of any Series would, subject only to notice by the
Trustee as therein provided, become immediately due and repayable);
"Extraordinary Resolution" has the meaning ascribed thereto in paragraph 20 of
the Third Schedule;
"Fixed Rate Note" means a Note on which interest is calculated at a
fixed rate payable in arrear on a fixed date or fixed dates in each
year and on redemption or on such other dates as may be agreed between
the Issuer and the relevant Dealer(s) (as indicated in the applicable
Pricing Supplement);
"Floating Rate Note" means a Note on which interest is calculated at a
floating rate payable one-, two-, three-, six- or twelve-monthly or in
respect of such other period or on such date(s) as may be agreed
between the Issuer and the relevant Dealer(s) (as indicated in the
applicable Pricing Supplement);
"Global Note" means a Temporary Global Note and/or a Permanent Global Note, as
the context may require;
"Indexed Interest Note" means a Note in respect of which the amount
payable in respect of interest is calculated by reference to an index
and/or a formula as the Issuer and the relevant Dealer(s) may agree (as
indicated in the applicable Pricing Supplement);
"Indexed Note" means an Indexed Interest Note and/or an Indexed Redemption
Amount Note, as applicable;
"Indexed Redemption Amount Note" means a Note in respect of which the
amount payable in respect of principal is calculated by reference to an
index and/or a formula as the Issuer and the relevant Dealer(s) may
agree (as indicated in the applicable Pricing Supplement);
"Interest Commencement Date" means, in the case of interest-bearing
Notes, the date specified in the applicable Pricing Supplement from
(and including) which such Notes bear interest, which may or may not be
the Issue Date;
"Interest Payment Date" means, in relation to any Floating Rate Note or Indexed
Interest Note, either:
(i) the date which falls the number of months or other period
specified as the "Specified Period" in the applicable Pricing
Supplement after the preceding Interest Payment Date or the
Interest Commencement Date (in the case of the first Interest
Payment Date); or
(ii) such date or dates as are indicated in the applicable Pricing Supplement;
"Issue Date" means, in respect of any Note, the date of issue and
purchase of such Note pursuant to and in accordance with the Programme
Agreement or any other agreement between the Issuer and the relevant
Dealer(s), being in the case of any Definitive Note represented
initially by a Temporary Global Note the same date as the date of issue
of the Temporary Global Note which initially represented such Note;
"Issue Price" means the price, generally expressed as a percentage of
the nominal amount of the Notes, at which the Notes will be issued;
"Liability" means any loss, damage, cost, charge, claim, demand,
expense, judgment, action, proceeding or other liability whatsoever
(including, without limitation, in respect of taxes, duties, levies,
imposts and other charges) and including any value added tax or similar
tax charged or chargeable in respect thereof and legal fees and
expenses provided that such legal fees and expenses shall have been
properly incurred;
"London Business Day" has the meaning set out in Condition 5(c);
"Maturity Date" means the date on which a Note is expressed to be redeemable;
"month" means calendar month;
"Note" means a note issued pursuant to the Programme and denominated in
such currency or currencies as may be agreed between the Issuer and the
relevant Dealer(s) which:
(i) has such maturity as may be agreed between the Issuer and the
relevant Dealer(s), subject to such minimum or maximum
maturity as may be allowed or required from time to time by
the relevant central bank (or equivalent body) or any laws or
regulations applicable to the Issuer or the relevant currency;
and
(ii) has such denomination as may be agreed between the Issuer and
the relevant Dealer(s), subject to such minimum denomination
as may be allowed or required from time to time by the
relevant central bank (or equivalent body) or any laws or
regulations applicable to the relevant currency,
issued or to be issued by the Issuer pursuant to the Programme
Agreement or any other agreement between the Issuer and the relevant
Dealer(s), the Agency Agreement and these presents and which shall
initially be represented by, and comprised in, either a Temporary
Global Note which may (in accordance with the terms of such Temporary
Global Note) be exchanged for Definitive Notes or a Permanent Global
Note, which Permanent Global Note may (in accordance with the terms of
such Permanent Global Note) in turn be exchanged for Definitive Notes
and includes any replacements for a Note issued pursuant to Condition
10;
"Noteholders" means the several persons who are for the time being
bearers of outstanding Notes save that, in respect of the Notes of any
Series, for so long as such Notes or any part thereof are represented
by a Global Note deposited with a common depositary for Euroclear and
Cedel Bank, each person who is for the time being shown in the records
of Euroclear or Cedel Bank (other than Cedel Bank, if Cedel Bank shall
be an accountholder of Euroclear and Euroclear, if Euroclear shall be
an accountholder of Cedel Bank) as the holder of a particular nominal
amount of the Notes of such Series shall be deemed to be the holder of
such nominal amount of such Notes (and the holder of the relevant
Global Note shall be deemed not to be the holder) for all purposes of
these presents other than with respect to the payment of principal or
interest on such nominal amount of such Notes, the rights to which
shall be vested, as against the Issuer and the Trustee, solely in such
common depositary and for which purpose such common depositary shall be
deemed to be the holder of such nominal amount of such Notes in
accordance with and subject to its terms and the provisions of these
presents and the expressions "Noteholder", "holder" and "holder of
Notes" and related expressions shall be construed accordingly;
"notice" means, in respect of a notice to be given to Noteholders, a notice
validly given pursuant to Condition 13;
"outstanding" means, in relation to the Notes of all or any Series, all
the Notes of such Series issued other than:
(a) those Notes which have been redeemed pursuant to these presents;
(b) those Notes in respect of which the date for redemption in
accordance with the Conditions has occurred and the redemption
moneys (including all interest payable thereon) have been duly
paid to the Trustee or to the Agent in the manner provided in
the Agency Agreement (and where appropriate notice to that
effect has been given to the relative Noteholders in
accordance with Condition 13) and remain available for payment
against presentation of the relevant Notes and/or Receipts
and/or Coupons;
(c) those Notes which have been purchased and cancelled in accordance with
Conditions 6(h) and 6(i);
(d) those Notes which have become void under Condition 8;
(e) those mutilated or defaced Notes which have been surrendered
and cancelled and in respect of which replacements have been
issued pursuant to Condition 10;
(f) (for the purpose only of ascertaining the nominal amount of
the Notes outstanding and without prejudice to the status for
any other purpose of the relevant Notes) those Notes which are
alleged to have been lost, stolen or destroyed and in respect
of which replacements have been issued pursuant to Condition
10; and
(g) any Temporary Global Note to the extent that it shall have
been exchanged for Definitive Notes or a Permanent Global Note
and any Permanent Global Note to the extent that it shall have
been exchanged for Definitive Notes in each case pursuant to
its provisions, the provisions of these presents and the
Agency Agreement;
PROVIDED THAT for each of the following purposes, namely:
(i) the right to attend and vote at any meeting of the holders of the Notes of
any Series;
(ii) the determination of how many and which Notes of any Series
are for the time being outstanding for the purposes of Clause
9(A), Conditions 9 and 14 and paragraphs 2, 5, 6 and 9 of the
Third Schedule;
(iii) any discretion, power or authority (whether contained in these
presents or vested by operation of law) which the Trustee is
required, expressly or impliedly, to exercise in or by
reference to the interests of the holders of the Notes of any
Series; and
(iv) the determination by the Trustee whether any event,
circumstance, matter or thing is, in its opinion, materially
prejudicial to the interests of the holders of the Notes of
any Series,
those Notes of the relevant Series (if any) which are for the time
being held by or on behalf of the Issuer, the Guarantor or any of its
other Subsidiaries, in each case as beneficial owner, shall (unless and
until ceasing to be so held) be deemed not to remain outstanding;
"Paying Agents" means, in relation to all or any Series of the Notes,
the several institutions (including, where the context permits, the
Agent) at their respective specified offices initially appointed as
paying agents in relation to such Notes by the Issuer and the Guarantor
pursuant to the Agency Agreement and/or, if applicable, any Successor
paying agents at their respective specified offices for all or any
Series of the Notes;
"Permanent Global Note" means a global note in the form or
substantially in the form set out in Part II of the Second Schedule
with such modifications (if any) as may be agreed between the Issuer,
the Agent, the Trustee and the relevant Dealer(s), together with the
copy of the applicable Pricing Supplement annexed thereto, comprising
some or all of the Notes of the same Series, issued by the Issuer
pursuant to the Programme Agreement or any other agreement between the
Issuer and the relevant Dealer(s), the Agency Agreement and these
presents;
"Potential Event of Default" means any condition, event or act which,
with the lapse of time and/or the issue, making or giving of any
notice, certification, declaration, demand, determination and/or
request and/or the taking of any similar action and/or the fulfilment
of any similar condition, would constitute an Event of Default;
"Pricing Supplement" has the meaning set out in the Programme Agreement;
"Programme" means the Euro Medium Term Note Programme established by, or
otherwise contemplated in, the Programme Agreement;
"Programme Agreement" means the agreement of even date herewith between
the Issuer, the Guarantor and the Dealers named therein concerning the
purchase of Notes to be issued pursuant to the Programme together with
any agreement for the time being in force amending, replacing, novating
or modifying such agreement;
"Receipt" means a receipt attached on issue to a Definitive Note
redeemable in instalments for the payment of an instalment of
principal, such receipt being in the form or substantially in the form
set out in Part IV of the Second Schedule or in such other form as may
be agreed between the Issuer, the Agent, the Trustee and the relevant
Dealer(s) and includes any replacements for Receipts issued pursuant to
Condition 10;
"Receiptholders" means the several persons who are for the time being holders of
the Receipts;
"Reference Banks" means the several banks initially appointed as
reference banks in relation to the Notes of any relevant Series and/or,
if applicable, any Successor reference banks in relation to such Notes;
"Relevant Date" has the meaning set out in Condition 7;
"repay", "redeem" and "pay" shall each include both the others and cognate
expressions shall be construed accordingly;
"Series" means a Tranche of Notes together with any further Tranche or
Tranches of Notes which are (i) expressed to be consolidated and form a
single series and (ii) identical in all respects (including as to
listing) except for their respective Issue Dates, Interest Commencement
Dates and/or Issue Prices and the expressions "Notes of the relevant
Series", "holders of Notes of the relevant Series" and related
expressions shall be construed accordingly;
"Stock Exchange" means the Luxembourg Stock Exchange, or any other or
further stock exchange(s) on which any Notes may from time to time be
listed, and references in these presents to the "relevant Stock
Exchange" shall, in relation to any Notes, be references to the Stock
Exchange on which such Notes are, from time to time, or are intended to
be, listed;
"Subsidiary" means any company which is for the time being a subsidiary
(within the meaning of Section 736 of the Companies Act 1985 of Great
Britain) or a subsidiary undertaking (within the meaning of Section 258
and Schedule 10A of the Companies Act 1985 of Great Britain);
"Successor" means, in relation to the Agent, the other Paying Agents,
the Reference Banks and the Calculation Agent, any successor to any one
or more of them in relation to the Notes which shall become such
pursuant to the provisions of these presents and/or the Agency
Agreement (as the case may be) and/or such other or further agent,
paying agents, reference banks or calculation agent (as the case may
be) in relation to the Notes as may (with the prior approval of, and on
terms previously approved by, the Trustee in writing) from time to time
be appointed as such, and/or, if applicable, such other or further
specified offices (in the former case being within the same city as
those for which they are substituted) as may from time to time be
nominated, in each case by the Issuer and the Guarantor and (except in
the case of the initial appointments and specified offices made under
and specified in the Conditions and/or the Agency Agreement, as the
case may be) notice of whose appointment or, as the case may be,
nomination has been given to the Noteholders;
"Talonholders" means the several persons who are for the time being holders of
the Talons;
"Talons" means the talons (if any) appertaining to, and exchangeable in
accordance with the provisions therein contained for further Coupons
appertaining to, the Definitive Notes (other than the Zero Coupon
Notes), such talons being in the form or substantially in the form set
out in Part VI of the Second Schedule or in such other form as may be
agreed between the Issuer, the Agent, the Trustee and the relevant
Dealer(s) and includes any replacements for Talons issued pursuant to
Condition 10;
"Temporary Global Note" means a temporary global note in the form or
substantially in the form set out in Part I of the Second Schedule with
such modifications (if any) as may be agreed between the Issuer, the
Agent, the Trustee and the relevant Dealer(s), together with the copy
of the applicable Pricing Supplement annexed thereto, comprising some
or all of the Notes of the same Series, issued by the Issuer pursuant
to the Programme Agreement or any other agreement between the Issuer
and the relevant Dealer(s), the Agency Agreement and these presents;
"these presents" means this Trust Deed and the Schedules and any trust
deed supplemental hereto and the Schedules (if any) thereto and the
Notes, the Receipts, the Coupons, the Talons, the Conditions and,
unless the context otherwise requires, the Pricing Supplements, all as
from time to time modified in accordance with the provisions herein or
therein contained;
"Tranche" means all Notes which are identical in all respects (including as to
listing);
"Trust Corporation" means a corporation entitled by rules made under
the Public Trustee Act 1906 of Great Britain or entitled pursuant to
any other comparable legislation applicable to a trustee in any other
jurisdiction to carry out the functions of a custodian trustee;
"Zero Coupon Note" means a Note on which no interest is payable;
words denoting the singular shall include the plural and vice versa;
words denoting one gender only shall include the other genders; and
words denoting persons only shall include firms and corporations and
vice versa.
(B) (i) All references in these presents to principal and/or
principal amount and/or interest in respect of the Notes or to
any moneys payable by the Issuer and/or the Guarantor under
these presents shall, unless the context otherwise requires,
be construed in accordance with Condition 6(e).
(ii) All references in these presents to any statute or any
provision of any statute shall be deemed also to refer to any
statutory modification or re-enactment thereof or any
statutory instrument, order or regulation made thereunder or
under any such modification or re-enactment.
(iii) All references in these presents to guarantees or to an
obligation being guaranteed shall be deemed to include
respectively references to indemnities or to an indemnity
being given in respect thereof.
(iv) All references in these presents to any action, remedy or
method of proceeding for the enforcement of the rights of
creditors shall be deemed to include, in respect of any
jurisdiction other than England, references to such action,
remedy or method of proceeding for the enforcement of the
rights of creditors available or appropriate in such
jurisdiction as shall most nearly approximate to such action,
remedy or method of proceeding described or referred to in
these presents.
(v) All references in these presents to Euroclear and/or Cedel
Bank shall, whenever the context so permits, be deemed to
include references to any additional or alternative clearing
system as is approved by the Issuer, the Agent and the
Trustee.
(vi) Unless the context otherwise requires words or expressions
used in these presents shall bear the same meanings as in the
Companies Act 1985 of Great Britain.
(vii) In this Trust Deed references to Schedules, Clauses,
sub-clauses, paragraphs and sub-paragraphs shall be construed
as references to the Schedules to this Trust Deed and to the
Clauses, sub-clauses, paragraphs and sub-paragraphs of this
Trust Deed respectively.
(viii) In these presents tables of contents and Clause headings are
included for ease of reference and shall not affect the
construction of these presents.
(C) Words and expressions defined in these presents or the Agency Agreement
or used in the applicable Pricing Supplement shall have the same
meanings where used herein unless the context otherwise requires or
unless otherwise stated and provided that, in the event of
inconsistency between the Agency Agreement and these presents, these
presents shall prevail and, in the event of inconsistency between the
Agency Agreement or these presents and the applicable Pricing
Supplement, the applicable Pricing Supplement shall prevail.
(D) All references in these presents to the "relevant currency" shall be
construed as references to the currency in which payments in respect of
the Notes and/or Receipts and/or Coupons of the relevant Series are to
be made as indicated in the applicable Pricing Supplement or, where
relevant in the case of Notes denominated or payable in ECU, the chosen
currency (as defined in Condition 5(c)) in which payments in respect of
such Notes and/or Receipts and/or Coupons are to be made, as the case
may be.
(E) All references in these presents to "listing" and "listed" shall
include references to "quotation" and "quoted" respectively.
2. AMOUNT AND ISSUE OF THE NOTES
(A) Amount of the Notes, Pricing Supplements and Legal Opinions:
THE Notes will be issued in Series in an aggregate nominal amount from
time to time outstanding not exceeding the Programme Limit from time to
time and for the purpose of determining such aggregate nominal amount
Clause 3(5) of the Programme Agreement shall apply.
By not later than 3.00 p.m. (London time) on the London Business Day
preceding each proposed Issue Date, the Issuer shall deliver or cause
to be delivered to the Trustee a copy of the applicable Pricing
Supplement and shall notify the Trustee in writing without delay of the
relevant Issue Date and the nominal amount of the Notes to be issued.
Upon the issue of the relevant Notes, such Notes shall become
constituted by these presents without further formality.
Before the first issue of Notes occurring after each anniversary of
this Trust Deed and on such other occasions as the Trustee so requests
(on the basis that the Trustee considers it necessary in view of a
change (or proposed change) in applicable law affecting the Issuer or,
as the case may be, the Guarantor, these presents, the Programme
Agreement or the Agency Agreement, or the Trustee has other grounds),
the Issuer or, as the case may be, the Guarantor will procure that (a)
further legal opinion(s) (relating, if applicable, to any such change
or proposed change) in such form and with such content as the Trustee
may require from the legal advisers specified in the Programme
Agreement or such other legal advisers as the Trustee may require
is/are delivered to the Trustee. Whenever such a request is made with
respect to any Notes to be issued, the receipt of such opinion in a
form satisfactory to the Trustee shall be a further condition precedent
to the issue of those Notes.
(B) Covenant to repay principal and to pay interest:
The Issuer covenants with the Trustee that it will, as and when the
Notes of any Series or any of them or any instalment of principal in
respect thereof becomes due to be redeemed in accordance with the
Conditions, unconditionally pay or procure to be paid to or to the
order of the Trustee in the relevant currency in immediately available
funds the principal amount in respect of the Notes of such Series or
the amount of such instalment becoming due for redemption on that date
and (except in the case of Zero Coupon Notes) shall (subject to the
provisions of the Conditions) in the meantime and until redemption in
full of the Notes of such Series (both before and after any judgment or
other order of a court of competent jurisdiction) unconditionally pay
or procure to be paid to or to the order of the Trustee as aforesaid
interest (which shall accrue from day to day) on the nominal amount of
the Notes outstanding of such Series at rates and/or in amounts
calculated from time to time in accordance with, or specified in, and
on the dates provided for in, the Conditions (subject to Clause 2(D))
PROVIDED THAT:
(i) every payment of principal or interest or other sum due in
respect of the Notes made to or to the order of the Agent in
the manner provided in the Agency Agreement shall be in
satisfaction pro tanto of the relative covenant by the Issuer
in this Clause contained in relation to the Notes of such
Series except to the extent that there is a default in the
subsequent payment thereof in accordance with the Conditions
to the relevant Noteholders, Receiptholders or Couponholders
(as the case may be);
(ii) in the case of any payment of principal made to the Trustee or the Agent
after the due date or on or after accelerated maturity following an Event of
Default, interest shall (subject, where applicable, as provided in the
Conditions) continue to accrue on the nominal amount of the relevant Notes
(except in the case of Zero Coupon Notes to which the provisions of Condition
6(j) shall apply) (both before and after any judgment or other order of a court
of competent jurisdiction) at the rates aforesaid (or, if higher, the rate of
interest on judgment debts for the time being provided by English law) up to and
including the date which the Trustee determines to be the date on and after
which payment is to be made in respect thereof as stated in a notice given to
the holders of such Notes (such date to be not later than seven days after the
day on which the whole of such principal amount, together with an amount equal
to the interest which has accrued and is to accrue pursuant to this proviso up
to and including that date, has been received by the Trustee or the Agent); and
(iii) in any case where payment of the whole or any part of the principal amount
of any Note is improperly withheld or refused upon due presentation thereof
(other than in circumstances contemplated by (ii) above) interest shall accrue
on the nominal amount of such Note (except in the case of Zero Coupon Notes to
which the provisions of Condition 6(j) shall apply) payment of which has been so
withheld or refused (both before and after any judgment or other order of a
court of competent jurisdiction) at the rates aforesaid (or, if higher, the rate
of interest on judgment debts for the time being provided by English law) from
the date of such withholding or refusal until the date on which, upon further
presentation of the relevant Note, payment of the full amount (including
interest as aforesaid) in the relevant currency payable in respect of such Note
is made or (if earlier) the seventh day after notice is given to the relevant
Noteholder(s) (whether individually or in accordance with Condition 13) that the
full amount (including interest as aforesaid) in the relevant currency in
respect of such Note is available for payment, provided that, upon further
presentation thereof being duly made, such payment is made.
The Trustee will hold the benefit of this covenant on trust for the
Noteholders, the Receiptholders and the Couponholders and itself in
accordance with these presents.
(C) Trustee's requirements regarding Paying Agents:
At any time after an Event of Default or a Potential Event of Default
shall have occurred or the Notes of all or any Series shall otherwise
have become due and repayable or the Trustee shall have received any
money which it proposes to pay under Clause 10 to the relevant
Noteholders, Receiptholders and/or Couponholders, the Trustee may:
(i) by notice in writing to the Issuer, the Guarantor, the Agent
and the other Paying Agents require the Agent and the other
Paying Agents pursuant to the Agency Agreement:
(a) to act thereafter as Agent and other Paying Agents respectively of the
Trustee in relation to payments to be made by or on behalf of the Trustee under
the terms of these presents mutatis mutandis on the terms provided in the Agency
Agreement (save that the Trustee's liability under any provisions thereof for
the indemnification, remuneration and payment of out-of-pocket expenses of the
Agent and the other Paying Agents shall be limited to the amounts for the time
being held by the Trustee on the trusts of these presents relating to the Notes
of the relevant Series and available for such purpose) and thereafter to hold
all Notes, Receipts and Coupons and all sums, documents and records held by them
in respect of Notes, Receipts and Coupons on behalf of the Trustee; or
(b) to deliver up all Notes, Receipts and Coupons and all sums, documents and
records held by them in respect of Notes, Receipts and Coupons to the Trustee or
as the Trustee shall direct in such notice provided that such notice shall be
deemed not to apply to any documents or records which the Agent or the relevant
other Paying Agent is obliged not to release by any law or regulation; and
(ii) by notice in writing to the Issuer require it to make all
subsequent payments in respect of the Notes, Receipts and
Coupons to or to the order of the Trustee and not to the Agent
and with effect from the issue of any such notice to the
Issuer and until such notice is withdrawn proviso (i) to
sub-clause (B) of this Clause relating to the Notes shall
cease to have effect.
(D) If the Floating Rate Notes or Indexed Interest Notes of any Series
become immediately due and repayable under Condition 9 the rate and/or
amount of interest payable in respect of them will be calculated at the
same intervals as if such Notes had not become due and repayable, the
first of which will commence on the expiry of the Interest Period
during which the Notes of the relevant Series become so due and
repayable mutatis mutandis in accordance with the provisions of
Condition 4(b) except that the rates of interest need not be published.
(E) Currency of payments:
All payments in respect of, under and in connection with these presents
and the Notes of any Series to the relevant Noteholders, Receiptholders
and Couponholders shall be made in the relevant currency.
(F) Further Notes:
The Issuer shall be at liberty from time to time (but subject always to
the provisions of these presents) without the consent of the
Noteholders, Receiptholders or Couponholders to create and issue
further Notes ranking pari passu in all respects (or in all respects
save for the date from which interest thereon accrues and the amount of
the first payment of interest on such further Notes) and so that the
same shall be consolidated and form a single series with the
outstanding Notes of a particular Series.
(G) Separate Series:
The Notes of each Series shall form a separate Series of Notes and
accordingly, unless for any purpose the Trustee in its absolute
discretion shall otherwise determine, the provisions of this Clause and
of Clauses 3 to 21 (both inclusive), 22(B) and the Third Schedule shall
apply mutatis mutandis separately and independently to the Notes of
each Series and in such Clauses and Schedule the expressions "Notes",
"Noteholders", "Receipts", "Receiptholders", "Coupons",
"Couponholders", "Talons" and "Talonholders" shall be construed
accordingly.
3. FORMs OF THE NOTES
(A) Global Notes:
(i) THE Notes of each Tranche will initially be represented by a Temporary
Global Note which shall be exchangeable for either Definitive Notes
together with, where applicable, Receipts and (except in the case of
Zero Coupon Notes) Coupons and, where applicable, Talons attached or a
Permanent Global Note, in each case in accordance with the provisions
of such Temporary Global Note. Each Permanent Global Note shall be
exchangeable for Definitive Notes together with, where applicable,
Receipts and (except in the case of Zero Coupon Notes) Coupons and,
where applicable, Talons attached, in accordance with the provisions of
such Permanent Global Note.
All Global Notes shall be prepared, completed and delivered to a common
depositary for Euroclear and Cedel Bank in accordance with the
provisions of the Programme Agreement or to another appropriate
depositary in accordance with any other agreement between the Issuer
and the relevant Dealer(s) and, in each case, the Agency Agreement and
these presents.
(ii) Each Temporary Global Note shall be printed or typed in the
form or substantially in the form set out in Part I of the
Second Schedule and may be a facsimile. Each Temporary Global
Note shall have annexed thereto a copy of the applicable
Pricing Supplement and shall be signed manually or in
facsimile by two persons duly authorised by the Issuer on
behalf of the Issuer and shall be authenticated by or on
behalf of the Agent. Each Temporary Global Note so executed
and authenticated shall be a binding and valid obligation of
the Issuer and title thereto shall pass by delivery.
(iii) Each Permanent Global Note shall be printed or typed in the
form or substantially in the form set out in Part II of the
Second Schedule and may be a facsimile. Each Permanent Global
Note shall have annexed thereto a copy of the applicable
Pricing Supplement and shall be signed manually or in
facsimile by two persons duly authorised by the Issuer on
behalf of the Issuer and shall be authenticated by or on
behalf of the Agent. Each Permanent Global Note so executed
and authenticated shall be a binding and valid obligation of
the Issuer and title thereto shall pass by delivery.
(B) Definitive Notes:
(i) The Definitive Notes, the Receipts, the Coupons and the Talons shall be to
bearer in the respective forms or substantially in the respective forms set out
in Parts III, IV, V and VI, respectively, of the Second Schedule. The Definitive
Notes, the Receipts, the Coupons and the Talons shall be serially numbered and,
if listed or quoted, shall be security printed in accordance with the
requirements (if any) from time to time of the relevant Stock Exchange and the
relevant Conditions shall be incorporated by reference (where applicable to
these presents) into such Definitive Notes if permitted by the relevant Stock
Exchange (if any), or, if not so permitted, the Definitive Notes shall be
endorsed with or have attached thereto the relevant Conditions, and, in either
such case, the Definitive Notes shall have endorsed thereon or attached thereto
a copy of the applicable Pricing Supplement (or the relevant provisions
thereof). Title to the Definitive Notes, the Receipts, the Coupons and the
Talons shall pass by delivery. (ii) The Definitive Notes shall be signed
manually or in facsimile by two persons duly authorised by the Issuer on behalf
of the Issuer and shall be authenticated by or on behalf of the Agent. The
Definitive Notes so executed and authenticated, and the Receipts, the Coupons
and Talons, upon execution and authentication of the relevant Definitive Notes,
shall be binding and valid obligations of the Issuer. The Receipts, the Coupons
and the Talons shall not be signed. No Definitive Note and none of the Receipts,
Coupons or Talons appertaining to such Definitive Note shall be binding or valid
until such Definitive Note shall have been executed and authenticated as
aforesaid.
(C) Facsimile Signatures:
The Issuer may use the facsimile signature of any person who at the
date such signature is affixed to a Note is duly authorised by the
Issuer notwithstanding that at the time of issue of any of the Notes he
may have ceased for any reason to be so authorised.
(D) Persons to be treated as Noteholders:
Except as ordered by a court of competent jurisdiction or as required
by law, the Issuer, the Guarantor, the Trustee, the Agent and the other
Paying Agents (notwithstanding any notice to the contrary and whether
or not it is overdue and notwithstanding any notation of ownership or
writing thereon or notice of any previous loss or theft thereof) may
(i) for the purpose of making payment thereon or on account thereof
deem and treat the bearer of any Global Note, Definitive Note, Receipt,
Coupon or Talon and of all rights thereunder free from all
encumbrances, and shall not be required to obtain proof of such
ownership or as to the identity of the bearer and (ii) for all other
purposes deem and treat:
(a) the bearer of any Definitive Note, Receipt, Coupon or Talon; and
(b) each person for the time being shown in the records of
Euroclear or Cedel Bank or such other additional or
alternative clearing system approved by the Issuer, the Agent
and the Trustee, as having a particular nominal amount of
Notes credited to his securities account,
as the absolute owner thereof free from all encumbrances and shall not
be required to obtain proof of such ownership or as to the identity of
the bearer of any Global Note, Definitive Note, Receipt, Coupon or
Talon.
4. Fees, Duties And Taxes
THE Issuer will pay any stamp, issue, registration, documentary and
other fees, duties and taxes, including interest and penalties, payable
on or in connection with (i) the execution and delivery of these
presents (ii) the constitution and original issue of the Notes, the
Receipts and the Coupons and (iii) any action taken by or on behalf of
the Trustee or (where permitted under these presents so to do) any
Noteholder, Receiptholder or Couponholder to enforce, or to resolve any
doubt concerning, or for any other purpose in relation to, these
presents.
5. Covenant Of Compliance
EACH of the Issuer and the Guarantor covenants with the Trustee that it
will comply with and perform and observe all the provisions of these
presents which are expressed to be binding on it. The Conditions shall
be binding on the Issuer, the Guarantor, the Noteholders, the
Receiptholders and the Couponholders. The Trustee shall be entitled to
enforce the obligations of the Issuer and the Guarantor under the
Notes, the Receipts and the Coupons as if the same were set out and
contained in this Trust Deed, which shall be read and construed as one
document with the Notes, the Receipts and the Coupons. The Trustee
shall hold the benefit of this covenant upon trust for itself and the
Noteholders, the Receiptholders and the Couponholders according to its
and their respective interests.
6. Cancellation Of NOTes And Records
(A) THE Issuer shall use its best endeavours to procure that all Notes (i)
redeemed or (ii) purchased for cancellation by or on behalf of the Issuer, the
Guarantor or any other Subsidiary of the Guarantor or (iii) which, being
mutilated or defaced, have been surrendered and replaced pursuant to Condition
10 (together in each case, in the case of Definitive Notes, with all unmatured
Receipts and Coupons attached thereto or delivered therewith) and, in the case
of Definitive Notes all relative Receipts and Coupons paid in accordance with
the relevant Conditions or which, being mutilated or defaced, have been
surrendered and replaced pursuant to Condition 10 shall forthwith be cancelled
by or on behalf of the Issuer and a certificate stating:
(a) the aggregate nominal amount of Notes which have been redeemed
and the amounts paid in respect thereof and the aggregate
amounts in respect of Receipts and Coupons which have been
paid;
(b) the serial numbers of such Notes in definitive form and Receipts;
(c) the total numbers (where applicable, of each denomination) by maturity date
of such Receipts and Coupons;
(d) the aggregate amount of interest paid (and the due dates of such payments)
on Global Notes;
(e) the aggregate nominal amount of Notes (if any) which have been
purchased by or on behalf of the Issuer, the Guarantor or any
other Subsidiary of the Guarantor and cancelled and the serial
numbers of such Notes in definitive form and, in the case of
Definitive Notes, the total number (where applicable, of each
denomination) by maturity date of the Receipts, Coupons and
Talons attached thereto or surrendered therewith;
(f) the aggregate nominal amounts of Notes and Receipts and the
aggregate amounts in respect of Coupons which have been so
exchanged or surrendered and replaced and the serial numbers
of such Notes in definitive form and the total number (where
applicable, of each denomination) by maturity date of such
Coupons and Talons;
(g) the total number (where applicable, of each denomination) by
maturity date of the unmatured Coupons missing from Definitive
Notes bearing interest at a fixed rate which have been
redeemed or exchanged or surrendered and replaced and the
serial numbers of the Definitive Notes to which such missing
unmatured Coupons appertained; and
(h) the total number (where applicable, of each denomination) by
maturity date of Talons which have been exchanged for further
Coupons
shall be given to the Trustee by or on behalf of the Issuer as soon as
possible and in any event within four months after the date of such
redemption, purchase, payment, exchange or replacement (as the case may
be). The Trustee may accept such certificate as conclusive evidence of
redemption, purchase, exchange or replacement pro tanto of the Notes or
payment of interest thereon or exchange of the relative Talons
respectively and of cancellation of the relative Notes and Coupons.
(B) The Issuer shall use its best endeavours to procure (i) that the Agent
shall keep a full and complete record of all Notes, Receipts, Coupons
and Talons issued by it (other than serial numbers of Receipts and
Coupons) and of their redemption, purchase by or on behalf of the
Issuer, the Guarantor or any other Subsidiary of the Guarantor and of
all replacement notes, receipts, coupons or talons issued in
substitution for lost, stolen, mutilated, defaced or destroyed Notes,
Receipts, Coupons or Talons and (ii) that such records shall be made
available to the Trustee at all reasonable times.
7. Guarantee
(A) THE Guarantor hereby irrevocably and unconditionally guarantees to the
Trustee the due and punctual payment in accordance with these presents
of the principal of and interest on the Notes and of all other amounts
payable by the Issuer under these presents.
(B) If the Issuer fails for any reason whatsoever punctually to pay any
such principal, interest or other amount, the Guarantor shall cause
each and every such payment to be made as if the Guarantor instead of
the Issuer were expressed to be the primary obligor of the relevant
Note, Receipt or Coupon and not merely as surety (but without affecting
the Issuer's obligations) to the intent that the holder thereof shall
receive the same amounts in respect of principal, interest or such
other amount as would have been receivable had such payments been made
by the Issuer.
(C) If any payment received by the Trustee or any Noteholder, Receiptholder or
Couponholder pursuant to the provisions of these presents in relation to the
Notes, the Receipts or the Coupons shall (whether on the subsequent bankruptcy,
insolvency or corporate reorganisation of the Issuer or, without limitation, on
any other event) be avoided or set aside for any reason, such payment shall not
be considered as discharging or diminishing the liability of the Guarantor and
this guarantee shall continue to apply as if such payment had at all times
remained owing by the Issuer and the Guarantor shall indemnify the Trustee and
the Noteholders and/or Receiptholders and/or Couponholders (as the case may be)
in respect thereof PROVIDED THAT the obligations of the Issuer and/or the
Guarantor under this sub-clause shall, as regards each payment made to the
Trustee or any Noteholder, Receiptholder or Couponholder which is avoided or set
aside, be contingent upon such payment being reimbursed to the Issuer or other
persons entitled through the Issuer.
(D) The Guarantor hereby agrees that its obligations hereunder shall be
unconditional and that the Guarantor shall be fully liable irrespective of the
validity, regularity, legality or enforceability against the Issuer of, or of
any defence or counter-claim whatsoever available to the Issuer in relation to,
its obligations under these presents, whether or not any action has been taken
to enforce the same or any judgment obtained against the Issuer, whether or not
any of the other provisions of these presents have been modified, whether or not
any time, indulgence, waiver, authorisation or consent has been granted to the
Issuer by or on behalf of the Noteholders or the Receiptholders or Couponholders
or the Trustee, whether or not any determination has been made by the Trustee
pursuant to Clause 19(A), whether or not there have been any dealings or
transactions between the Issuer, any of the Noteholders, Receiptholders or
Couponholders or the Trustee, whether or not the Issuer has been dissolved,
liquidated, merged, consolidated, bankrupted or has changed its status,
functions, control or ownership, whether or not the Issuer has been prevented
from making payment by foreign exchange provisions applicable at its place of
registration or incorporation and whether or not any other circumstances have
occurred which might otherwise constitute a legal or equitable discharge of or
defence to a guarantor. Accordingly, the validity of this guarantee shall not be
affected by reason of any invalidity, irregularity, illegality or
unenforceability of all or any of the obligations of the Issuer under these
presents and this guarantee shall not be discharged nor shall the liability of
the Guarantor under these presents be affected by any act, thing or omission or
means whatever whereby its liability would not have been discharged if it had
been the principal debtor.
(E) Without prejudice to the provisions of Clause 9(A), the Trustee may
determine from time to time whether or not it will enforce this
guarantee which it may do without making any demand of or taking any
proceedings against the Issuer (as appropriate) and may from time to
time make any arrangement or compromise with the Guarantor in relation
to this guarantee which the Trustee may consider expedient in the
interests of the Noteholders, Receiptholders or Couponholders.
(F) The Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of dissolution, liquidation, merger
or bankruptcy of the Issuer, any right to require a proceeding first against the
Issuer, protest or notice with respect to the Notes, Receipts or Coupons or the
indebtedness evidenced thereby and all demands whatsoever and hereby covenants
that this guarantee shall be a continuing guarantee, shall extend to the
ultimate balance of all sums payable by the Issuer under these presents in
relation to the Notes, Receipts and Coupons, shall not be discharged except by
complete performance of the obligations contained in these presents in relation
to the Notes, Receipts and Coupons and is additional to, and not instead of, any
security or other guarantee or indemnity at any time existing in favour of any
person, whether from the Guarantor or otherwise.
(G) If any moneys shall become payable by the Guarantor under this
guarantee the Guarantor shall not, so long as the same remain unpaid,
without the prior written consent of the Trustee:
(i) in respect of any amounts paid by it under this guarantee,
exercise any rights of subrogation or contribution or, without
limitation, any other right or remedy which may accrue to it
in respect of or as a result of any such payment; or
(ii) in respect of any other moneys for the time being due to the
Guarantor by the Issuer, claim payment thereof or exercise any
other right or remedy;
(including in either case claiming the benefit of any security or right
of set-off or, on the liquidation of the Issuer, proving in competition
with the Trustee). If, notwithstanding the foregoing, upon the
bankruptcy, insolvency or liquidation of the Issuer any payment or
distribution of assets of the Issuer of any kind or character, whether
in cash, property or securities, shall be received by the Guarantor
before payment in full of all principal of, and interest on, the Notes,
Receipts and Coupons shall have been made to the Noteholders,
Receiptholders and Couponholders, such payment or distribution shall be
received by the Guarantor on trust to pay the same over immediately to
the Trustee for application in or towards the payment of all sums due
and unpaid under these presents in accordance with Clause 10 on the
basis that Clause 10 does not apply separately and independently to
each Series of the Notes.
(H) The obligations of the Guarantor under these presents constitute
direct, unconditional, unsubordinated and unsecured obligations of the
Guarantor and (save for certain obligations required to be preferred by
law) rank and will rank pari passu with all other unsecured obligations
(other than subordinated obligations, if any) of the Guarantor, from
time to time outstanding.
8. NON-PAYMENT
(A) PROOF that as regards any specified Note, Receipt or Coupon the Issuer
or, as the case may be, the Guarantor has made default in paying any
amount due in respect of such Note, Receipt or Coupon shall (unless the
contrary be proved) be sufficient evidence that the same default has
been made as regards all other Notes, Receipts or Coupons (as the case
may be) in respect of which the relevant amount is due and payable.
(B) References in provisos (ii) and (iii) to Clause 2(B) and the provisions
of any trust deed supplemental to this Trust Deed corresponding to
provisos (ii) and (iii) to Clause 2(B) to "the rates aforesaid" shall,
in the event of the Notes having become due and repayable, with effect
from the expiry of the interest period during which such Notes become
due and repayable, be construed as references to rates of interest
calculated mutatis mutandis in accordance with the Conditions except
that no notices need be published in respect thereof.
9. PROCEEDINGS, ACTION AND INDEMNIFICATION
(A) The Trustee shall not be bound to take any proceedings mentioned in
Condition 9 or any other action in relation to these presents unless
respectively directed or requested to do so (i) by an Extraordinary
Resolution or (ii) in writing by the holders of at least one-quarter in
nominal amount of the Notes then outstanding and in either case then
only if it shall be indemnified to its satisfaction against all
Liabilities to which it may thereby render itself liable or which it
may incur by so doing.
(B) Only the Trustee may enforce the provisions of these presents. No
Noteholder, Receiptholder or Couponholder shall be entitled to proceed
directly against the Issuer or the Guarantor to enforce the performance
of any of the provisions of these presents unless the Trustee having
become bound as aforesaid to take proceedings fails to do so within a
reasonable period and such failure is continuing.
10. APPLICATION OF MONEYS
ALL moneys received by the Trustee under these presents from the Issuer
or, as the case may be, the Guarantor (including any moneys which
represent principal or interest in respect of Notes, Receipts or
Coupons which have become void under Condition 8) shall, unless and to
the extent attributable, in the opinion of the Trustee, to a particular
Series of the Notes, be apportioned pari passu and rateably between
each Series of the Notes, and all moneys received by the Trustee under
these presents from the Issuer or, as the case may be, the Guarantor to
the extent attributable in the opinion of the Trustee to a particular
Series of the Notes or which are apportioned to such Series as
aforesaid, be held by the Trustee upon trust to apply them (subject to
Clause 12):
FIRST in payment or satisfaction of all amounts then due and unpaid
under Clauses 15 and/or 16(J) to the Trustee and/or any Appointee;
SECONDLY in or towards payment pari passu and rateably of all principal
and interest then due and unpaid in respect of the Notes of that
Series;
THIRDLY in or towards payment pari passu and rateably of all principal
and interest then due and unpaid in respect of the Notes of each other
Series; and
FOURTHLY in payment of the balance (if any) to the Issuer (without
prejudice to, or liability in respect of, any question as to how such
payment to the Issuer shall be dealt with as between the Issuer and any
other person).
Without prejudice to this Clause 10, if the Trustee holds any moneys
which represent principal or interest in respect of Notes which have
become void or in respect of which claims have been prescribed under
Condition 8, the Trustee will hold such moneys on the above trusts.
11. NOTICE OF PAYMENTS
THE Trustee shall give notice to the relevant Noteholders in accordance
with Condition 13 of the day fixed for any payment to them under Clause
10. Such payment may be made in accordance with Condition 5 and any
payment so made shall be a good discharge to the Trustee.
12. INVESTMENT BY TRUSTEE
(A) IF the amount of the moneys at any time available for the payment of
principal and interest in respect of the Notes issued by the Issuer under Clause
10 shall be less than 10 per cent. of the nominal amount of the Notes then
outstanding the Trustee may at its discretion invest such moneys in some or one
of the investments authorised below. The Trustee at its discretion may vary such
investments and may accumulate such investments and the resulting income until
the accumulations, together with any other funds for the time being under the
control of the Trustee and available for such purpose, amount to at least 10 per
cent. of the nominal amount of the Notes then outstanding and then such
accumulations and funds shall be applied under Clause 10.
(B) Any moneys which under the trusts of these presents ought to or may be
invested by the Trustee may be invested in the name or under the control of the
Trustee in any investments or other assets in any part of the world whether or
not they produce income or by placing the same on deposit in the name or under
the control of the Trustee at such bank or other financial institution and in
such currency as the Trustee may think fit. If that bank or institution is the
Trustee or a Subsidiary, holding or associated company of the Trustee, it need
only account for an amount of interest equal to the amount of interest which
would, at then current rates, be payable by it on such a deposit to an
independent customer. The Trustee may at any time vary any such investments for
or into other investments or convert any moneys so deposited into any other
currency and shall not be responsible for any loss resulting from any such
investments or deposits, whether due to depreciation in value, fluctuations in
exchange rates or otherwise.
13. PARTIAL PAYMENTS
UPON any payment under Clause 10 (other than payment in full against
surrender of a Note, Receipt or Coupon) the Note, Receipt or Coupon in
respect of which such payment is made shall be produced to the Trustee
or the Paying Agent by or through whom such payment is made and the
Trustee shall or shall cause such Paying Agent to enface thereon a
memorandum of the amount and the date of payment but the Trustee may in
any particular case dispense with such production and enfacement upon
such indemnity being given as it shall think sufficient.
14. COVENANTS BY THE ISSUER AND THE GUARANTOR
(A) THE Issuer covenants with the Trustee that, so long as any of the Notes
remains outstanding (or, in the case of paragraphs (viii), (ix),
(xiii), (xiv), (xvi) and (xviii), so long as any of such Notes or the
relative Receipts or Coupons remains liable to prescription or, in the
case of sub-paragraph (xv), until the expiry of a period of 30 days
after the Relevant Date) it shall:
(i) at all times carry on and conduct its affairs and procure its
Subsidiaries to carry on and conduct their respective affairs
in a proper and efficient manner;
(ii) give or procure to be given to the Trustee such opinions,
certificates and information as it shall require and in such
form as it shall require (including without limitation the
procurement of all such certificates called for by the Trustee
pursuant to Clause 16(C)) for the purpose of the discharge or
exercise of the duties, trusts, powers, authorities and
discretions vested in it under these presents or by operation
of law;
(iii) cause to be prepared and certified by its Auditors in respect
of each annual financial accounting period accounts in such
form as will comply with all relevant legal and accounting
requirements and all requirements for the time being of the
relevant Stock Exchange;
(iv) at all times keep proper books of account and allow the
Trustee and any person appointed by the Trustee to whom the
Issuer shall have no reasonable objection free access to such
books of account at all reasonable times during normal
business hours;
(v) send to the Trustee (in addition to any copies to which it may
be entitled as a holder of any securities of the Issuer) two
copies in English of every balance sheet, profit and loss
account, report, circular and notice of general meeting and
every other document issued or sent to its shareholders
together with any of the foregoing, and every document issued
or sent to holders of securities other than its shareholders
(including the Noteholders) as soon as practicable after the
issue or publication thereof;
(vi) forthwith give notice in writing to the Trustee of the occurrence of any
Event of Default or Potential Event of Default;
(vii) give to the Trustee (a) within seven days after demand by the Trustee
therefor and (b) (without the necessity for any such demand) promptly after the
publication of its audited accounts in respect of each financial year commencing
with the financial year ending 28th February, 1999 and in any event not later
than 180 days after the end of each such financial year a certificate signed by
two of its Directors, to the effect that as at a date not more than seven days
before delivering such certificate (the "relevant certification date") there did
not exist and had not existed since the relevant certification date of the
previous certificate (or in the case of the first such certificate the date
hereof) any Event of Default or any Potential Event of Default (or if such
exists or existed specifying the same) and that during the period from and
including the relevant certification date of the last such certificate (or in
the case of the first such certificate the date hereof) to and including the
relevant certification date of such certificate the Issuer has complied with all
its obligations contained in these presents or (if such is not the case)
specifying the respects in which it has not complied;
(viii) at all times execute and do all such further documents, acts
and things as may be necessary at any time or times in the
opinion of the Trustee for the purpose of discharging its
functions under, or giving effect to, these presents;
(ix) at all times maintain an Agent, other Paying Agents, a
Calculation Agent and Reference Banks in accordance with the
Conditions;
(x) procure the Agent to notify the Trustee forthwith in the event
that it does not, on or before the due date for any payment in
respect of the Notes or any of them or any of the relative
Receipts or Coupons, receive unconditionally pursuant to the
Agency Agreement payment of the full amount in the relevant
currency of the moneys payable on such due date on all such
Notes, Receipts or Coupons as the case may be;
(xi) in the event of the unconditional payment to the Agent or the
Trustee of any sum due in respect of the Notes or any of them
or any of the relative Receipts or Coupons being made after
the due date for payment thereof forthwith give or procure to
be given notice to the relevant Noteholders in accordance with
Condition 13 that such payment has been made;
(xii) use its best endeavours to maintain the quotation or listing on the
relevant Stock Exchange of those of the Notes which are quoted or listed on the
relevant Stock Exchange or, if it is unable to do so having used such
endeavours, use its best endeavours to obtain and maintain a quotation or
listing of such Notes issued by it on such other stock exchange or exchanges or
securities market or markets as the Issuer may (with the prior written approval
of the Trustee) decide and shall also upon obtaining a quotation or listing of
such Notes issued by it on such other stock exchange or exchanges or securities
market or markets enter into a trust deed supplemental to this Trust Deed to
effect such consequential amendments to these presents as the Trustee may
require or as shall be requisite to comply with the requirements of any such
stock exchange or securities market;
(xiii) give notice to the Noteholders in accordance with Condition 13 of any
appointment, resignation or removal of any Agent, Calculation Agent, Reference
Bank or other Paying Agent (other than the appointment of the initial Agent,
Calculation Agent, Reference Banks and other Paying Agents) after having
obtained the prior written approval of the Trustee thereto or any change of any
Paying Agent's or Reference Bank's specified office and (except as provided by
the Agency Agreement or the Conditions) at least 30 days prior to such event
taking effect; PROVIDED ALWAYS THAT so long as any of the Notes, Receipts or
Coupons remains liable to prescription in the case of the termination of the
appointment of the Agent or the Calculation Agent no such termination shall take
effect until a new Agent or Calculation Agent (as the case may be) has been
appointed on terms previously approved in writing by the Trustee;
(xiv) obtain the prior written approval of the Trustee to, and
promptly give to the Trustee two copies of, the form of every
notice given to the holders of any Notes issued by it in
accordance with Condition 13 (such approval, unless so
expressed, not to constitute approval for the purposes of
Section 57 of the Financial Services Act 1986 of the United
Kingdom of any such notice which is an investment
advertisement (as therein defined));
(xv) if payments of principal or interest in respect of the Notes or relative
Receipts or Coupons by the Issuer shall become subject generally to the taxing
jurisdiction of any territory or any political sub-division or any authority
therein or thereof having power to tax other than or in addition to the United
States of America or any political sub-division or any authority therein or
thereof having power to tax, immediately upon becoming aware thereof notify the
Trustee in writing of such event and (unless the Trustee otherwise agrees) enter
forthwith into a trust deed supplemental to this Trust Deed, giving to the
Trustee an undertaking or covenant in form and manner satisfactory to the
Trustee in terms corresponding to the terms of Condition 7 with the substitution
for (or, as the case may be, the addition to) the references therein to the
United States of America or any political sub-division thereof or any authority
therein or thereof having power to tax of references to that other or additional
territory or any political sub-division thereof or any authority therein or
thereof having power to tax to whose taxing jurisdiction such payments shall
have become subject as aforesaid such trust deed also (where applicable) to
modify Condition 6(b) so that such Condition shall make reference to the other
or additional territory, any political sub-division thereof and any authority
therein or thereof having power to tax;
(xvi) comply with and perform all its obligations under the Agency
Agreement and use its best endeavours to procure that the
Agent and the other Paying Agents comply with and perform all
their respective obligations thereunder and any notice given
by the Trustee pursuant to Clause 2(C)(i) and that the
Calculation Agent complies with and performs all its
obligations under the relative calculation agency agreement
and not make any amendment or modification to such Agreement
without the prior written approval of the Trustee;
(xvii) in order to enable the Trustee to ascertain the nominal amount
of the Notes of each Series for the time being outstanding for
any of the purposes referred to in the proviso to the
definition of "outstanding" in Clause 1, deliver to the
Trustee as soon as practicable upon being so requested in
writing by the Trustee a certificate in writing signed by two
of its Directors, setting out the total number and aggregate
nominal amount of the Notes of each Series issued which:
(a) up to and including the date of such certificate have been purchased by the
Issuer or any Subsidiary of the Issuer and cancelled; and
(b) are at the date of such certificate held by, for the benefit of, or on
behalf of, the Issuer or any Subsidiary of the Issuer;
(xviii) procure its Subsidiaries to comply with all applicable provisions of
Condition 6(h);
(xix) use its best endeavours to procure that each of the Paying
Agents makes available for inspection by Noteholders,
Receiptholders and Couponholders at its specified office
copies of these presents, the Agency Agreement and the then
latest audited balance sheet and profit and loss account
(consolidated if applicable) of the Issuer and the Guarantor;
(xx) if, in accordance with the provisions of the Conditions,
interest in respect of the Notes becomes payable at the
specified office of any Paying Agent in the United States of
America promptly give notice thereof to the relative
Noteholders in accordance with Condition 13;
(xxi) use all its best endeavours to procure that Euroclear and/or
Cedel Bank (as the case may be) issue(s) any document
requested by the Trustee under Clause 16(U) as soon as
practicable after such request;
(xxii) give prior written notice to the Trustee of any proposed
redemption pursuant to Condition 6(b) or 6(c) and, if it shall
have given notice to the Noteholders of its intention to
redeem any Notes pursuant to Condition 6(c), duly proceed to
draw (if appropriate) and redeem the relevant Notes
accordingly; and
(xxiii) promptly provide the Trustee with copies of all supplements
and/or amendments and/or restatements of the Programme
Agreement.
(B) The Guarantor covenants with the Trustee that, so long as any of the
Notes remains outstanding (or, in the case of paragraphs (viii) and
(xvi), so long as any of such Notes or the relative Receipts or Coupons
remains liable to prescription or, in the case of sub-paragraph (xv),
until the expiry of a period of 30 days after the Relevant Date) it
shall:
(i) at all times carry on and conduct its affairs and procure its
Subsidiaries to carry on and conduct their respective affairs
in a proper and efficient manner;
(ii) give or procure to be given to the Trustee such opinions,
certificates and information as it shall require and in such
form as it shall require (including without limitation the
procurement of all such certificates called for by the Trustee
pursuant to Clause 16(C)) for the purpose of the discharge or
exercise of the duties, trusts, powers, authorities and
discretions vested in it under these presents or by operation
of law;
(iii) cause to be prepared and certified by its Auditors in respect
of each annual financial accounting period accounts in such
form as will comply with all relevant legal and accounting
requirements and all requirements for the time being of the
relevant Stock Exchange;
(iv) at all times keep proper books of account and allow the
Trustee and any person appointed by the Trustee to whom the
Guarantor shall have no reasonable objection free access to
such books of account at all reasonable times during normal
business hours;
(v) send to the Trustee (in addition to any copies to which it may
be entitled as a holder of any securities of the Guarantor)
two copies in English of every balance sheet, profit and loss
account, report, circular and notice of general meeting and
every other document issued or sent to its shareholders
together with any of the foregoing, and every document issued
or sent to holders of securities other than its shareholders
(including the Noteholders) as soon as practicable after the
issue or publication thereof;
(vi) forthwith give notice in writing to the Trustee of the occurrence of any
Event of Default or Potential Event of Default;
(vii) give to the Trustee (a) within seven days after demand by the Trustee
therefor and (b) (without the necessity for any such demand) promptly after the
publication of its audited accounts in respect of each financial year commencing
with the financial year ending 28th February, 1999 and in any event not later
than 180 days after the end of each such financial year a certificate signed by
two of its Directors, to the effect that as at a date not more than seven days
before delivering such certificate (the "relevant certification date") there did
not exist and had not existed since the relevant certification date of the
previous certificate (or in the case of the first such certificate the date
hereof) any Event of Default or any Potential Event of Default (or if such
exists or existed specifying the same) and that during the period from and
including the relevant certification date of the last such certificate (or in
the case of the first such certificate the date hereof) to and including the
relevant certification date of such certificate the Guarantor has complied with
all its obligations contained in these presents or (if such is not the case)
specifying the respects in which it has not complied;
(viii) at all times execute and do all such further documents, acts
and things as may be necessary at any time or times in the
opinion of the Trustee for the purpose of discharging its
functions under, or giving effect to, these presents;
(ix) if payments of principal or interest in respect of the Notes or relative
Receipts or Coupons by the Guarantor shall become subject generally to the
taxing jurisdiction of any territory or any political sub-division or any
authority therein or thereof having power to tax other than or in addition to
the United States of America or any political sub-division or any authority
therein or thereof having power to tax, immediately upon becoming aware thereof
notify the Trustee in writing of such event and (unless the Trustee otherwise
agrees) enter forthwith into a trust deed supplemental to this Trust Deed,
giving to the Trustee an undertaking or covenant in form and manner satisfactory
to the Trustee in terms corresponding to the terms of Condition 7 with the
substitution for (or, as the case may be, the addition to) the references
therein to the United States of America or any political sub-division thereof or
any authority therein or thereof having power to tax of references to that other
or additional territory or any political sub-division thereof or any authority
therein or thereof having power to tax to whose taxing jurisdiction such
payments shall have become subject as aforesaid such trust deed also (where
applicable) to modify Condition 6(b) so that such Condition shall make reference
to the other or additional territory, any political sub-division thereof and any
authority therein or thereof having power to tax;
(x) comply with and perform all its obligations under the Agency Agreement;
(xi) in order to enable the Trustee to ascertain the nominal amount
of the Notes of each Series for the time being outstanding for
any of the purposes referred to in the proviso to the
definition of "outstanding" in Clause 1, deliver to the
Trustee as soon as practicable upon being so requested in
writing by the Trustee a certificate in writing signed by two
of its Directors, setting out the total number and aggregate
nominal amount of the Notes of each Series issued which:
(a) up to and including the date of such certificate have been purchased by the
Guarantor or any Subsidiary of the Guarantor and cancelled; and
(b) are at the date of such certificate held by, for the benefit of, or on
behalf of, the Guarantor or any Subsidiary of the Guarantor; and
(xii) procure its Subsidiaries to comply with all applicable provisions
of Condition 6(h).
15. REMUNERATION AND INDEMNIFICATION OF TRUSTEE
(A) THE Issuer shall pay to the Trustee remuneration for its services as trustee
of these presents such amount as shall be agreed from time to time by exchange
of letters between the Issuer and the Trustee. Such remuneration shall accrue
from day to day and be payable (in priority to payments to Noteholders,
Receiptholders and Couponholders) up to and including the date when, all the
Notes having become due for redemption, the redemption moneys and interest
thereon to the date of redemption have been paid to the Agent or the Trustee
PROVIDED THAT if upon due presentation of any Note, Receipt or Coupon or any
cheque payment of the moneys due in respect thereof is improperly withheld or
refused, remuneration will commence again to accrue until payment to such
Noteholder, Receiptholder or Couponholder is duly made.
(B) In the event of the occurrence of an Event of Default or a Potential
Event of Default or the Trustee considering it expedient or necessary
or being requested by the Issuer to undertake duties which the Trustee
and the Issuer agree to be of an exceptional nature or otherwise
outside the scope of the normal duties of the Trustee under these
presents the Issuer shall pay to the Trustee such additional
remuneration as shall be agreed between them.
(C) The Issuer shall in addition pay to the Trustee an amount equal to the
amount of any value added tax or similar tax chargeable in respect of
its remuneration under these presents.
(D) In the event of the Trustee and the Issuer failing to agree:
(1) (in a case to which sub-clause (A) above applies) upon the amount of the
remuneration; or
(2) (in a case to which sub-clause (B) above applies) upon whether
such duties shall be of an exceptional nature or otherwise
outside the scope of the normal duties of the Trustee under
these presents, or upon such additional remuneration,
such matters shall be determined by a merchant or investment bank
(acting as an expert and not as an arbitrator) selected by the Trustee
and approved by the Issuer or, failing such approval, nominated (on the
application of the Trustee) by the President for the time being of The
Law Society of England and Wales (the expenses involved in such
nomination and the fees of such merchant or investment bank being
payable by the Issuer) and the determination of any such merchant or
investment bank shall be final and binding upon the Trustee and the
Issuer.
(E) The Issuer shall also pay or discharge all Liabilities incurred by the
Trustee in relation to the preparation and execution of, the exercise
of its powers and the performance of its duties under, and in any other
manner in relation to, these presents, including but not limited to
travelling expenses and any stamp, issue, registration, documentary and
other taxes or duties paid or payable by the Trustee in connection with
any action taken by or on behalf of the Trustee for enforcing, or
resolving any doubt concerning, or for any other purpose in relation
to, these presents.
(F) All amounts payable pursuant to sub-clause (E) above and/or Clause 16(J)
shall be payable by the Issuer on the date specified in a demand by the Trustee
and in the case of payments actually made by the Trustee prior to such demand
shall (if not paid within seven days after such demand and the Trustee so
requires) carry interest at the rate of two per cent. per annum above the Base
Rate from time to time of National Westminster Bank Plc from the date specified
in such demand, and in all other cases shall (if not paid on the date specified
in such demand or, if later, within seven days after such demand and, in either
case, the Trustee so requires) carry interest at such rate from the date
specified in such demand. All remuneration payable to the Trustee shall carry
interest at such rate from the due date therefor.
(G) Unless otherwise specifically stated in any discharge of these presents
the provisions of this Clause and Clause 16(J) shall continue in full
force and effect notwithstanding such discharge.
(H) The Trustee shall be entitled in its absolute discretion to determine
in respect of which Series of Notes any Liabilities incurred under
these presents have been incurred or to allocate any such Liabilities
between the Notes of any Series.
16. SUPPLEMENT TO TRUSTEE ACT 1925
THE Trustee shall have all the powers conferred upon trustees by the
Trustee Act 1925 of England and Wales and by way of supplement thereto
it is expressly declared as follows:
(A) The Trustee may in relation to these presents act on the
advice or opinion of or any information obtained from any
lawyer, valuer, accountant, surveyor, banker, broker,
auctioneer or other expert whether obtained by the Issuer, the
Guarantor, the Trustee or otherwise and shall not be
responsible for any Liability occasioned by so acting.
(B) Any such advice, opinion or information may be sent or
obtained by letter, telex, telegram, facsimile transmission or
cable and the Trustee shall not be liable for acting on any
advice, opinion or information purporting to be conveyed by
any such letter, telex, telegram, facsimile transmission or
cable although the same shall contain some error or shall not
be authentic.
(C) The Trustee may call for and shall be at liberty to accept as
sufficient evidence of any fact or matter or the expediency of
any transaction or thing a certificate signed by any two
Directors of the Issuer or by any two Directors of the
Guarantor, and the Trustee shall not be bound in any such case
to call for further evidence or be responsible for any
Liability that may be occasioned by it or any other person
acting on such certificate.
(D) The Trustee shall be at liberty to hold these presents and any
other documents relating thereto or to deposit them in any
part of the world with any banker or banking company or
company whose business includes undertaking the safe custody
of documents or lawyer or firm of lawyers considered by the
Trustee to be of good repute and the Trustee shall not be
responsible for or required to insure against any Liability
incurred in connection with any such holding or deposit and
may pay all sums required to be paid on account of or in
respect of any such deposit.
(E) The Trustee shall not be responsible for the receipt or
application of the proceeds of the issue of any of the Notes
by the Issuer, the exchange of any Global Note for another
Global Note or Definitive Notes or the delivery of any Global
Note or Definitive Notes to the person(s) entitled to it or
them.
(F) The Trustee shall not be bound to give notice to any person of
the execution of any documents comprised or referred to in
these presents or to take any steps to ascertain whether any
Event of Default or any Potential Event of Default has
occurred and, until it shall have actual knowledge or express
notice pursuant to these presents to the contrary, the Trustee
shall be entitled to assume that no Event of Default or
Potential Event of Default has occurred and that each of the
Issuer and the Guarantor is observing and performing all its
obligations under these presents.
(G) Save as expressly otherwise provided in these presents, the
Trustee shall have absolute and uncontrolled discretion as to
the exercise or non-exercise of its trusts, powers,
authorities and discretions under these presents (the exercise
or non-exercise of which as between the Trustee and the
Noteholders, the Receiptholders and Couponholders shall be
conclusive and binding on the Noteholders, the Receiptholders
and Couponholders) and shall not be responsible for any
Liability which may result from their exercise or
non-exercise.
(H) The Trustee shall not be liable to any person by reason of having acted upon
any Extraordinary Resolution in writing or any Extraordinary Resolution or other
resolution purporting to have been passed at any meeting of the holders of Notes
of all or any Series in respect whereof minutes have been made and signed even
though subsequent to its acting it may be found that there was some defect in
the constitution of the meeting or the passing of the resolution, (in the case
of an Extraordinary Resolution in writing) that not all such holders had signed
the Extraordinary Resolution or that for any reason the resolution was not valid
or binding upon such holders and the relative Receiptholders and Couponholders.
(I) The Trustee shall not be liable to any person by reason of
having accepted as valid or not having rejected any Note,
Receipt or Coupon purporting to be such and subsequently found
to be forged or not authentic.
(J) Without prejudice to the right of indemnity by law given to
trustees, each of the Issuer and the Guarantor shall indemnify
the Trustee and every Appointee and keep it or him indemnified
against all Liabilities to which it or he may be or become
subject or which may be incurred by it or him in the execution
or purported execution of any of its or his trusts, powers,
authorities and discretions under these presents or its or his
functions under any such appointment or in respect of any
other matter or thing done or omitted in any way relating to
these presents or any such appointment.
(K) Any consent or approval given by the Trustee for the purposes
of these presents may be given on such terms and subject to
such conditions (if any) as the Trustee thinks fit and
notwithstanding anything to the contrary in these presents may
be given retrospectively.
(L) The Trustee shall not (unless and to the extent ordered so to
do by a court of competent jurisdiction) be required to
disclose to any Noteholder, Receiptholder or Couponholder any
information (including, without limitation, information of a
confidential, financial or price sensitive nature) made
available to the Trustee by the Issuer, the Guarantor or any
other person in connection with these presents and no Holder,
Receiptholder or Couponholder shall be entitled to take any
action to obtain from the Trustee any such information.
(M) Where it is necessary or desirable for any purpose in
connection with these presents to convert any sum from one
currency to another it shall (unless otherwise provided by
these presents or required by law) be converted at such rate
or rates, in accordance with such method and as at such date
for the determination of such rate of exchange, as may be
agreed by the Trustee in consultation with the Issuer and any
rate, method and date so agreed shall be binding on the
Issuer, the Guarantor, the Noteholders, the Receiptholders and
the Couponholders.
(N) The Trustee as between itself and the Noteholders, the
Receiptholders and the Couponholders may determine all
questions and doubts arising in relation to any of the
provisions of these presents. Every such determination,
whether or not relating in whole or in part to the acts or
proceedings of the Trustee, shall be conclusive and shall bind
the Trustee and the Noteholders, the Receiptholders and the
Couponholders.
(O) In connection with the exercise by it of any of its trusts, powers,
authorities or discretions under these presents (including, without limitation,
any modification, waiver, authorisation or determination), the Trustee shall
have regard to the general interests of the Noteholders as a class but shall not
have regard to any interests arising from circumstances particular to individual
Noteholders, Receiptholders or Couponholders (whatever their number) and, in
particular but without limitation, shall not have regard to the consequences of
such exercise for individual Noteholders, Receiptholders or Couponholders
(whatever their number) resulting from their being for any purpose domiciled or
resident in, or otherwise connected with, or subject to the jurisdiction of, any
particular territory or any political sub-division thereof and the Trustee shall
not be entitled to require, nor shall any Noteholder, Receiptholder or
Couponholder be entitled to claim, from the Issuer, the Guarantor, the Trustee
or any other person any indemnification or payment in respect of any tax
consequence of any such exercise upon individual Noteholders, the Receiptholders
or Couponholders except to the extent already provided for in Condition 7 and/or
any undertaking given in addition thereto or in substitution therefor under
these presents.
(P) Any trustee of these presents being a lawyer, accountant,
broker or other person engaged in any profession or business
shall be entitled to charge and be paid all usual professional
and other charges properly incurred for business transacted
and acts done by him or his firm in connection with the trusts
of these presents and also his reasonable charges in addition
to disbursements for all other work and business done and all
time spent by him or his firm in connection with matters
arising in connection with these presents.
(Q) The Trustee may whenever it thinks fit, subject to the consent of the Issuer
(such consent not to be unreasonably withheld) except following the occurrence
of an Event of Default or a Potential Event of Default or if the Trustee has
reasonable grounds to believe that an Event of Default or a Potential Event of
Default has occurred or is about to occur or if the Trustee has been advised by
its legal advisers that such delegation is necessary in order to avoid a
conflict of interest or a possible conflict of interest in each of which cases
no such consent of the Issuer as aforesaid shall be required, delegate by power
of attorney or otherwise to any person or persons or fluctuating body of persons
(whether being a joint trustee of these presents or not) all or any of its
trusts, powers, authorities and discretions under these presents. Such
delegation may be made upon such terms (including power to sub-delegate) and
subject to such conditions and regulations as the Trustee may in the interests
of the Noteholders think fit. Provided that the Trustee shall have exercised
reasonable care in the selection of such delegate the Trustee shall not be under
any obligation to supervise the proceedings or acts of any such delegate or
sub-delegate or be in any way responsible for any Liability incurred by reason
of any misconduct or default on the part of any such delegate or sub-delegate.
The Trustee shall within a reasonable time after any such delegation or any
renewal, extension or termination thereof give notice thereof to the Issuer.
(R) The Trustee may after consultation with the Issuer and the Guarantor unless,
in the opinion of the Trustee, such consultation would be materially prejudicial
to the interests of the Noteholders in the conduct of the trusts of these
presents instead of acting personally employ and pay an agent (whether being a
lawyer or other professional person) to transact or conduct, or concur in
transacting or conducting, any business and to do, or concur in doing, all acts
required to be done in connection with these presents (including the receipt and
payment of money). Provided that the Trustee shall have exercised reasonable
care in the selection of such agent the Trustee shall not be in any way
responsible for any Liability incurred by reason of any misconduct or default on
the part of any such agent or be bound to supervise the proceedings or acts of
any such agent. The Trustee shall within a reasonable time after appointing such
an agent or after any renewal, extension or termination of such an appointment
give notice thereof to the Issuer.
(S) The Trustee shall not be responsible for the execution,
delivery, legality, effectiveness, adequacy, genuineness,
validity, enforceability or admissibility in evidence of these
presents or any other document relating or expressed to be
supplemental thereto and shall not be liable for any failure
to obtain any licence, consent or other authority for the
execution, delivery, legality, effectiveness, adequacy,
genuineness, validity, performance, enforceability or
admissibility in evidence of these presents or any other
document relating or expressed to be supplemental thereto.
(T) The Trustee may call for any document and/or evidence and/or information
and/or certification to be issued or given by Euroclear or Cedel Bank as to the
nominal amount of Notes represented by a Global Note standing to the account of
any person. Any such certificate or other document shall be conclusive and
binding for all purposes. The Trustee shall not be liable to any person by
reason of having accepted as valid or not having rejected any document and/or
evidence and/or information and/or certification to such effect purporting to be
issued or given by Euroclear or Cedel Bank and subsequently found to be forged
or not authentic.
17. TRUSTEE'S LIABILITY
NOTHING in these presents shall in any case in which the Trustee has
failed to show the degree of care and diligence required of it as
trustee having regard to the provisions of these presents conferring on
it any trusts, powers, authorities or discretions exempt the Trustee
from or indemnify it against any Liability for negligence, default,
breach of duty or breach of trust of which it may be guilty in relation
to its duties under these presents.
18. TRUSTEE CONTRACTING WITH the ISSUER and the guarantor
NEITHER the Trustee nor any director or officer or holding company,
Subsidiary or associated company of a corporation acting as a trustee
under these presents shall by reason of its or his fiduciary position
be in any way precluded from:
(i) entering into or being interested in any contract or financial or other
transaction or arrangement with the Issuer or the Guarantor or any person or
body corporate associated with the Issuer or the Guarantor (including without
limitation any contract, transaction or arrangement of a banking or insurance
nature or any contract, transaction or arrangement in relation to the making of
loans or the provision of financial facilities or financial advice to, or the
purchase, placing or underwriting of or the subscribing or procuring
subscriptions for or otherwise acquiring, holding or dealing with, or acting as
paying agent in respect of, the Notes or any other notes, bonds, stocks, shares,
debenture stock, debentures or other securities of, any Issuer or any person or
body corporate associated as aforesaid); or
(ii) accepting or holding the trusteeship of any other trust deed
constituting or securing any other securities issued by or
relating to the Issuer or the Guarantor or any such person or
body corporate so associated or any other office of profit
under the Issuer or the Guarantor or any such person or body
corporate so associated,
and shall be entitled to exercise and enforce its rights, comply with
its obligations and perform its duties under or in relation to any such
contract, transaction or arrangement as is referred to in (i) above or,
as the case may be, any such trusteeship or office of profit as is
referred to in (ii) above without regard to the interests of the
Noteholders and notwithstanding that the same may be contrary or
prejudicial to the interests of the Noteholders and shall not be
responsible for any Liability occasioned to the Noteholders thereby and
shall be entitled to retain and shall not be in any way liable to
account for any profit made or share of brokerage or commission or
remuneration or other amount or benefit received thereby or in
connection therewith.
Where any holding company, Subsidiary or associated company of the
Trustee or any director or officer of the Trustee acting other than in
his capacity as such a director or officer has any information, the
Trustee shall not thereby be deemed also to have knowledge of such
information and, unless it shall have actual knowledge of such
information, shall not be responsible for any loss suffered by
Noteholders resulting from the Trustee's failing to take such
information into account in acting or refraining from acting under or
in relation to these presents.
19. WAIVER, AUTHORISATION AND DETERMINATION
(A) THE Trustee may without the consent or sanction of the Noteholders, the
Receiptholders or the Couponholders and without prejudice to its rights in
respect of any subsequent breach, Event of Default or Potential Event of Default
from time to time and at any time but only if and in so far as in its opinion
the interests of the Noteholders shall not be materially prejudiced thereby
waive or authorise any breach or proposed breach by the Issuer or the Guarantor
of any of the covenants or provisions contained in these presents or determine
that any Event of Default or Potential Event of Default shall not be treated as
such for the purposes of these presents PROVIDED ALWAYS THAT the Trustee shall
not exercise any powers conferred on it by this Clause in contravention of any
express direction given by Extraordinary Resolution or by a request under
Condition 9 but so that no such direction or request shall affect any waiver,
authorisation or determination previously given or made. Any such waiver,
authorisation or determination may be given or made on such terms and subject to
such conditions (if any) as the Trustee may determine, shall be binding on the
Noteholders, the Receiptholders and the Couponholders and, if, but only if, the
Trustee shall so require, shall be notified by the Issuer to the Noteholders in
accordance with Condition 13 as soon as practicable thereafter.
MODIFICATION
(B) The Trustee may without the consent or sanction of the Noteholders, the
Receiptholders or the Couponholders at any time and from time to time concur
with the Issuer in making any modification (i) to these presents (other than the
proviso to paragraph 5 of the Third Schedule or any matters referred to in that
proviso) which in the opinion of the Trustee it may be proper to make PROVIDED
THAT the Trustee is of the opinion that such modification will not be materially
prejudicial to the interests of the Noteholders or (ii) to these presents if in
the opinion of the Trustee such modification is of a formal, minor or technical
nature or to correct a manifest error. Any such modification may be made on such
terms and subject to such conditions (if any) as the Trustee may determine,
shall be binding upon the Noteholders, the Receiptholders and the Couponholders
and, unless the Trustee agrees otherwise, shall be notified by the Issuer to the
Noteholders in accordance with Condition 13 as soon as practicable thereafter.
BREACH
(C) Any breach of or failure to comply with any such terms and conditions
as are referred to in sub-clauses (A) and (B) of this Clause shall
constitute a default by the Issuer or the Guarantor in the performance
or observance of a covenant or provision binding on it under or
pursuant to these presents.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
(D) (1) The Issuer shall not consolidate with or merge into any
other corporation or convey or transfer its properties and
assets substantially as an entirety to any person, unless:
(a) the corporation formed by such consolidation or into which the Issuer is
merged or the person which acquires by conveyance or transfer the properties and
assets of the Issuer substantially as an entirety shall be a corporation
organised and existing under the laws of the United States of America, any
political subdivision thereof or any State thereof and shall expressly assume,
by a trust deed supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the principal
of and interest on all the Notes and the performance of every covenant of these
presents on the part of the Issuer to be performed or observed;
(b) immediately after giving effect to such transaction,
no Event of Default or Potential Event of Default
shall have occurred;
(c) the Issuer has delivered to the Trustee a certificate
signed by two of its Directors and an opinion of
counsel acceptable to the Trustee, each stating that
such consolidation, merger, conveyance or transfer
and such supplemental trust deed comply with this
paragraph (1) and that all conditions precedent
herein provided for relating to such transaction have
been complied with; and
(d) the Guarantor has delivered to the Trustee a
certificate signed by two of its Directors and an
opinion of counsel acceptable to the Trustee, each
stating that the Guarantor's obligations under these
presents shall remain in full force and effect
thereafter.
(2) Upon any consolidation with or merger into any other
corporation, or any conveyance or transfer of the properties
and assets of the Issuer substantially as an entirety, in each
case in accordance with paragraph (1) above, the successor
corporation formed by such consolidation or into which the
Issuer is merged or the successor person to which such
conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of,
the Issuer under these presents with the same effect as if
such successor had been named as the Issuer herein, and
thereafter the predecessor corporation shall be relieved of
all obligations and covenants under these presents.
(3) The Guarantor shall not consolidate with or merge into any
other corporation or convey or transfer its properties and
assets substantially as an entirety to any person, unless:
(a) the corporation formed by such consolidation or into which the Guarantor is
merged or the person which acquires by conveyance or transfer the properties and
assets of the Guarantor substantially as an entirety shall be a corporation
organised and existing under the laws of the United States of America, any
political subdivision thereof or any State thereof and shall expressly assume,
by a trust deed supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the obligations of the Guarantor contained in
Clause 7 and the performance of every covenant contained in these presents on
the part of the Guarantor to be performed or observed;
(b) immediately after giving effect to such transaction,
no Event of Default or Potential Event of Default
shall have occurred; and
(c) the Guarantor has delivered to the Trustee a
certificate signed by two of its Directors and an
opinion of counsel acceptable to the Trustee, each
stating that such consolidation, merger, conveyance
or transfer and such supplemental trust deed comply
with this paragraph (3) and that all conditions
precedent herein provided for relating to such
transaction have been complied with.
(4) Upon any consolidation with or merger into any other
corporation, or any conveyance or transfer of the properties
and assets of the Guarantor substantially as an entirety, in
each case in accordance with paragraph (3) above, the
successor corporation formed by such consolidation or into
which the Guarantor is merged or the successor person to which
such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of,
the Guarantor under these presents with the same effect as if
such successor had been named as the Guarantor herein, and
thereafter the predecessor corporation shall be relieved of
all obligations and covenants under these presents.
20. HOLDER OF DEFINITIVE NOTE ASSUMED TO BE RECEIPTHOLDER AND COUPONHOLDER
(A) WHEREVER in these presents the Trustee is required or entitled to
exercise a power, trust, authority or discretion under these presents,
except as ordered by a court of competent jurisdiction or as required
by applicable law, the Trustee shall, notwithstanding that it may have
express notice to the contrary, assume that each Noteholder is the
holder of all Receipts and Coupons appertaining to each Definitive Note
of which he is the holder.
NO NOTICE TO RECEIPTHOLDERS OR COUPONHOLDERS
(B) Neither the Trustee nor the Issuer shall be required to give any notice
to the Receiptholders or Couponholders for any purpose under these
presents and the Receiptholders or Couponholders shall be deemed for
all purposes to have notice of the contents of any notice given to the
holders of Bearer Notes in accordance with Condition 13.
21. CURRENCY INDEMNITY
EACH of the Issuer and the Guarantor shall severally indemnify the
Trustee, every Appointee, the Noteholders, the Receiptholders and the
Couponholders and keep them indemnified against:
(a) any Liability incurred by any of them arising from the
non-payment by the Issuer or the Guarantor of any amount due
to the Trustee or the holders of the Notes issued by the
Issuer or the Guarantor and the relative Receiptholders or
Couponholders under these presents by reason of any variation
in the rates of exchange between those used for the purposes
of calculating the amount due under a judgment or order in
respect thereof and those prevailing at the date of actual
payment by the Issuer or the Guarantor; and
(b) any deficiency arising or resulting from any variation in rates of exchange
between (i) the date as of which the local currency equivalent of the amounts
due or contingently due under these presents (other than this Clause) is
calculated for the purposes of any bankruptcy, insolvency or liquidation of the
Issuer or the Guarantor and (ii) the final date for ascertaining the amount of
claims in such bankruptcy, insolvency or liquidation. The amount of such
deficiency shall be deemed not to be reduced by any variation in rates of
exchange occurring between the said final date and the date of any distribution
of assets in connection with any such bankruptcy, insolvency or liquidation.
The above indemnities shall constitute obligations of the Issuer and
the Guarantor separate and independent from their other obligations
under the other provisions of these presents and shall apply
irrespective of any indulgence granted by the Trustee or the
Noteholders, the Receiptholders or the Couponholders from time to time
and shall continue in full force and effect notwithstanding the
judgment or filing of any proof or proofs in any bankruptcy, insolvency
or liquidation of the Issuer or the Guarantor for a liquidated sum or
sums in respect of amounts due under these presents (other than this
Clause). Any such deficiency as aforesaid shall be deemed to constitute
a loss suffered by the Noteholders, the Receiptholders and the
Couponholders and no proof or evidence of any actual loss shall be
required by the Issuer or the Guarantor or its liquidator or
liquidators.
22. NEW TRUSTEE
(A) THE power to appoint a new trustee of these presents shall be vested in the
Issuer but no person shall be appointed who shall not previously have been
approved by an Extraordinary Resolution. One or more persons may hold office as
trustee or trustees of these presents but such trustee or trustees shall be or
include a Trust Corporation. Whenever there shall be more than two trustees of
these presents the majority of such trustees shall be competent to execute and
exercise all the duties, powers, trusts, authorities and discretions vested in
the Trustee by these presents provided that a Trust Corporation shall be
included in such majority. Any appointment of a new trustee of these presents
shall as soon as practicable thereafter be notified by the Issuer to the Agent
and the Noteholders.
SEPARATE AND CO-TRUSTEES
(B) Notwithstanding the provisions of sub-clause (A) above, the Trustee
may, upon giving prior notice to the Issuer (but without the consent of
the Issuer, the Guarantor, the Noteholders, the Receiptholders or the
Couponholders), appoint any person established or resident in any
jurisdiction (whether a Trust Corporation or not) to act either as a
separate trustee or as a co-trustee jointly with the Trustee:
(i) if the Trustee considers such appointment to be in the interests of the
Noteholders;
(ii) for the purposes of conforming to any legal requirements, restrictions or
conditions in any jurisdiction in which any particular act or acts is or are to
be performed; or
(iii) for the purposes of obtaining a judgment in any jurisdiction
or the enforcement in any jurisdiction of either a judgment
already obtained or any of the provisions of these presents
against the Issuer or the Guarantor.
The Issuer irrevocably appoints the Trustee to be its attorney in its
name and on its behalf to execute any such instrument of appointment.
Such a person shall (subject always to the provisions of these
presents) have such trusts, powers, authorities and discretions (not
exceeding those conferred on the Trustee by these presents) and such
duties and obligations as shall be conferred or imposed by the
instrument of appointment. The Trustee shall have power in like manner
to remove any such person. Such reasonable remuneration as the Trustee
may pay to any such person, together with any attributable Liabilities
incurred by it in performing its function as such separate trustee or
co-trustee, shall for the purposes of these presents be treated as
Liabilities incurred by the Trustee.
23. TRUSTEE'S RETIREMENT AND REMOVAL
A trustee of these presents may retire at any time on giving not less
than three months' prior written notice to the Issuer without giving
any reason and without being responsible for any Liabilities incurred
by reason of such retirement. The Noteholders may by Extraordinary
Resolution remove any trustee or trustees for the time being of these
presents. The Issuer undertakes that in the event of the only trustee
of these presents which is a Trust Corporation giving notice under this
Clause or being removed by Extraordinary Resolution it will use its
best endeavours to procure that a new trustee of these presents being a
Trust Corporation is appointed as soon as reasonably practicable
thereafter. The retirement or removal of any such trustee shall not
become effective until a successor trustee being a Trust Corporation is
appointed.
24. TRUSTEE'S POWERS TO BE ADDITIONAL
THE powers conferred upon the Trustee by these presents shall be in
addition to any powers which may from time to time be vested in the
Trustee by the general law or as a holder of any of the Notes, Receipts
or Coupons.
25. NOTICES
ANY notice or demand to the Issuer, the Guarantor or the Trustee to be
given, made or served for any purposes under these presents shall be
given, made or served by sending the same by pre-paid post (first class
if inland, first class airmail if overseas) or facsimile transmission
or by delivering it by hand as follows:
to the Issuer 4500 Park Granada
Calabasas
California 91302
U.S.A.
(Attention: Jennifer Sandefur
Executive Vice President
and Treasurer)
Facsimile No. 001 818 225 4001
to the Guarantor: 4500 Park Granada
Calabasas
California 91302
U.S.A.
(Attention: Keith McLaughlin
Managing Director
and Treasurer)
Facsimile No. 001 818 225 4053
to the Trustee: 1 Appold Street
Broadgate
London EC2A 2HE
(Attention: the Managing Director)
Facsimile No. 44 171 982 1149
or to such other address or facsimile number as shall have been
notified (in accordance with this Clause) to the other parties hereto
and any notice or demand sent by post as aforesaid shall be deemed to
have been given, made or served three days in the case of inland post
or seven days in the case of overseas post after despatch and any
notice or demand sent by facsimile transmission as aforesaid shall be
deemed to have been given, made or served 24 hours after the time of
despatch provided that in the case of a notice or demand given by
facsimile transmission such notice or demand shall forthwith be
confirmed by post. The failure of the addressee to receive such
confirmation shall not invalidate the relevant notice or demand given
by facsimile transmission.
26. GOVERNING LAW
THESE presents are governed by, and shall be construed in accordance
with, English law.
27. SUBMISSION TO JURISDICTION
(A) EACH of the Issuer and the Guarantor irrevocably agrees for the benefit of
the Trustee, the Noteholders, the Receiptholders and the Couponholders that the
courts of England are to have jurisdiction to settle any disputes which may
arise out of or in connection with these presents and that accordingly any suit,
action or proceedings arising out of or in connection with these presents
(together referred to as "Proceedings") may be brought in the courts of England.
Each of the Issuer and the Guarantor irrevocably and unconditionally waives and
agrees not to raise any objection which it may have now or subsequently to the
laying of the venue of any Proceedings in the courts of England and any claim
that any Proceedings have been brought in an inconvenient forum and further
irrevocably and unconditionally agrees that a judgment in any Proceedings
brought in the courts of England shall be conclusive and binding upon it and may
be enforced in the courts of any other jurisdiction. Nothing in this Clause
shall limit any right to take Proceedings against the Issuer or the Guarantor in
any other court of competent jurisdiction, nor shall the taking of Proceedings
in one or more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
(B) Each of the Issuer and the Guarantor irrevocably and unconditionally
appoints Clifford Chance Secretaries Limited at its registered office
for the time being (being at the date hereof at 200 Aldersgate Street,
London EC1A 4JJ) and in the event of its ceasing so to act will appoint
such other person as the Trustee may approve and as the Issuer or the
Guarantor may nominate in writing to the Trustee for the purpose to
accept service of process on its behalf in England in respect of any
Proceedings. Each of the Issuer and the Guarantor:
(i) agrees to procure that, so long as any of the Notes issued by
it remains liable to prescription, there shall be in force an
appointment of such a person approved by the Trustee with an
office in London with authority to accept service as
aforesaid;
(ii) agrees that failure by any such person to give notice of such
service of process to the Issuer or the Guarantor shall not
impair the validity of such service or of any judgment based
thereon; and
(iii) agrees that nothing in these presents shall affect the right
to serve process in any other manner permitted by law.
28. COUNTERPARTS
THIS Trust Deed and any trust deed supplemental hereto may be executed
and delivered in any number of counterparts, all of which, taken
together, shall constitute one and the same deed and any party to this
Trust Deed or any trust deed supplemental hereto may enter into the
same by executing and delivering a counterpart.
IN WITNESS whereof this Trust Deed has been executed as a deed by the Issuer,
the Guarantor and the Trustee and delivered on the date stated on page 1.
TERMS AND CONDITIONS OF THE NOTES
The following are the Terms and Conditions of the Notes which will be
incorporated by reference into each global Note and each definitive Note, in the
latter case only if permitted by all legal and other relevant regulatory
requirements and agreed by the Issuer and the relevant Dealer at the time of
issue but, if not so permitted and agreed, such definitive Note will have
endorsed thereon or attached thereto such Terms and Conditions. The applicable
Pricing Supplement in relation to any Tranche of Notes may specify other terms
and conditions which shall, to the extent so specified or to the extent
inconsistent with the following Terms and Conditions, replace or modify the
following Terms and Conditions for the purpose of such Notes. The applicable
Pricing Supplement (or the relevant provisions thereof) will be endorsed upon,
or attached to, each temporary global Note, permanent global Note and definitive
Note. Reference should be made to "Form of the Notes" above for a description of
the content of Pricing Supplements which will include the definitions of certain
terms used in the following Terms and Conditions or specify which of such terms
are to apply in relation to the relevant Notes. This Note is one of a Series (as
defined below) of Notes issued by Countrywide Home Loans, Inc. (the "Issuer")
constituted by a Trust Deed dated 1st May, 1998 (such Trust Deed as modified
and/or supplemented and/or restated from time to time, the "Trust Deed") made
between the Issuer, Countrywide Credit Industries, Inc. as guarantor (the
"Guarantor") and Bankers Trustee Company Limited (the "Trustee", which
expression shall include any successor as trustee). References herein to the
"Notes" shall be references to the Notes of this Series and shall mean:
(i) in relation to any Notes represented by a global Note, units of the
lowest Specified Denomination in the Specified Currency;
(ii) definitive Notes issued in exchange for a global Note; and (iii) any
global Note.
The Notes, the Receipts (as defined below) and the Coupons (as defined below)
have the benefit of an Agency Agreement also dated 1st May, 1998 (such Agency
Agreement as amended and/or supplemented and/or restated from time to time, the
"Agency Agreement") and made between the Issuer, the Guarantor, Bankers Trust
Company as issuing and principal paying agent and agent bank (the "Agent", which
expression shall include any successor agent specified in the applicable Pricing
Supplement), the other paying agents named therein (together, where the context
so permits, with the Agent, the "Paying Agents", which expression shall include
any additional or successor paying agents) and the Trustee. Interest bearing
definitive Notes (unless otherwise indicated in the applicable Pricing
Supplement) have interest coupons ("Coupons") and, if indicated in the
applicable Pricing Supplement, talons for further Coupons ("Talons") attached on
issue. Any reference herein to Coupons or coupons shall, unless the context
otherwise requires, be deemed to include a reference to Talons or talons.
Definitive Notes repayable in instalments have receipts ("Receipts") for the
payment of the instalments of principal (other than the final instalment)
attached on issue. The Pricing Supplement for this Note (or the relevant
provisions thereof) is attached to or endorsed on this Note and supplements
these Terms and Conditions and may specify other terms and conditions which
shall, to the extent so specified or to the extent inconsistent with these Terms
and Conditions, replace or modify these Terms and Conditions for the purposes of
this Note. References to the "applicable Pricing Supplement" are to the Pricing
Supplement (or the relevant provisions thereof) attached to or endorsed on this
Note. The Trustee acts for the benefit of the holders for the time being of the
Notes (the "Noteholders", which expression shall, in relation to any Notes
represented by a global Note, be construed as provided below), the holders of
the Receipts (the "Receiptholders") and the holders of the Coupons (the
"Couponholders", which expression shall, unless the context otherwise requires,
include the holders of the Talons), in accordance with the provisions of the
Trust Deed. As used herein, "Tranche" means Notes which are identical in all
respects (including as to listing) and "Series" means a Tranche of Notes
together with any further Tranche or Tranches of Notes which are
(i)(129) expressed to be consolidated and form a single series and
(ii)(129) identical in all respects (including as to listing) except fortheir
respective Issue Dates, Interest Commencement Dates and/or Issue Prices. Copies
of the Trust Deed, the Agency Agreement and the applicable Pricing Supplement
are available for inspection during normal business hours at the registered
office for the time being of the Trustee (being at 1stMay, 1998 at 1 Appold
Street, Broadgate, London EC2A 2HE, England) and at the specified office of each
of the Agent and the other Paying Agents (and, if this Note is a listed Note of
any Series, a copy of the applicable Pricing Supplement is available, free of
charge, from the specified office of the Paying Agent in Luxembourg) save that,
if this Note is an unlisted Note of any Series, the applicable Pricing
Supplement will only be available for inspection by a Noteholder holding one or
more unlisted Notes of that Series and such Noteholder must produce evidence
satisfactory to the Trustee or, as the case may be, the relevant Paying Agent as
to its holding of Notes and as to identity. The Noteholders, the Receiptholders
and the Couponholders are deemed to have notice of, and are entitled to the
benefit of, all the provisions of the Trust Deed, the Agency Agreement and the
applicable Pricing Supplement which are applicable to them. These Terms and
Conditions include summaries of, and are subject to the detailed provisions of,
the Trust Deed. Words and expressions defined in the Trust Deed or the Agency
Agreement or used in the applicable Pricing Supplement shall have the same
meanings where used in these Terms and Conditions unless the context otherwise
requires or unless otherwise stated and provided that, in the event of
inconsistency between the Agency Agreement and the Trust Deed, the Trust Deed
will prevail and, in the event of inconsistency between the Agency Agreement or
the Trust Deed and the applicable Pricing Supplement, the applicable Pricing
Supplement will prevail. 1. Form, Denomination and Title The Notes are in bearer
form and, in the case of definitive Notes, serially numbered, in the Specified
Currency and the Specified Denomination(s). Notes of one Specified Denomination
may not be exchanged for Notes of another Specified Denomination. This Note is a
Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Indexed Interest
Note, an Indexed Redemption Amount Note, an Instalment Note, a Dual Currency
Note or a Partly Paid Note or a combination of any of the foregoing or any other
type of Note, depending upon the Interest Basis and Redemption/Payment Basis
shown in the applicable Pricing Supplement. Definitive Notes are issued with
Coupons attached, unless they are Zero Coupon Notes in which case references to
Coupons and Couponholders in these Terms and Conditions are not applicable.
Subject as set out below, title to the Notes, Receipts and Coupons will pass by
delivery. The Issuer, the Guarantor, the Replacement Agent (as defined in the
Agency Agreement) and any Paying Agent may deem and treat the bearer of any
Note, Receipt or Coupon as the absolute owner thereof (whether or not overdue
and notwithstanding any notice of ownership or writing thereon or notice of any
previous loss or theft thereof) for all purposes but, in the case of any global
Note, without prejudice to the provisions set out in the next succeeding
paragraph. For so long as any of the Notes is represented by a global Note held
on behalf of Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System ("Euroclear") and/or Cedel Bank,(129)sociAtA
anonyme ("Cedel Bank") each person (other than Euroclear or Cedel Bank or, in
the case of Notes listed on the Paris Bourse, Sicovam (as defined below)) who is
for the time being shown in the records of Euroclear or of Cedel Bank as the
holder of a particular nominal amount of such Notes (in which regard any
certificate or other document issued by Euroclear or Cedel Bank as to the
nominal amount of such Notes standing to the account of any person shall be
conclusive and binding for all purposes save in the case of manifest error)
shall be treated by the Issuer, the Guarantor, the Agent and any other Paying
Agent as the holder of such nominal amount of such Notes for all purposes other
than with respect to the payment of principal or interest on the Notes, for
which purpose the bearer of the relevant global Note shall be treated by the
Issuer, the Guarantor, the Agent and any other Paying Agent as the holder of
such nominal amount of such Notes in accordance with and subject to the terms of
the relevant global Note and the expressions "Noteholder" and "holder of Notes"
and related expressions shall be construed accordingly. Notes which are
represented by a global Note will be transferable only in accordance with the
rules and procedures for the time being of Euroclear or of Cedel Bank, as the
case may be. References to Euroclear and/or Cedel Bank shall, whenever the
context so permits, be deemed to include a reference to any additional or
alternative clearing system including, in the case of Notes listed on the Paris
Bourse, Sicovam SA and the IntermAdiaires financiers habilitAs authorised to
maintain accounts therein (together "Sicovam") approved by the Issuer, the Agent
and the Trustee. 2. Status of the Notes and the Guarantee (a)The Notes and the
relative Receipts and Coupons are direct, unconditional, unsubordinated and
unsecured obligations of the Issuer and rank pari passu among themselves and
(save for certain debts required to be preferred by law) equally with all other
unsecured obligations (other than subordinated obligations, if any) of the
Issuer, from time to time outstanding. (b)The payment of the principal and
interest in respect of the Notes and all other moneys payable by the Issuer
under or pursuant to the Trust Deed has been unconditionally and irrevocably
guaranteed by the Guarantor under the Trust Deed. The obligations of the
Guarantor under the Guarantee are direct, unconditional, unsubordinated and
unsecured obligations of the Guarantor and rank pari passu and (save for certain
debts required to be preferred by law) equally with all other unsecured
obligations (other than subordinated obligations, if any) of the Guarantor, from
time to time outstanding. 3. ECU Notes (a) Application of this Condition This
Condition only applies if the Notes are denominated or payable in ECU. (b) Value
and composition of the ECU Subject to Condition 5 (c), the ECU in which the
Notes are denominated or payable ("ECU") will be the same as the ECU, as
referred to in Article 109g of the Treaty establishing the European Communities,
as amended by the Treaty on European Union (the "Treaty") and as defined in
Council Regulation (EC) No 3320/94, that is from time to time used as the unit
of account of the European Communities (the "EC"). Changes to the ECU may be
made by the EC in which event the ECU will change accordingly. References to the
ECU shall be deemed to be references to the ECU as so changed from time to time.
(c) Provisions applicable from the start of the third stage of European economic
and monetary union Notwithstanding the other provisions of these Terms and
Conditions, on and after the Commencement Date:
(i) all payments in respect of the Notes, the Receipts and the Coupons will
be made solely in euro, including payments of interest in respect of periods
commencing before the Commencement Date, as though references in the Notes to
ECU were to euro;
(ii) payments will be made in euro by credit or transfer to a euro account
(or any other account to which euro may be credited or transferred) specified by
the payee or, at the option of the payee, by a euro cheque;
(iii) references in these Terms and Conditions to "ECU Settlement Day" shall
be read as references to any day on which the TARGET System (as defined in
Condition 17) is operating;
(iv) if the Notes are Fixed Rate Notes and interest for any period ending on
or after the Commencement Date is required to be calculated for a period of less
than one year, it will be calculated on the basis of the actual number of days
elapsed divided by 365 (or, if any of the days elapsed fall in a leap year, the
sum of (i) the number of those days falling in a leap year divided by 366 and
(ii) the number of those days falling in a non-leap year divided by 365);
(v) if the Notes are Floating Rate Notes the applicable Pricing Supplement
specifies any relevant changes to the provisions relating to interest; and
(vi) such other changes (whether or not relating to any of the above
matters) shall be made to these Terms and Conditions as the Issuer may decide,
with the prior written approval of the Agent and Trustee, to conform them to
conventions then applicable to instruments denominated in euro or to enable the
Notes to be consolidated with one or more issues of other notes, whether or not
originally denominated in ECU or euro. Any such other changes will not take
effect until after they have been notified to the Noteholders in accordance with
Condition 13. (c) Definition In this Condition, "Commencement Date" means the
start of the third stage of economic and monetary union pursuant to the Treaty
(as defined above). 4. Interest (a) Interest on Fixed Rate Notes Each Fixed Rate
Note bears interest on its nominal amount (or, if it is a Partly Paid Note, the
amount paid up) from (and including) the Interest Commencement Date at the
rate(s) per annum equal to the Rate(s) of Interest payable in arrear on the
Interest Payment Date(s) in each year and on the Maturity Date if that does not
fall on an Interest Payment Date. The first payment of interest will be made on
the Interest Payment Date next following the Interest Commencement Date. Except
as provided above or in the applicable Pricing Supplement, the amount of
interest payable on each Interest Payment Date in respect of the Fixed Interest
Period ending on such date will amount to the Fixed Coupon Amount. As used
herein, "Fixed Interest Period" means the period from (and including) an
Interest Payment Date (or the Interest Commencement Date) to (but excluding) the
next (or first) Interest Payment Date. If interest is required to be calculated
for a period of other than a Fixed Interest Period, such interest shall be
calculated on the basis of a 360-day year consisting of 12 months of 30 days
each. (b) Interest on Floating Rate Notes and Indexed Interest Notes (i)
Interest Payment Dates Each Floating Rate Note and Indexed Interest Note bears
interest on its nominal amount (or, if it is a Partly Paid Note, the amount paid
up) from (and including) the Interest Commencement Date and such interest will
be payable in arrear on either:
(A) the Interest Payment Date(s) in each year specified in the applicable
Pricing Supplement; or (B) if no express Interest Payment Date(s) is/are
specified in the applicable Pricing Supplement, each
date (each an "Interest Payment Date") which falls the number of months or other
period specified as the Specified Period in the applicable Pricing Supplement
after the preceding Interest Payment Date or, in the case of the first Interest
Payment Date, after the Interest Commencement Date. Such interest will be
payable in respect of each Interest Period (which expression shall, in these
Terms and Conditions, mean the period from (and including) an Interest Payment
Date (or the Interest Commencement Date) to (but excluding) the next (or first)
Interest Payment Date). If a business day convention is specified in the
applicable Pricing Supplement and (x) if there is no numerically corresponding
day in the calendar month in which an Interest Payment Date should occur or (y)
if any Interest Payment Date would otherwise fall on a day which is not a
Business Day, then, if the business day convention specified is:
(1) in any case where Specified Periods are specified in accordance
with Condition 4(b)(i)(B) above, the Floating Rate Convention, such Interest
Payment Date (i) in the case of (x) above, shall be the last day that is a
Business Day in the relevant month and the provisions of (B) below shall apply
mutatis mutandis or (ii) in the case of (y) above, shall be postponed to the
next day which is a Business Day unless it would thereby fall into the next
calendar month, in which event (A) such Interest Payment Date shall be brought
forward to the immediately preceding Business Day and (B) each subsequent
Interest Payment Date shall be the last Business Day in the month which falls
the Specified Period after the preceding applicable Interest Payment Date; or
(2) the Following Business Day Convention, such Interest Payment Date
shall be postponed to the next day which is a Business Day; or
(3) the Modified Following Business Day Convention, such Interest
Payment Date shall be postponed to the next day which is a Business Day unless
it would thereby fall into the next calendar month, in which event such Interest
Payment Date shall be brought forward to the immediately preceding Business Day;
or
(4) the Preceding Business Day Convention, such Interest Payment Date
shall be brought forward to the immediately preceding Business Day.
In this Condition, "Business Day" means a day which is both:
(A) a day on which commercial banks and foreign exchange markets settle
payments in London and any Additional Business Centre specified in the
applicable Pricing Supplement; and
(B) either (1) in relation to any sum payable in a Specified Currency other
than ECU, a day on which commercial banks and foreign exchange markets settle
payments in the principal financial centre of the country of the relevant
Specified Currency (if other than London and any Additional Business Centre and
which, if the Specified Currency is New Zealand dollars, shall be Auckland) or
(2) in relation to any sum payable in ECU, an ECU Settlement Day (as defined in
the 1991 ISDA Definitions, as amended and updated as at the Issue Date of the
first Tranche of the Notes, published by the International Swaps and Derivatives
Association, Inc. (the "ISDA Definitions") but not including part (b) of such
definition). (ii) Rate of Interest The Rate of Interest payable from time to
time in respect of Floating Rate Notes and Indexed Interest Notes will be
determined in the manner specified in the applicable Pricing Supplement.
(A) ISDA Determination for Floating Rate Notes
Where ISDA Determination is specified in the applicable Pricing Supplement as
the manner in which the Rate of Interest is to be determined, the Rate of
Interest for each Interest Period will be the relevant ISDA Rate plus or minus
(as indicated in the applicable Pricing Supplement) the Margin (if any). For the
purposes of this sub-paragraph (A), "ISDA Rate" for an Interest Period means a
rate equal to the Floating Rate that would be determined by the Agent under an
interest rate swap transaction if the Agent were acting as Calculation Agent for
that swap transaction under the terms of an agreement incorporating the ISDA
Definitions and under which:
(1) the Floating Rate Option is as specified in the applicable Pricing
Supplement; (2) the Designated Maturity is a period specified in the
applicable Pricing Supplement; and (3) the relevant Reset Date is either (i)
if the applicable Floating Rate Option is based on the London
inter-bank offered rate (LIBOR) for a currency, the first day of that Interest
Period or (ii) in any other case, as specified in the applicable Pricing
Supplement. For the purposes of this sub-paragraph (A), "Floating Rate",
"Calculation Agent", "Floating Rate Option", "Designated Maturity" and "Reset
Date" have the meanings given to those terms in the ISDA Definitions. (B) Screen
Rate Determination for Floating Rate Notes Where Screen Rate Determination is
specified in the applicable Pricing Supplement as the manner in which the Rate
of Interest is to be determined, the Rate of Interest for each Interest Period
will, subject as provided below, be either:
(1) the offered quotation; or
(2) the arithmetic mean (rounded if necessary to the fifth decimal place,
with 0.000005 being rounded upwards) of the offered quotations, (expressed as a
percentage rate per annum) for the Reference Rate which appears or appear, as
the case may be, on the Relevant Screen Page as at 11.00 a.m. (London time) on
the Interest Determination Date in question plus or minus (as indicated in the
applicable Pricing Supplement) the Margin (if any), all as determined by the
Agent. If five or more of such offered quotations are available on the Relevant
Screen Page, the highest (or, if there is more than one such highest quotation,
one only of such quotations) and the lowest (or, if there is more than one such
lowest quotation, one only of such quotations) shall be disregarded by the Agent
for the purpose of determining the arithmetic mean (rounded as provided above)
of such offered quotations. The Agency Agreement contains provisions for
determining the Rate of Interest in the event that the Relevant Screen Page is
not available or if, in the case of (1) above, no such quotation appears or, in
the case of (2) above, fewer than three such offered quotations appear, in each
case as at the time specified in the preceding paragraph. If the Reference Rate
from time to time in respect of Floating Rate Notes is specified in the
applicable Pricing Supplement as being other than the London inter-bank offered
rate, the Rate of Interest in respect of such Notes will be determined as
provided in the applicable Pricing Supplement. (iii) Minimum and/or Maximum Rate
of Interest If the applicable Pricing Supplement specifies a Minimum Rate of
Interest for any Interest Period, then, in the event that the Rate of Interest
in respect of such Interest Period determined in accordance with the provisions
of paragraph (ii) above is less than such Minimum Rate of Interest, the Rate of
Interest for such Interest Period shall be such Minimum Rate of Interest. If the
applicable Pricing Supplement specifies a Maximum Rate of Interest for any
Interest Period, then, in the event that the Rate of Interest in respect of such
Interest Period determined in accordance with the provisions of paragraph (ii)
above is greater than such Maximum Rate of Interest, the Rate of Interest for
such Interest Period shall be such Maximum Rate of Interest. (iv) Determination
of Rate of Interest and Calculation of Interest Amounts The Agent, in the case
of Floating Rate Notes, and the Calculation Agent, in the case of Indexed
Interest Notes, will at or as soon as practicable after each time at which the
Rate of Interest is to be determined, determine the Rate of Interest for the
relevant Interest Period. In the case of Indexed Interest Notes, the Calculation
Agent will notify the Agent of the Rate of Interest for the relevant Interest
Period as soon as practicable after calculating the same. The Agent will
calculate the amount of interest (the "Interest Amount") payable on the Floating
Rate Notes or Indexed Interest Notes in respect of each Specified Denomination
for the relevant Interest Period. Each Interest Amount shall be calculated by
applying the Rate of Interest to each Specified Denomination, multiplying such
sum by the applicable Day Count Fraction, and rounding the resultant figure to
the nearest sub-unit of the relevant Specified Currency, half of any such
sub-unit being rounded upwards or otherwise in accordance with applicable market
convention. "Day Count Fraction" means, in respect of the calculation of an
amount of interest for any Interest Period:
(i) if "Actual/365" or "Actual/Actual" is specified in the applicable
Pricing Supplement, the actual number of days in the Interest Period divided by
365 (or, if any portion of that Interest Period falls in a leap year, the sum of
(A) the actual number of days in that portion of the Interest Period falling in
a leap year divided by 366 and (B) the actual number of days in that portion of
the Interest Period falling in a non-leap year divided by 365);
(ii) if "Actual/365 (Fixed)" is specified in the applicable Pricing
Supplement, the actual number of days in the Interest Period divided by 365;
(iii) if "Actual/360" is specified in the applicable Pricing Supplement, the
actual number of days in the Interest Period divided by 360;
(iv) if "30/360", "360/360" or "Bond Basis" is specified in the applicable
Pricing Supplement, the number of days in the Interest Period divided by 360
(the number of days to be calculated on the basis of a year of 360 days with 12
30-day months (unless (a) the last day of the Interest Period is the 31st day of
a month but the first day of the Interest Period is a day other than the 30th or
31st day of a month, in which case the month that includes that last day shall
not be considered to be shortened to a 30-day month, or (b) the last day of the
Interest Period is the last day of the month of February, in which case the
month of February shall not be considered to be lengthened to a 30-day month));
and
(v) if "30E/360" or "Eurobond Basis" is specified in the applicable Pricing
Supplement, the number of days in the Interest Period divided by 360 (the number
of days to be calculated on the basis of a year of 360 days with 12 30-day
months, without regard to the date of the first day or last day of the Interest
Period unless, in the case of an Interest Period ending on the Maturity Date,
the Maturity Date is the last day of the month of February, in which case the
month of February shall not be considered to be lengthened to a 30-day month).
(v) Notification of Rate of Interest and Interest Amounts The Agent will cause
the Rate of Interest and each Interest Amount for each Interest Period and the
relevant Interest Payment Date to be notified to the Issuer and any stock
exchange on which the relevant Floating Rate Notes or Indexed Interest Notes are
for the time being listed and notice thereof to be published in accordance with
Condition(129)13 as soon as possible after their determination but in no event
later than the fourth London Business Day (as defined in Condition(129)6(c))
thereafter. Each Interest Amount and Interest Payment Date so notified may
subsequently be amended (or appropriate alternative arrangements made by way of
adjustment) without prior notice in the event of an extension or shortening of
the Interest Period. Any such amendment will be promptly notified to each stock
exchange on which the relevant Floating Rate Notes or Indexed Interest Notes are
for the time being listed and to the Noteholders in accordance with
Condition(129)13. (vi) Determination or calculation by Trustee If for any reason
at any relevant time the Agent or, as the case may be, the Calculation Agent
defaults in its obligation to determine the Rate of Interest or the Agent
defaults in its obligation to calculate any Interest Amount in accordance with
sub-paragraph (ii)(A) or (B) above or as otherwise specified in the applicable
Pricing Supplement, as the case may be, and, in each case (iv) above, the
Trustee shall determine the Rate of Interest at such rate as, in its absolute
discretion (having such regard as it shall think fit to the foregoing provisions
of this Condition, but subject always to any minimum or maximum Rate of Interest
specified in the applicable Pricing Supplement), it shall deem fair and
reasonable in all the circumstances or, as the case may be, the Trustee shall
calculate the Interest Amount(s) in such manner as it shall deem fair and
reasonable in all the circumstances and each such determination or calculation
shall be deemed to have been made by the Agent or the Calculation Agent, as
applicable. (vii) Certificates to be final All certificates, communications,
opinions, determinations, calculations, quotations and decisions given,
expressed, made or obtained for the purposes of the provisions of this Condition
4(b), whether by the Agent or, if applicable, the Calculation Agent or the
Trustee, shall (in the absence of wilful default, bad faith or manifest error)
be binding on the Issuer, the Guarantor, the Agent, the Calculation Agent (if
applicable), the other Paying Agents, the Trustee and all Noteholders,
Receiptholders and Couponholders and (in the absence as aforesaid) no liability
to the Issuer, the Guarantor, the Noteholders, the Receiptholders or the
Couponholders shall attach to the Agent or (if applicable) the Calculation Agent
or the Trustee in connection with the exercise or non-exercise by it of its
powers, duties and discretions pursuant to such provisions. (c) Dual Currency
Notes In the case of Dual Currency Notes, if the rate or amount of interest
falls to be determined by reference to an exchange rate, the rate or amount of
interest payable shall be determined in the manner specified in the applicable
Pricing Supplement. (d) Partly Paid Notes In the case of Partly Paid Notes
(other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue
as aforesaid on the paid-up nominal amount of such Notes and otherwise as
specified in the applicable Pricing Supplement. (e) Accrual of Interest Each
Note (or in the case of the redemption of part only of a Note, that part only of
such Note) will cease to bear interest (if any) from the date for its redemption
unless, upon due presentation thereof, payment of principal is improperly
withheld or refused. In such event, interest will continue to accrue as provided
in the Trust Deed. 5. Payments (a) Method of Payment Subject as provided below:
(i) payments in a Specified Currency other than ECU or U.S. dollars will be
made by transfer to an account in the relevant Specified Currency (which, in the
case of a payment in Japanese Yen to a non-resident of Japan, shall be a
non-resident account) maintained by the payee with, or by a cheque in such
Specified Currency drawn on, a bank in the principal financial centre of the
country of such Specified Currency (which, if the Specified Currency is New
Zealand dollars, shall be Auckland);
(ii) payments in ECU will be made by credit or transfer to an ECU account
specified by the payee; and (iii) payments in U.S. dollars will be made by
transfer to a U.S. dollar account maintained by the payee
with a bank outside the United States (which expression, as used in this
Condition 5, means the United States of America, including the States and the
District of Columbia, its territories, its possessions and other areas subject
to its jurisdiction), or by cheque drawn on a United States bank. In no event
will payment be made by a cheque mailed to an address in the United States or by
transfer to an account maintained by the payee with a bank located in the United
States. Payments will be subject in all cases to any fiscal or other laws and
regulations applicable thereto in the place of payment, but without prejudice to
the provisions of Condition(129)7. References to "Specified Currency" will
include any successor currency under applicable law. (b) Presentation of Notes,
Receipts and Coupons Payments of principal in respect of definitive Notes will
(subject as provided below) be made in the manner provided in paragraph (a)
above only against surrender of definitive Notes, and payments of interest in
respect of definitive Notes will (subject as provided below) be made as
aforesaid only against surrender of Coupons, in each case at the specified
office of any Paying Agent outside the United States (which expression, as used
herein, means the United States of America (including the States and the
District of Columbia, its territories, its possessions and other areas subject
to its jurisdiction)). Payments of instalments of principal (if any), other than
the final instalment, will (subject as provided below) be made in the manner
provided in paragraph (a) above against surrender of the relevant Receipt.
Payment of the final instalment will be made in the manner provided in paragraph
(a) above only against surrender of the relevant Note. Each Receipt must be
presented for payment of the relevant instalment together with the definitive
Note to which it appertains. Receipts presented without the definitive Note to
which they appertain do not constitute valid obligations of the Issuer. Upon the
date on which any definitive Note becomes due and repayable, unmatured Receipts
(if any) relating thereto (whether or not attached) shall become void and no
payment shall be made in respect thereof. Fixed Rate Notes in definitive form
(other than Dual Currency Notes or Indexed Notes) should be presented for
payment together with all unmatured Coupons appertaining thereto (which
expression shall for this purpose include Coupons falling to be issued on
exchange of matured Talons), failing which the amount of any missing unmatured
Coupon (or, in the case of payment not being made in full, the same proportion
of the amount of such missing unmatured Coupon as the sum so paid bears to the
sum due) will be deducted from the sum due for payment. Each amount of principal
so deducted will be paid in the manner mentioned above against surrender of the
relative missing Coupon at any time before the expiry of 10(129)years after the
Relevant Date (as defined in Condition(129)7) in respect of such principal
(whether or not such Coupon would otherwise have become void under
Condition(129)8) or, if later, five years from the date on which such Coupon
would otherwise have become due, but in no event thereafter. Notwithstanding the
provisions of this paragraph, if any such Fixed Rate Notes in definitive form
should be issued on terms such that, on the presentation for payment of any such
Note without any unmatured Coupons attached thereto or surrendered therewith,
the amount required by this paragraph to be deducted would be greater than the
Early Redemption Amount otherwise due for payment, then, upon the due date for
redemption of any such Note, such unmatured Coupons (whether or not attached)
shall become void (and no payment shall be made in respect thereof) as shall be
required so that, upon application of the provisions of this paragraph in
respect of such Coupons as have not so become void, the amount required by this
paragraph to be deducted would not be greater than the Early Redemption Amount
otherwise due for payment. Where the application of the foregoing sentence
requires some but not all of the unmatured Coupons relating to a Note to become
void, the relevant Paying Agent shall determine which unmatured Coupons are to
become void, and shall select for such purpose Coupons maturing on later dates
in preference to Coupons maturing on earlier dates. Upon any Fixed Rate Note
becoming due and repayable prior to its Maturity Date, all unmatured Talons (if
any) appertaining thereto will become void and no further Coupons will be issued
in respect thereof. Upon the date on which any Floating Rate Note, Dual Currency
Note or Indexed Note in definitive form becomes due and repayable, unmatured
Coupons and Talons (if any) relating thereto (whether or not attached) shall
become void and no payment or, as the case may be, exchange for further Coupons
shall be made in respect thereof. If the due date for redemption of any
definitive Note is not an Interest Payment Date, interest (if any) accrued in
respect of such Note from (and including) the preceding Interest Payment Date
or, as the case may be, the Interest Commencement Date shall be payable only
against surrender of the relevant definitive Note. Payments of principal and
interest (if any) in respect of Notes represented by any global Note will
(subject as provided below) be made in the manner specified above in relation to
definitive Notes and otherwise in the manner specified in the relevant global
Note against presentation or surrender, as the case may be, of such global Note
at the specified office of any Paying Agent. A record of each payment made
against presentation or surrender of such global Note, distinguishing between
any payment of principal and any payment of interest, will be made on such
global Note by such Paying Agent and such record shall be prima facie evidence
that the payment in question has been made. The holder of a global Note shall be
the only person entitled to receive payments in respect of Notes represented by
such global Note and the Issuer or, as the case may be, the Guarantor will be
discharged by payment to, or to the order of, the holder of such global Note in
respect of each amount so paid. Each of the persons shown in the records of
Euroclear or Cedel Bank as the beneficial holder of a particular nominal amount
of Notes represented by such global Note must look solely to Euroclear or Cedel
Bank, as the case may be, for his share of each payment so made by the Issuer
or, as the case may be, the Guarantor to, or to the order of, the holder of such
global Note. Notwithstanding the foregoing, if any amount of principal and/or
interest in respect of this Note is payable in U.S. dollars, such U.S. dollar
payments of principal and/or interest in respect of this Note will be made at
the specified office of a Paying Agent in the United States if:
(i) the Issuer has appointed Paying Agents with specified offices outside
the United States with the reasonable expectation that such Paying Agents would
be able to make payment in U.S. dollars at such specified offices outside the
United States of the full amount of principal and interest on the Notes in the
manner provided above when due;
(ii) payment of the full amount of such principal and interest at all such
specified offices outside the United States is illegal or effectively precluded
by exchange controls or other similar restrictions on the full payment or
receipt of principal and interest in U.S. dollars; and
(iii) such payment is then permitted under United States law without
involving, in the opinion of the Issuer and the Guarantor, adverse tax
consequences to the Issuer or the Guarantor.
(c) Payment in a Component Currency
If any payment of principal or interest in respect of a Note, Receipt or Coupon
is to be made in ECU and, on the relevant due date, the ECU is used neither as
the unit of account of the EC nor as the currency of the European Union, the
Trustee shall, without liability on its part and without having regard to the
interests of individual Noteholders, Receiptholders or Couponholders and after
consultation, if practicable, with the Issuer, choose a currency which was a
component of the ECU when the ECU was most recently used as the unit of account
of the EC (the "chosen currency") in which all payments due on that due date
with respect to such Notes, Receipts and Coupons shall be made. Notice of the
chosen currency selected by the Trustee shall, where practicable, be published
in accordance with Condition 13. The amount of each payment in such chosen
currency shall be computed on the basis of the equivalent of the ECU in that
currency, determined as set out in this paragraph (c), as of the fourth London
Business Day prior to the date on which such payment is due. For the purposes of
this paragraph (c), the expression "London Business Day" means a day (other than
a Saturday or a Sunday) on which banks and foreign exchange markets are open for
business in London.
Without prejudice to the preceding paragraph, on the first London Business Day
from which the ECU is used neither as the unit of account of the EC nor as the
currency of the European Union, the Trustee shall, without liability on its part
and without having regard to the interests of individual Noteholders,
Receiptholders or Couponholders and after consultation, if practicable, with the
Issuer, choose a currency which was a component of the ECU when the ECU was most
recently used as the unit of account of the EC (also the "chosen currency") in
which all payments with respect to Notes, Receipts and Coupons having a due date
prior thereto but not yet presented for payment are to be made. The amount of
each payment in such chosen currency shall be computed on the basis of the
equivalent of the ECU in that currency, determined as set out in this paragraph
(c), as of such first London Business Day. The equivalent of the ECU in the
relevant chosen currency as of any date (the "Day of Valuation") shall be
determined on the following basis by the Agent. The component currencies of the
ECU for this purpose (the "Components") shall be the currency amounts which were
components of the ECU as of the last date on which the ECU was used as the unit
of account of the EC. The equivalent of the ECU in the chosen currency shall be
calculated by first aggregating the U.S. dollar equivalents of the Components,
and then, using the rate used for determining the U.S. dollar equivalent of the
Component in the chosen currency as set forth below, calculating the equivalent
in the chosen currency of such aggregate amount in U.S. dollars. The U.S. dollar
equivalent of each of the Components shall be determined by the Agent on the
basis of the middle spot delivery quotations prevailing at 11.00 a.m. (London
time) on the Day of Valuation, as obtained by the Agent from one or more leading
banks as selected by the Agent in the country of issue of the Component in
question. If the official unit of any Component is altered by way of combination
or subdivision, the number of units of that Component shall be divided or
multiplied in the same proportion. If two or more Components are consolidated
into a single currency, the amounts of those Components shall be replaced by an
amount in such single currency equal to the sum of the amounts of the
consolidated Components expressed in such single currency. If any Component is
divided into two or more currencies, the amount of that Component shall be
replaced by amounts of such two or more currencies each of which shall be equal
to the amount of the former Component divided by the number of currencies into
which that Component was divided. If no direct quotations are available for a
Component as of a Day of Valuation from any of the banks selected by the Agent
for this purpose because foreign exchange markets are closed in the country of
issue of that Component or for any other reason, the most recent direct
quotations for that Component obtainable by the Agent shall be used in computing
the U.S. dollar equivalent of the ECU on such Day of Valuation, provided,
however, that such most recent quotations may be used only if they were
prevailing in the country of issue of each Component not more than two London
Business Days before such Day of Valuation. If the most recent quotations
obtained by the Agent are those which were so prevailing more than two London
Business Days before such Day of Valuation, the Agent shall determine the U.S.
dollar equivalent of such Component on the basis of cross rates derived from the
middle spot delivery quotations for such Component and for the U.S. dollar
prevailing at 11.00 a.m. (London time) on such Day of Valuation, as obtained by
the Agent from one or more leading banks, as selected by the Agent, in a country
other than the country of issue of such Component. If such most recent
quotations obtained by the Agent are those which were so prevailing not more
than two London Business Days before such Day of Valuation, the Agent shall
determine the U.S. dollar equivalent of such Component on the basis of such
cross rates if it judges that the U.S. dollar equivalent so calculated is more
representative than the U.S. dollar equivalent calculated on the basis of such
most recent direct quotations. If there is more than one market for dealing in
any Component by reason of foreign exchange regulations or for any other reason,
the market to be referred to in respect of such Component shall be that upon
which a non-resident issuer of securities denominated in such Component would
ordinarily purchase such Component in order to make payments in respect of such
securities. All choices and determinations made by the Agent or the Trustee for
the purposes of this paragraph (c) shall be at its sole discretion and shall, in
the absence of manifest error, be conclusive for all purposes and binding on the
Issuer, the Guarantor, all Noteholders, Receiptholders and Couponholders.
Whenever a payment is to be made in a chosen currency as provided in this
paragraph (c), such chosen currency shall be deemed to be the Specified Currency
for the purposes of the other provisions of this Condition. From the start of
the third stage of European economic and monetary union, all amounts or payments
in respect of Notes denominated or payable in ECU will be payable in euro at the
rate of one euro for one ECU. This paragraph (c) will not result in a payment in
a Component in such circumstances. (d) Payment Day If the date for payment of
any amount in respect of any Note, Receipt or Coupon is not a Payment Day, the
holder thereof shall not be entitled to payment until the next following Payment
Day in the relevant place and shall not be entitled to further interest or other
payment in respect of such delay. For these purposes, "Payment Day" means any
day which is:
(i) a day on which commercial banks and foreign exchange markets settle
payments in the relevant place of presentation;
(ii) a Business Day (as defined in Condition 4(b)(i)); and
(iii) in relation to Notes denominated or payable in ECU, a day on which
payments in ECU can be settled by commercial banks and in foreign exchange
markets in the place in which the relevant account for payment is located. (e)
Interpretation of Principal and Interest Any reference in these Terms and
Conditions to principal in respect of the Notes shall be deemed to include, as
applicable:
(i) any additional amounts which may be payable with respect to principal
under Condition 7; (ii) the Final Redemption Amount of the Notes; (iii) the
Early Redemption Amount of the Notes; (iv) the Optional Redemption Amount(s)
(if any) of the Notes; (v) in relation to Notes redeemable in instalments,
the Instalment Amounts; (vi) in relation to Zero Coupon Notes, the Amortised
Face Amount; and (vii) any premium and any other amounts which may be
payable by the Issuer under or in respect of the
Notes.
Any reference in these Terms and Conditions to interest in respect of the Notes
shall be deemed to include, as applicable, any additional amounts (other than
interest) which may be payable with respect to interest under Condition 7. 6.
Redemption and Purchase (a) At Maturity Unless previously redeemed or purchased
and cancelled as specified below, each Note will be redeemed by the Issuer at
its Final Redemption Amount specified in, or determined in the manner specified
in, the applicable Pricing Supplement in the relevant Specified Currency on the
Maturity Date. (b) Redemption for Tax Reasons The Notes may be redeemed at the
option of the Issuer in whole, but not in part, at any time (if this Note is
neither a Floating Rate Note nor an Indexed Interest Note) or on any Interest
Payment Date (if this Note is either a Floating Rate Note or an Indexed Interest
Note), on giving not less than 30 nor more than 60 days' notice to the Agent
and, in accordance with Condition 13, the Noteholders (which notice shall be
irrevocable), if:
(i) on the occasion of the next payment due under the Notes, the Issuer has
or will become obliged to pay additional amounts as provided or referred to in
Condition 7 or the Guarantor would be unable for reasons outside its control to
procure payment by the Issuer and in making payment itself would be required to
pay such additional amounts in each case as a result of any change in, or
amendment to, the laws or regulations of the United States of America or any
political subdivision or any authority thereof or therein having power to tax,
or any change in the application or official interpretation of such laws or
regulations, which change or amendment becomes effective on or after the Issue
Date of the first Tranche of the Notes; and
(ii) such obligation cannot be avoided by the Issuer or, as the case may be,
the Guarantor taking reasonable measures available to it, provided that no such
notice of redemption shall be given earlier than 90 days prior to the earliest
date on which the Issuer or, as the case may be, the Guarantor would be obliged
to pay such additional amounts were a payment in respect of the Notes then due.
Prior to the publication of any notice of redemption pursuant to this Condition,
the Issuer shall deliver to the Agent a certificate signed by two Directors of
the Issuer or, as the case may be, two Directors of the Guarantor stating that
the Issuer is entitled to effect such redemption and setting forth a statement
of facts showing that the conditions precedent to the right of the Issuer so to
redeem have occurred, and an opinion of independent legal advisers of recognised
standing to the effect that the Issuer or, as the case may be, the Guarantor has
or will become obliged to pay such additional amounts as a result of such change
or amendment. In addition if the Issuer or, if applicable, the Guarantor
determines, based upon a written opinion of independent United States legal
counsel, that any payment made outside the United States by the Issuer, the
Guarantor or any Paying Agent of principal or interest due in respect of any
Note, Receipt or Coupon would, under any present or future laws or regulations
of the United States of America, be subject to any certification, identification
or other information reporting requirement of any kind, the effect of which is
the disclosure to the Issuer, the Guarantor, any Paying Agent or any
governmental authority of the nationality, residence or identity (as
distinguished from, for example, status as a United States Alien (as defined in
Condition 7)) of a beneficial owner of such Note, Receipt or Coupon who is a
United States Alien the Issuer, at its option, will either (x) redeem the Notes,
in whole but not in part, or (y) if and so long as the conditions of Condition 7
are satisfied, pay the additional amounts specified in Condition 7. The right of
the Issuer to exercise such option will not apply where the requirement
otherwise giving rise to such option (1) would not be applicable to a payment
made by the Issuer, the Guarantor or any Paying Agent (i) directly to the
beneficial owner or (ii) to a custodian, nominee or other agent of the
beneficial owner, (2) can be satisfied by such custodian, nominee or other agent
certifying that such beneficial owner is a United States Alien, provided that in
each case referred to in sub-paragraphs (1)(ii) and (2) payment by such
custodian, nominee or agent of such beneficial owner is not otherwise subject to
any such requirement (other than a requirement which is imposed on a custodian,
nominee or other agent described in (4) of this sentence) or (3) would not be
applicable to payment made by at least one other Paying Agent or (4) is
applicable to a payment to a custodian, nominee or other agent of the beneficial
owner who is a United States person, a controlled foreign corporation for United
States tax purposes, a foreign person 50 per cent. or more of whose gross income
for the 3-year period ending with the close of its taxable year preceding the
year of payment is effectively connected with a United States trade or business,
or is otherwise related to the United States. Such determination and election
will be made as soon as practicable, and the Issuer will promptly publish notice
thereof (the "Determination Notice") stating the effective date of such
certification, identification or other information or reporting requirement,
whether the Notes shall be redeemed or that the additional amounts specified in
Condition 7 should be paid and (if applicable) the last date by which the
redemption of the Notes must take place. If an election has been made that the
Notes shall be redeemed, such redemption will take place on such date (being an
Interest Payment Date if this Note is either a Floating Rate Note or an Indexed
Interest Note), not later than one year after the publication of the
Determination Notice, as the Issuer elects by notice to the Noteholders in
accordance with Condition 13 at least 60 days before the date fixed for
redemption. Notwithstanding the foregoing, the Notes will not be so redeemed if
the Issuer subsequently determines, based on an opinion of independent United
States legal counsel, no less than 30 days prior to the redemption date, that
subsequent payments would not be subject to any such requirement, in which case
the Issuer will promptly publish notice of such determination and any earlier
redemption notice will be revoked and of no further effect. Notes redeemed
pursuant to this Condition 6(b) will be redeemed at their Early Redemption
Amount referred to in paragraph (e) below together (if appropriate) with
interest accrued to (but excluding) the date of redemption. (c) Redemption at
the Option of the Issuer If the Issuer is specified in the applicable Pricing
Supplement as having an option to redeem, the Issuer shall, having given:
(i) not less than 30 nor more than 60 days' notice to the Noteholders in
accordance with Condition 13; and (ii) not less than 30 days before the
giving of the notice referred to in (i), notice to the Agent;
(which notices shall be irrevocable), redeem all or some only of the Notes then
outstanding on any Optional Redemption Date and at the Optional Redemption
Amount(s) specified in, or determined in the manner specified in, the applicable
Pricing Supplement together, if appropriate, with interest accrued to (but
excluding) the relevant Optional Redemption Date. Any such redemption must be of
a nominal amount equal to the Minimum Redemption Amount or a Higher Redemption
Amount. In the case of a partial redemption of Notes, the Notes to be redeemed
("Redeemed Notes") will be selected individually by lot, in the case of Redeemed
Notes represented by definitive Notes, and in accordance with the rules of
Euroclear and/or Cedel Bank, in the case of Redeemed Notes represented by a
global Note, not more than 60 days prior to the date fixed for redemption (such
date of selection being hereinafter called the "Selection Date"). In the case of
Redeemed Notes represented by definitive Notes, a list of the serial numbers of
such Redeemed Notes will be published in accordance with Condition 13 not less
than 30 days prior to the date fixed for redemption. The aggregate nominal
amount of Redeemed Notes represented by definitive Notes shall bear the same
proportion to the aggregate nominal amount of all Redeemed Notes as the
aggregate nominal amount of definitive Notes outstanding bears to the aggregate
nominal amount of the Notes outstanding, in each case on the Selection Date,
provided that such first mentioned nominal amount shall, if necessary, be
rounded downwards to the nearest integral multiple of the Specified
Denomination, and the aggregate nominal amount of Redeemed Notes represented by
a global Note shall be equal to the balance of the Redeemed Notes. No exchange
of the relevant global Note will be permitted during the period from and
including the Selection Date to and including the date fixed for redemption
pursuant to this paragraph (c) and notice to that effect shall be given by the
Issuer to the Noteholders in accordance with Condition 13 at least 5 days prior
to the Selection Date.
(d) Redemption at the Option of the Noteholders
If the Noteholders are specified in the applicable Pricing Supplement as having
an option to redeem, upon the holder of any Note giving to the Issuer in
accordance with Condition 13 not less than 30 nor more than 60 days' notice
(which shall be irrevocable) the Issuer will, upon the expiry of such notice,
redeem, subject to, and in accordance with, the terms specified in the
applicable Pricing Supplement, in whole (but not in part), such Note on the
Optional Redemption Date and at the Optional Redemption Amount together, if
appropriate, with interest accrued to (but excluding) the Optional Redemption
Date. If this Note is in definitive form, to exercise the right to require
redemption of this Note the holder of this Note must deliver such Note at the
specified office of any Paying Agent at any time during normal business hours of
such Paying Agent falling within the notice period, accompanied by a duly
completed and signed notice of exercise in the form (for the time being current)
obtainable from any specified office of any Paying Agent (a "Put Notice") and in
which the holder must specify a bank account (or, if payment is by cheque, an
address) to which payment is to be made under this Condition. (e) Early
Redemption Amounts For the purpose of paragraph (b) above and Condition 9, the
Notes will be redeemed at the Early Redemption Amount calculated as follows:
(i) in the case of Notes with a Final Redemption Amount equal to the Issue
Price, at the Final Redemption Amount thereof;
(ii) in the case of Notes (other than Zero Coupon Notes but including
Instalment Notes and Partly Paid Notes) with a Final Redemption Amount which is
or may be less or greater than the Issue Price or which is payable in a
Specified Currency other than that in which the Notes are denominated, at the
amount specified in, or determined in the manner specified in, the applicable
Pricing Supplement or, if no such amount or manner is so specified in the
Pricing Supplement, at their nominal amount; or
(iii) in the case of Zero Coupon Notes, at an amount (the "Amortised Face
Amount") equal to the sum of: (A) the Reference Price; and (B) the
product of the Accrual Yield (compounded annually) being applied to
the Reference Price
from (and including) the Issue Date to (but excluding) the date fixed for
redemption or (as the case may be) the date upon which such Note becomes due and
repayable. Where such calculation is to be made for a period which is not a
whole number of years, it shall be made on the basis of a 360-day year
consisting of 12 months of 30 days each or such other calculation basis as may
be specified in the applicable Pricing Supplement. (f) Instalments Instalment
Notes will be redeemed in the Instalment Amounts and on the Instalment Dates. In
the case of early redemption, the Early Redemption Amount will be determined
pursuant to paragraph (e) above. (g) Partly Paid Notes Partly Paid Notes will be
redeemed, whether at maturity, early redemption or otherwise, in accordance with
the provisions of this Condition and the applicable Pricing Supplement. (h)
Purchases The Issuer, the Guarantor or any of its other Subsidiaries (as defined
in the Trust Deed) may at any time purchase Notes (provided that, in the case of
definitive Notes, all unmatured Receipts, Coupons and Talons appertaining
thereto are purchased therewith) at any price in the open market or otherwise.
Such Notes may be held, reissued, resold or, at the option of the Issuer or the
Guarantor, surrendered to any Paying Agent for cancellation. (i) Cancellation
All Notes which are redeemed will forthwith be cancelled (together with all
unmatured Receipts and Coupons attached thereto or surrendered therewith at the
time of redemption). All Notes so cancelled and the Notes purchased and
cancelled pursuant to paragraph (h) above (together with all unmatured Receipts
and Coupons cancelled therewith) shall be forwarded to the Agent and cannot be
reissued or resold. (j) Late payment on Zero Coupon Notes If the amount payable
in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note
pursuant to paragraph (a), (b), (c) or (d) above or upon its becoming due and
repayable as provided in Condition 9 is improperly withheld or refused, the
amount due and repayable in respect of such Zero Coupon Note shall be the amount
calculated as provided in paragraph (e)(iii) above as though the references
therein to the date fixed for the redemption or the date upon which such Zero
Coupon Note becomes due and payable were replaced by references to the date
which is the earlier of:
(i) the date on which all amounts due in respect of such Zero Coupon Note
have been paid; and (ii) five days after the date on which the full amount
of the moneys payable has been received by the
Agent or the Trustee and notice to that effect has been given to the Noteholders
in accordance with Condition 13. 7. Taxation Subject to certain exceptions and
limitations set forth below, all payments of principal and interest in respect
of the Notes, Receipts and Coupons by the Issuer or the Guarantor will be made
without withholding or deduction for or on account of any present or future
taxes or duties of whatever nature imposed or levied by or on behalf of the
United States of America or any political subdivision or any authority thereof
or therein having power to tax unless such withholding or deduction is required
by law. In such event, the Issuer or, as the case may be, the Guarantor will pay
such additional amounts as shall be necessary in order that the net amounts
received by the holders of the Notes, Receipts or Coupons after such withholding
or deduction shall equal the respective amounts of principal and interest which
would otherwise have been receivable in respect of the Notes, Receipts or
Coupons, as the case may be, in the absence of such withholding or deduction;
except that no such additional amounts shall be payable with respect to any
Note, Receipt or Coupon as a result of withholding or deduction on account of
any one or more of the following:
(i) any tax or duty which would not have been so imposed but for (A) the
existence of any present or former connection between such holder (or between a
fiduciary, settlor, or beneficiary of, or a person holding a power over, such
holder, if such holder is an estate or a trust, or a member or shareholder of
such holder, if such holder is a partnership or a corporation) and the United
States of America including, without limitation, such holder (or such fiduciary,
settlor, beneficiary, person holding a power, member or shareholder) being or
having been a citizen or resident or treated as a resident thereof or being or
having been engaged in a trade or business therein or having had a permanent
establishment therein, or (B) such holder's present or former status as a
personal holding company, foreign personal holding company or passive foreign
investment company with respect to the United States of America or a controlled
foreign corporation or a foreign tax exempt organisation for United States tax
purposes or as a corporation which accumulates earnings to avoid United States
Federal income tax;
(ii) any tax or duty which would not have been so imposed but for the
presentation or surrender by the holder of such Note, Receipt or Coupon for
payment on a date more than 30 days after the Relevant Date except to the extent
that the holder thereof would have been entitled to an additional amount on
presenting the same for payment on such thirtieth day;
(iii) any estate, inheritance, gift, sales, transfer or personal property
tax or any similar tax or duty; (iv) any tax or duty which would not have
been so imposed but for the failure to comply with
certification, identification or other information reporting requirements
concerning the nationality, residence, identity or connection with the United
States of America of the holder or beneficial owner of such Note, Receipt or
Coupon, if such compliance is required by statute or by regulation of the United
States of America as a precondition of relief or exemption from such tax or
duty;
(v) any tax or duty which is payable otherwise than by withholding from a
payment on a Note, Receipt or Coupon;
(vi) any tax or duty imposed on a Noteholder, Receiptholder or Couponholder
that actually or constructively owns 10 per cent. or more of the total combined
voting power of all classes of stock of the Issuer or, as the case may be, the
Guarantor entitled to vote within the meaning of Section 871(h)(3) of the United
States Internal Revenue Code of 1986, as amended, and any regulations thereunder
(the "Code"); or
(vii) any combination of items (i), (ii), (iii), (iv), (v) and (vi),
nor will additional amounts be paid with respect to any payment of principal of
or interest on any such Note, Receipt or Coupon to any United States Alien which
is a fiduciary or partnership or other than the sole beneficial owner of such
payment, to the extent that a beneficiary or settlor with respect to such
fiduciary or a member of such partnership or the beneficial owner would not have
been entitled to the additional amounts had such beneficiary, settlor, member or
beneficial owner been the holder of such Note, Receipt or Coupon. As used
herein, "United States Alien" means any corporation, partnership, individual or
fiduciary that is, for United States Federal tax purposes, a foreign
corporation, a non-resident alien individual, a non-resident fiduciary of a
foreign estate or trust, or a foreign partnership one or more of the members of
which is, for United States Federal tax purposes, a foreign corporation, a
non-resident alien individual or a non-resident fiduciary of a foreign estate or
trust. Notwithstanding the above, if and so long as a certification,
identification or other information reporting requirement referred to in the
third paragraph of Condition 6(b) would be fully satisfied by payment of a
backup withholding tax or similar charge, the Issuer may elect, by so stating in
the Determination Notice, to have the following provisions of this Condition 7
apply in lieu of the provisions of the third paragraph of Condition 6(b). In
such event, the Issuer, failing which, if applicable, the Guarantor, will pay as
additional amounts such amounts as may be necessary so that every net payment
made following the effective date of such requirements outside the United States
of America by it, the Guarantor (if applicable) or any of the Paying Agents of
principal or interest due in respect of any Note, Receipt or Coupon of which the
beneficial owner is a United States Alien (but without any requirement that the
nationality, residence or identity of such beneficial owner be disclosed to the
Issuer, any Paying Agent or any governmental authority), after withholding or
deduction for or on account of such backup withholding tax or similar charge
(other than a backup withholding tax or similar charge which (1) is the result
of a certification, identification or other information reporting requirement
which would not be applicable in the circumstances described in the fourth
paragraph of Condition 6(b) or (2) is imposed as a result of any of the
circumstances described in paragraph (i), (ii) or (vi) above or any combination
thereof), will not be less than the amount provided for in such Note, Receipt or
Coupon to be then due and payable. If the Issuer or, if applicable, the
Guarantor elects to pay such additional amounts and so long as they are
obligated to pay the same, the Issuer may subsequently redeem the Notes in
accordance with Condition 6(b). As used in these Terms and Conditions, the
"Relevant Date" means the date on which a payment in respect of a Note, Receipt
or Coupon first becomes due, except that, if the full amount of the moneys
payable has not been duly received by the Agent or the Trustee on or prior to
such due date, it means the date on which, the full amount of such moneys having
been so received, notice to that effect is duly given to the Noteholders in
accordance with Condition 13. 8. Prescription The Notes, Receipts and Coupons
will become void unless presented for payment within a period of 10(129)years
(in the case of principal) and five years (in the case of interest) after the
Relevant Date (as defined in Condition 7) therefor. There shall not be included
in any Coupon sheet issued on exchange of a Talon any Coupon the claim for
payment in respect of which would be void pursuant to this Condition or
Condition 5(b) or any Talon which would be void pursuant to Condition 5(b). 9.
Events of Default (A)If any one or more of the following events (each an "Event
of Default") shall occur and is continuing, the Trustee at its discretion may,
and if so requested in writing by the holders of at least one quarter in nominal
amount of the Notes then outstanding or if so directed by an Extraordinary
Resolution (as defined in the Trust Deed) of the Noteholders shall (subject to
being indemnified to its satisfaction), give notice to the Issuer that the Notes
are, and they shall thereupon immediately become, due and repayable at their
Early Redemption Amount, together with accrued interest as provided in the Trust
Deed:
(a) if default is made in the payment of any principal or interest due in
respect of the Notes or any of them and the default continues for a period of
30(129)days in the case of interest; or
(b) if the Issuer or the Guarantor fails to perform or observe any of its
other obligations under these Terms and Conditions or the Trust Deed and (except
in any case where, in the opinion of the Trustee, the failure is incapable of
remedy when no such continuation or notice as is hereinafter mentioned will be
required) the failure continues for the period of 60(129)days next following the
service by the Trustee on the Issuer or the Guarantor (as the case may be) of
notice requiring the same to be remedied; or
(c) if any Indebtedness for Borrowed Money of the Issuer or the Guarantor
becomes due and repayable prematurely by reason of an event of default (however
described) or the Issuer or the Guarantor fails to make any payment in respect
of any Indebtedness for Borrowed Money on the due date for payment or any
security given by the Issuer or the Guarantor for any Indebtedness for Borrowed
Money becomes enforceable or if default is made by the Issuer or the Guarantor
in making any payment due under any guarantee and/or indemnity given by it in
relation to any Indebtedness for Borrowed Money of any other person provided
that no such event shall constitute an Event of Default unless the relative
Indebtedness for Borrowed Money either alone or when aggregated with other
Indebtedness for Borrowed Money relative to all (if any) other such events which
shall have occurred shall amount to at least U.S.$10,000,000 (or its equivalent
in any other currency); or
(d) the entry of a decree or order for relief in respect of the Issuer or
the Guarantor by a court having jurisdiction in the premises in an involuntary
case under the Federal bankruptcy laws of the United States of America, as now
or hereafter constituted, or any other Federal or State bankruptcy, insolvency
or other similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Issuer or the Guarantor
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 90 consecutive days; or
(e) the commencement by the Issuer or the Guarantor of a voluntary case
under the Federal bankruptcy laws of the United States of America, as now or
hereafter constituted, or any other applicable Federal or State bankruptcy,
insolvency or other similar law, or the consent by it to the entry of an order
for relief in an involuntary case under any such law or to the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Issuer or the Guarantor or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of any corporate action in furtherance of any of
the foregoing. (B) The Trustee may at any time, at its discretion and without
notice, take such proceedings against the Issuer and/or the Guarantor as it may
think fit to enforce the provisions of the Trust Deed, the Notes, the Receipts
and the Coupons, but it shall not be bound to take any such proceedings or any
other action in relation to the Trust Deed, the Notes, the Receipts or the
Coupons unless (a) it shall have been so directed by an Extraordinary Resolution
of the Noteholders or so requested in writing by the holders of at least
one-quarter in nominal amount of the Notes then outstanding, and (b) it shall
have been indemnified to its satisfaction;
(2) No Noteholder, Receiptholder or Couponholder shall be entitled to
proceed directly against the Issuer or the Guarantor unless the Trustee, having
become bound so to proceed, fails so to do within a reasonable period and the
failure shall be continuing. For the purposes of this Condition, "Indebtedness
for Borrowed Money" means any present or future indebtedness (whether being
principal, premium, interest or other amounts) for or in respect of
(i)(129)money borrowed, (ii)(129)liabilities under or in respect of any
acceptance or acceptance credit or (iii)(129)any notes, bonds, debentures,
debenture stock, loan stock or other securities offered, issued or distributed
whether by way of public offer, private placing, acquisition consideration or
otherwise and whether issued for cash or in whole or in part for a consideration
other than cash. 10. Replacement of Notes, Receipts, Coupons and Talons Should
any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or
destroyed, it may be replaced at the specified office of the Replacement Agent
upon payment by the claimant of such costs and expenses as may be incurred in
connection therewith and on such terms as to evidence and indemnity as the
Issuer and the Replacement Agent may reasonably require. Mutilated or defaced
Notes, Receipts, Coupons or Talons must be surrendered before replacements will
be issued. 11. Agent and Paying Agents The names of the initial Agent and the
other initial Paying Agents and their initial specified offices are set out
below. The Issuer and the Guarantor are entitled, with the prior written
approval of the Trustee, to vary or terminate the appointment of any Paying
Agent and/or appoint additional or other Paying Agents and/or approve any change
in the specified office through which any Paying Agent acts, provided that:
(i) so long as the Notes are listed on any stock exchange, there will at all
times be a Paying Agent with a specified office in such place as may be required
by the rules and regulations of the relevant stock exchange;
(ii) there will at all times be a Paying Agent with a specified office in a
city approved by the Trustee in continental Europe; and
(iii) there will at all times be an Agent.
In addition, the Issuer and the Guarantor shall forthwith appoint a Paying Agent
having a specified office in New York City in the circumstances described in the
final paragraph of Condition 5(b). Any variation, termination, appointment or
change shall only take effect (other than in the case of insolvency, when it
shall be of immediate effect) after not less than 30 nor more than 45 days'
prior notice thereof shall have been given to the Noteholders in accordance with
Condition 13. 12. Exchange of Talons On and after the Interest Payment Date on
which the final Coupon comprised in any Coupon sheet matures, the Talon (if any)
forming part of such Coupon sheet may be surrendered at the specified office of
the Agent or any other Paying Agent in exchange for a further Coupon sheet
including (if such further Coupon sheet does not include Coupons to (and
including) the final date for the payment of interest due in respect of the Note
to which it appertains) a further Talon, subject to the provisions of Condition
8. 13. Notices All notices regarding the Notes shall be published (i) in a
leading English language daily newspaper of general circulation in London and,
(ii) if and for so long as the Notes are listed on the Luxembourg Stock
Exchange, a daily newspaper of general circulation in Luxembourg and (in respect
of any Notes listed on the Paris Bourse (so long as that exchange requires)) in
a French language daily newspaper of general circulation in Paris. It is
expected that such publication will be made in the Financial(129)Times in
London, the Luxemburger Wort in Luxembourg and Les Echos in Paris. The Issuer
shall also ensure that notices are duly published in a manner which complies
with the rules and regulations of any other stock exchange on which the Notes
are for the time being listed. Any such notice will be deemed to have been given
on the date of the first publication or, where required to be published in more
than one newspaper, on the date of the first publication in each such newspaper
or, where published in such newspapers on different dates, the last date of such
first publication. If publication as provided above is not practicable, notice
will be given in such other manner and shall be deemed to have been given on
such date, as the Trustee may approve. Receiptholders and Couponholders shall be
deemed for all purposes to have notice of the contents of any notice given to
Noteholders in accordance with this Condition. Except in the case of Notes
listed on the Luxembourg Stock Exchange, until such time as any definitive Notes
are issued, there may (provided that, in the case of Notes listed on any stock
exchange other than the Luxembourg Stock Exchange, the rules of such stock
exchange so permit), so long as the global Note(s) is or are held in its/their
entirety on behalf of Euroclear and Cedel Bank, be substituted for such
publication in such newspaper(s) the delivery of the relevant notice to
Euroclear and Cedel Bank for communication by them to the Noteholders. Any such
notice shall be deemed to have been given to the Noteholders on the seventh day
after the day on which the said notice was given to Euroclear and Cedel Bank.
Notices to be given by any Noteholder shall be in writing and given by lodging
the same, together with the relative Note or Notes, with the Agent. Whilst any
of the Notes is represented by a global Note, such notice may be given by any
Noteholder to the Agent via Euroclear and/or Cedel Bank, as the case may be, in
such manner as the Agent and Euroclear and/or Cedel Bank, as the case may be,
may approve for this purpose. 14. Meetings of Noteholders, Modification and
Waiver The Trust Deed contains provisions for convening meetings of the
Noteholders to consider any matter affecting their interests, including the
sanctioning by Extraordinary Resolution of a modification of the Notes, the
Receipts, the Coupons or any of the provisions of the Trust Deed. Such a meeting
may be convened by the Issuer or the Guarantor or by Noteholders holding not
less than five per cent. in nominal amount of the Notes for the time being
remaining outstanding. The quorum at any such meeting for passing an
Extraordinary Resolution is one or more persons holding or representing not less
than a clear majority in nominal amount of the Notes for the time being
outstanding, or at any adjourned meeting one or more persons being or
representing Noteholders whatever the nominal amount of the Notes so held or
represented, except that at any meeting the business of which includes the
modification of certain provisions of the Notes, Receipts or Coupons or the
Trust Deed (including modifying the date of maturity of the Notes or any date
for payment of interest thereon, reducing or cancelling the amount of principal
or the rate of interest payable in respect of the Notes or altering the currency
of payment of the Notes, Receipts or Coupons), the quorum shall be one or more
persons holding or representing not less than two-thirds in nominal amount of
the Notes for the time being outstanding, or at any adjourned such meeting one
or more persons holding or representing not less than one-third in nominal
amount of the Notes for the time being outstanding. An Extraordinary Resolution
passed at any meeting of the Noteholders shall be binding on all the
Noteholders, whether or not they are present at the meeting, and on all
Receiptholders and Couponholders. The Trustee may agree, without the consent of
the Noteholders, Receiptholders or Couponholders, to any modification (subject
to certain exceptions) of, or to the waiver or authorisation of any breach or
proposed breach of, any of these Terms and Conditions or any of the provisions
of the Trust Deed, or determine, without any such consent as aforesaid, that any
Event of Default or Potential Event of Default (as defined in the Trust Deed)
shall not be treated as such, which in any such case is not, in the opinion of
the Trustee, materially prejudicial to the interests of the Noteholders or may
agree, without any such consent as aforesaid, to any modification which is of a
formal, minor or technical nature or to correct a manifest error. Any such
modification shall be binding on the Noteholders, the Receiptholders and the
Couponholders and, unless the Trustee otherwise agrees, any such modification
shall be notified to the Noteholders in accordance with Condition 13 as soon as
practicable thereafter. In connection with the exercise by it of any of its
trusts, powers, authorities and discretions (including, without limitation, any
modification, waiver, authorisation or determination), the Trustee shall have
regard to the general interests of the Noteholders as a class but shall not have
regard to any interests arising from circumstances particular to individual
Noteholders, Receiptholders or Couponholders (whatever their number) and, in
particular but without limitation, shall not have regard to the consequences of
any such exercise for individual Noteholders, Receiptholders or Couponholders
(whatever their number) resulting from their being for any purpose domiciled or
resident in, or otherwise connected with, or subject to the jurisdiction of, any
particular territory or any political sub-division thereof and the Trustee shall
not be entitled to require, nor shall any Noteholder, Receiptholder or
Couponholder be entitled to claim, from the Issuer, the Guarantor, the Trustee
or any other person any indemnification or payment in respect of any tax
consequence of any such exercise upon individual Noteholders or Couponholders
except to the extent already provided for in Condition 7 and/or any undertaking
given in addition to, or in substitution for, Condition 7 pursuant to the Trust
Deed. 15. Further Issues The Issuer shall be at liberty from time to time
without the consent of the Noteholders, Receiptholders or Couponholders to
create and issue further notes having terms and conditions the same as the Notes
or the same in all respects save for the amount and date of the first payment of
interest thereon and so that the same shall be consolidated and form a single
Series with the outstanding Notes. The Trust Deed contains provisions for
convening a single meeting of the Noteholders and the holders of Notes of other
Series where the Trustee so decides. 16. Consolidation, Merger and Transfer of
Assets The Trust Deed provides that neither the Issuer nor the Guarantor may
consolidate with, or merge into, any corporation, or transfer its assets
substantially as an entirety to any person, unless (a)(129)the successor
corporation or transferee assumes the Issuer's or, as the case may be, the
Guarantor's obligations in respect of the Notes, the Receipts and the Coupons
and under the Trust Deed, (b) after giving effect to the relevant transaction,
no Event of Default or Potential Event of Default (as defined in the Trust Deed)
shall have occurred and be continuing and (c)(129)certain other conditions set
out in the Trust Deed are complied with. 17. Redenomination and Exchange (a)
Redenomination Where redenomination is specified in the applicable Pricing
Supplement as being applicable, the Issuer may, without the consent of the
Noteholders, the Receiptholders and the Couponholders, on giving prior notice to
the Trustee, the Agent, Euroclear and Cedel Bank and at least 30 days' prior
notice to the Noteholders in accordance with Condition 13, elect that, with
effect from the Redenomination Date specified in the notice, the Notes shall be
redenominated in euro. The election will have effect as follows:
(i) each Specified Denomination and, in the case of Fixed Rate Notes, each
amount of interest specified on the Coupons will be deemed to be such amount of
euro as is equivalent to its denomination or the amount so specified in the
Specified Currency at the Established Rate, rounded down to the nearest euro
0.01;
(ii) after the Redenomination Date, all payments in respect of the Notes,
the Receipts and the Coupons other than payments of interest in respect of
periods commencing before the Redenomination Date, will be made solely in euro
as though references in the Notes to the Specified Currency were to euro.
Payments will be made in euro by credit or transfer to a euro account (or any
other account to which euro may be credited or transferred) specified by the
payee or, at the option of the payee, by a euro cheque;
(iii) paragraph (B) of the definition of Business Day in Condition 4(b)(i)
shall read as follows: "either (1) in relation to any sum payable in a
Specified Currency other than euro, a day on which
commercial banks and foreign exchange markets settle payments in the principal
financial centre of the country of the relevant Specified Currency (if other
than London and any Additional Business Centre and which, if the Specified
Currency is New Zealand dollars, shall be Auckland) or (2) in relation to any
sum payable in euro, a day on which the TARGET System is open.";
(iv) if the Notes are Fixed Rate Notes and interest for any period ending on
or after the Redenomination Date is required to be calculated for a period of
less than one year, it will be calculated on the basis of the actual number of
days elapsed divided by 365 (or, if any of the days elapsed fall in a leap year,
the sum of (i) the number of those days falling in a leap year divided by 366
and (ii) the number of those days falling in a non-leap year divided by 365);
(v) if the Notes are Floating Rate Notes the applicable Pricing Supplement
specifies any relevant changes to the provisions relating to interest; and
(vi) such other changes shall be made to these Terms and Conditions as the
Issuer may decide, with the prior written approval of the Trustee and the Agent,
and as may be specified in the notice, to conform them to conventions then
applicable to instruments denominated in euro or to enable the Notes to be
consolidated with one or more issues of other notes, whether or not originally
denominated in the Specified Currency or euro. Any such other changes will not
take effect until after they have been notified to the Noteholders in accordance
with Condition 13. (b) Exchange Where exchange is specified in the applicable
Pricing Supplement as being applicable, the Issuer may, without the consent of
the Noteholders, the Receiptholders and the Couponholders, on giving prior
notice to the Trustee, the Agent, and if applicable, Euroclear and Cedel Bank
and not less than 30 days' prior notice to the Noteholders in accordance with
Condition 13, elect that, with effect from the Redenomination Date specified in
the notice, the Notes shall be exchangeable for Notes expressed to be
denominated in euro in accordance with such arrangements as the Issuer may
decide, with the prior written approval of the Trustee, and as may be specified
in the notice, including arrangements under which Receipts and Coupons unmatured
at the date so specified become void. (c) Definitions In this Condition, the
following expressions have the following meanings: "Established Rate" means the
rate for the conversion of the Specified Currency (including compliance with
rules relating to roundings in accordance with applicable European Community
regulations) into euro established by the Council of the European Union pursuant
to Article 109l(4) of the Treaty; "euro" means the currency to be introduced at
the start of the third stage of European economic and monetary union pursuant to
the Treaty; "Redenomination Date" means a date (which, in the case of
interest-bearing Notes, shall be a date for payment of interest under the Notes)
specified by the Issuer in the notice given to the Noteholders pursuant to
paragraph (a) or, as the case may be, (b) above which falls on or after the
start of the third stage of European economic and monetary union pursuant to the
Treaty or, if the country of the Specified Currency is not one of the countries
then participating in such third stage, which falls on or after such later date
as it does so participate; and "TARGET system" means the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System. 18.
Indemnification of(129)the Trustee and its contracting with the Issuer and the
Guarantor The Trust Deed contains provisions for the indemnification of the
Trustee and for its relief from responsibility, including provisions relieving
it from taking action unless indemnified to its satisfaction. The Trust Deed
also contains provisions pursuant to which the Trustee is entitled, inter alia,
(i)(129)to enter into business transactions with the Issuer and/or the Guarantor
and/or any of the Guarantor's other Subsidiaries and to act as trustee for the
holders of any other securities issued or guaranteed by, or relating to, the
Issuer and/or the Guarantor and/or any of the Guarantor's other Subsidiaries,
(ii)(129)to exercise and enforce its rights, comply with its obligations and
perform its duties under or in relation to any such transactions or, as the case
may be, any such trusteeship without regard to the interests of, or consequences
for, the Noteholders, Receiptholders or Couponholders, and (iii) to retain and
not be liable to account for any profit made or any other amount or benefit
received thereby or in connection therewith. 19. Governing law and submission to
jurisdiction (a)The Trust Deed, the Notes, the Receipts and the Coupons are
governed by, and shall be construed in accordance with, English law. (b)Each of
the Issuer and the Guarantor has in the Trust Deed agreed, for the exclusive
benefit of the Trustee, the Noteholders, the Receiptholders and the
Couponholders that the courts of England are to have jurisdiction to settle any
disputes which may arise out of or in connection with the Trust Deed, the Notes,
the Receipts and/or the Coupons and that accordingly any suit, action or
proceedings (together referred to as "Proceedings") arising out of or in
connection with the Trust Deed, the Notes, the Receipts and/or the Coupons may
be brought in such courts. Each of the Issuer and the Guarantor has in the Trust
Deed irrevocably waived any objection which it may have now or hereafter to the
laying of the venue of any such Proceedings in any such court and any claim that
any such Proceedings have been brought in an inconvenient forum and has in the
Trust Deed further irrevocably agreed that a judgment in any such Proceedings
brought in the English courts shall be conclusive and binding upon it and may be
enforced in the courts of any other jurisdiction. Nothing contained in this
Condition shall limit any right to take Proceedings against the Issuer or the
Guarantor in any other court of competent jurisdiction, nor shall the taking of
Proceedings in one or more jurisdictions preclude the taking of Proceedings in
any other jurisdiction, whether concurrently or not. Each of the Issuer and the
Guarantor has in the Trust Deed appointed Clifford Chance Secretaries Limited at
its registered office (being at 1st May, 1998 at 200 Aldersgate Street, London
EC1A 4JJ) as its agent for service of process, and undertaken that, in the event
of Clifford Chance Secretaries Limited ceasing so to act or ceasing to be
registered in England, it will appoint another person as its agent for service
of process in England in respect of any Proceedings. Nothing herein shall affect
the right to serve proceedings in any other manner permitted by law. USE OF
PROCEEDS The net proceeds from each issue of Notes will be applied by the Issuer
for its general corporate purposes.
<PAGE>
AGENT
Bankers Trust Company
1 Appold Street
Broadgate
London EC2A 2HE
OTHER PAYING AGENTS
Bankers Trust Luxembourg S.A. Swiss Bank Corporation
14 boulevard F.D. Roosevelt Paradeplatz 6
L-2450 Luxembourg CH-8010 Zurich
<PAGE>
THE SECOND SCHEDULE
FORMS OF GLOBAL AND DEFINITIVE NOTES, RECEIPTS, COUPONS AND TALONS
PART I
FORM OF TEMPORARY GLOBAL NOTE
[ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED
STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE
UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS
165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]1
[BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANTS THAT IT IS NOT
A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION
6049(b)(4) OF THE INTERNAL REVENUE CODE OF THE UNITED STATES AND THE REGULATIONS
THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITED STATES PERSON
(OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION 6049(b)(4) OF THE INTERNAL
REVENUE CODE AND THE REGULATIONS THEREUNDER).]2
[THIS NOTE CONSTITUTES [COMMERCIAL PAPER/[A SHORTER/LONGER] TERM DEBT SECURITY]3
ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT
1987. THE ISSUER OF THIS NOTE IS NOT AN AUTHORISED INSTITUTION OR A EUROPEAN
AUTHORISED INSTITUTION (AS SUCH TERMS ARE DEFINED IN THE BANKING ACT 1987
(EXEMPT TRANSACTIONS) REGULATIONS 1997). REPAYMENT OF THE PRINCIPAL AND PAYMENT
OF ANY INTEREST OR PREMIUM IN CONNECTION WITH THIS NOTE HAS BEEN GUARANTEED BY
COUNTRYWIDE CREDIT INDUSTRIES, INC. WHICH IS NOT AN AUTHORISED INSTITUTION OR A
EUROPEAN AUTHORISED INSTITUTION.]4
COUNTRYWIDE HOME LOANS INC.
(the "Issuer")
(incorporated with limited liability in the State of New York)
Unconditionally and irrevocably guaranteed by
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(incorporated with limited liability in the State of Delaware)
TEMPORARY GLOBAL NOTE
This Note is a Temporary Global Note in respect of a duly authorised issue of
Notes of the Issuer (the "Notes") of the Nominal Amount, Specified Currency(ies)
and Specified Denomination(s) as are specified in the Pricing Supplement
applicable to the Notes (the "Pricing Supplement"), a copy of which is annexed
hereto. References herein to the Conditions shall be to the Terms and Conditions
of the Notes as set out in the First Schedule to the Trust Deed (as defined
below) as supplemented, replaced and modified by the Pricing Supplement but, in
the event of any conflict between the provisions of the said Conditions and the
information in the Pricing Supplement, the Pricing Supplement will prevail.
Words and expressions defined in the Conditions shall bear the same meanings
when used in this Global Note. This Global Note is issued subject to, and with
the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified
and/or supplemented and/or restated from time to time, the "Trust Deed") dated
1st May, 1998 and made between the Issuer, Countrywide Credit Industries, Inc.
as guarantor and Bankers Trustee Company Limited as trustee for the holders of
the Notes.
The Issuer, subject as hereinafter provided and subject to and in accordance
with the Conditions and the Trust Deed, promises to pay to the bearer hereof on
each Instalment Date (if the Notes are repayable in instalments) and on the
Maturity Date and/or on such earlier date(s) as all or any of the Notes
represented by this Global Note may become due and repayable in accordance with
the Conditions and the Trust Deed, the amount payable under the Conditions in
respect of such Notes on each such date and to pay interest (if any) on the
nominal amount of the Notes from time to time represented by this Global Note
calculated and payable as provided in the Conditions and the Trust Deed together
with any other sums payable under the Conditions and the Trust Deed, upon
presentation and, at maturity, surrender of this Global Note at the specified
office of the Agent at 1 Appold Street, Broadgate, London EC2A 2HE, England or
such other specified office as may be specified for this purpose in accordance
with the Conditions or at the specified office of any of the other Paying Agents
located outside the United States, its territories and possessions (except as
provided in the Conditions) from time to time appointed by the Issuer in respect
of the Notes. On any redemption or payment of an instalment or interest being
made in respect of, or purchase and cancellation of, any of the Notes
represented by this Global Note details of such redemption, payment, purchase
and cancellation (as the case may be) shall be entered by or on behalf of the
Issuer in Schedule One hereto and the relevant space in Schedule One hereto
recording any such redemption, payment, purchase and cancellation (as the case
may be) shall be signed by or on behalf of the Issuer. Upon any such redemption,
payment of an instalment, purchase and cancellation the nominal amount of this
Global Note and the Notes represented by this Global Note shall be reduced by
the nominal amount of such Notes so redeemed or purchased and cancelled or the
amount of such instalment. The nominal amount from time to time of this Global
Note and of the Notes represented by this Global Note following any such
redemption, payment of an instalment, purchase and cancellation as aforesaid or
any exchange as referred to below shall be the nominal amount most recently
entered in the relevant column in Part II, III or IV of Schedule One hereto or
in Schedule Two hereto.
Payments of principal and interest (if any) due prior to the Exchange Date (as
defined below) will only be made to the bearer hereof to the extent that there
is presented to the Agent by Cedel Bank, societe anonyme ("Cedel Bank") or
Morgan Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System ("Euroclear") a certificate in or substantially in the form set
out in Part VII of the Second Schedule to the Trust Deed to the effect that it
has received from or in respect of a person entitled to a particular nominal
amount of the Notes represented by this Global Note (as shown by its records) a
certificate in or substantially in the form of Certificate "A" as set out in
Part VII of the Second Schedule to the Trust Deed. The bearer of this Global
Note will not (unless upon due presentation of this Global Note for exchange,
delivery of the appropriate number of Definitive Notes (together, if applicable,
with the Receipts, Coupons and Talons appertaining thereto in or substantially
in the forms set out in Parts III, IV, V and VI of the Second Schedule to the
Trust Deed) or, as the case may be, issue and delivery (or, as the case may be,
endorsement) of the Permanent Global Note is improperly withheld or refused and
such withholding or refusal is continuing at the relevant payment date) be
entitled to receive any payment hereon due on or after the Exchange Date.
On or after the date (the "Exchange Date") which is 40 days after the Issue
Date, this Global Note may be exchanged (free of charge) in whole or in part
for, as specified in the Pricing Supplement, either Definitive Notes and (if
applicable) Receipts, Coupons and/or Talons (on the basis that all the
appropriate details have been included on the face of such Definitive Notes and
(if applicable) Receipts, Coupons and/or Talons and the relevant information
supplementing, replacing or modifying the Conditions appearing in the Pricing
Supplement has been endorsed on or attached to such Definitive Notes) or a
Permanent Global Note in or substantially in the form set out in Part II of the
Second Schedule to the Trust Deed (together with the Pricing Supplement attached
thereto) upon notice being given by Euroclear and/or Cedel Bank acting on the
instructions of any holder of an interest in this Global Note and subject, in
the case of Definitive Notes, to such notice period as is specified in the
Pricing Supplement. If Definitive Notes and (if applicable) Receipts, Coupons
and/or Talons have already been issued in exchange for all the Notes represented
for the time being by the Permanent Global Note, then this Global Note may only
thereafter be exchanged for Definitive Notes and (if applicable) Receipts,
Coupons and/or Talons pursuant to the terms hereof. Presentation of this Global
Note for exchange shall be made by the bearer hereof on any day (other than a
Saturday or Sunday) on which banks are open for business in London at the office
of the Agent specified above. The Issuer shall procure that Definitive Notes or
(as the case may be) the Permanent Global Note shall be so issued and delivered
in exchange for only that portion of this Global Note in respect of which there
shall have been presented to the Agent by Euroclear or Cedel Bank a certificate
in or substantially in the form set out in Part VII of the Second Schedule to
the Trust Deed to the effect that it has received from or in respect of a person
entitled to a particular nominal amount of the Notes represented by this Global
Note (as shown by its records) a certificate in or substantially in the form of
Certificate "A" as set out in Part VII of the Second Schedule to the Trust Deed.
On an exchange of the whole of this Global Note, this Global Note shall be
surrendered to the Agent. On an exchange of part only of this Global Note,
details of such exchange shall be entered by or on behalf of the Issuer in
Schedule Two hereto and the relevant space in Schedule Two hereto recording such
exchange shall be signed by or on behalf of the Issuer, whereupon the nominal
amount of this Global Note and the Notes represented by this Global Note shall
be reduced by the nominal amount of this Global Note so exchanged. On any
exchange of this Global Note for a Permanent Global Note, details of such
exchange shall be entered by or on behalf of the Issuer in Schedule Two to the
Permanent Global Note and the relevant space in Schedule Two thereto recording
such exchange shall be signed by or on behalf of the Issuer.
Until the exchange of the whole of this Global Note as aforesaid, the bearer
hereof shall (subject as provided in the next paragraph) in all respects (except
as otherwise provided herein) be entitled to the same benefits as if he were the
bearer of Definitive Notes and the relative Receipts, Coupons and/or Talons (if
any) in the form(s) set out in Parts III, IV, V and VI (as applicable) of the
Second Schedule to the Trust Deed.
Each person (other than Euroclear or Cedel Bank) who is for the time being shown
in the records of Euroclear or Cedel Bank as the holder of a particular nominal
amount of the Notes represented by this Global Note (in which regard any
certificate or other document issued by Euroclear or Cedel Bank as to the
nominal amount of such Notes standing to the account of any person shall be
conclusive and binding for all purposes save in the case of manifest error)
shall be treated by the Issuer, the Trustee, the Agent and any other Paying
Agent as the holder of such nominal amount of such Notes for all purposes other
than with respect to the payment of principal and interest on such nominal
amount of such Notes, the right to which shall be vested, as against the Issuer,
solely in the bearer of this Global Note in accordance with and subject to the
terms of this Global Note and the Trust Deed.
This Global Note is governed by, and shall be construed in accordance with,
English law.
This Global Note shall not be valid unless authenticated by Bankers Trust
Company as Agent.
IN WITNESS whereof the Issuer has caused this Global Note to be signed manually
or in facsimile by two persons duly authorised on its behalf.
COUNTRYWIDE HOME LOANS, INC.
By: ..................................................... By:
.....................................................
Duly Authorised Duly Authorised
Authenticated by
Bankers Trust Company
as Agent.
By: .....................................................
Authorised Officer
<PAGE>
Schedule One
PART I
INTEREST PAYMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Confirmation of
payment by or on
Interest Payment Total amount of Amount of interest behalf of the Issuer
Date made Date interest payable paid
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART II
PAYMENT OF INSTALMENT AMOUNTS
Remaining nominal
amount of this Global
Total amount of Amount of Instalment Note following such Confirmation of
Instalment Amounts Amounts paid payment * payment by or on
Date made payable behalf of the Issuer
<S> <C> <C> <C> <C>
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
======== ============== ============== ============== ==============
</TABLE>
* See most recent entry in Part II, III or IV or Schedule Two in order to
determine this amount.
<PAGE>
<TABLE>
<CAPTION>
PART III
REDEMPTIONS
Remaining nominal
Total amount amount of this Global Confirmation of redemption
Date of principal Amount of Note following such by or on behalf of the Issuer
made payable principal paid redemption*
<S> <C> <C> <C> <C>
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
- --------- ----------- ------------- ----------------- -------------------
</TABLE>
* See most recent entry in Part II, III or IV or Schedule Two in order to
determine this amount.
<PAGE>
<TABLE>
<CAPTION>
PART IV
PURCHASES AND CANCELLATIONS
Remaining nominal amount of
Part of nominal amount of this Global Note following Confirmation of purchase and
Date this Global Note purchased such purchase and cancellation by or on behalf
made and cancelled cancellation* of the Issuer
<S> <C> <C> <C>
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
</TABLE>
* See most recent entry in Part II, III or IV or Schedule Two in order to
determine this amount.
<PAGE>
Schedule Two
EXCHANGES
FOR DEFINITIVE NOTES OR PERMANENT GLOBAL NOTE
<TABLE>
<CAPTION>
The following exchanges of a part of this Global Note for Definitive Notes or a
part of a Permanent Global Note have been made:
Nominal amount of this Global
Note exchanged for Definitive Remaining nominal amount of
Date Notes or a part of a this Global Note following Notation made by or on behalf
made Permanent Global Note such exchange* of the Issuer
<S> <C> <C> <C>
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
======== ===================== ===================== ====================
- -------- --------------------- --------------------- --------------------
</TABLE>
* See most recent entry in Part II, III or IV of Schedule One or in this
Schedule Two in order to determine this amount.
<PAGE>
PART II
FORM OF PERMANENT GLOBAL NOTE
[ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED
STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE
UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS
165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]1
[BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANTS THAT IT IS NOT
A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION
6049(b)(4) OF THE INTERNAL REVENUE CODE OF THE UNITED STATES AND THE REGULATIONS
THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITED STATES PERSON
(OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION 6049(b)(4) OF THE INTERNAL
REVENUE CODE AND THE REGULATIONS THEREUNDER).]2
[THIS NOTE CONSTITUTES [COMMERCIAL PAPER/[A SHORTER/LONGER] TERM DEBT SECURITY]3
ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT
1987. THE ISSUER OF THIS NOTE IS NOT AN AUTHORISED INSTITUTION OR A EUROPEAN
AUTHORISED INSTITUTION (AS SUCH TERMS ARE DEFINED IN THE BANKING ACT 1987
(EXEMPT TRANSACTIONS) REGULATIONS 1997). REPAYMENT OF THE PRINCIPAL AND PAYMENT
OF ANY INTEREST OR PREMIUM IN CONNECTION WITH THIS NOTE HAS BEEN GUARANTEED BY
COUNTRYWIDE CREDIT INDUSTRIES, INC. WHICH IS NOT AN AUTHORISED INSTITUTION OR A
EUROPEAN AUTHORISED INSTITUTION.]4
COUNTRYWIDE HOME LOANS, INC.
(the "Issuer")
(incorporated with limited liability in the State of New York)
Unconditionally and irrevocably guaranteed by
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(incorporated with limited liability in the State of Delaware)
PERMANENT GLOBAL NOTE
This Note is a Permanent Global Note in respect of a duly authorised issue of
Notes of the Issuer (the "Notes") of the Nominal Amount, Specified Currency(ies)
and Specified Denomination(s) as are specified in the Pricing Supplement
applicable to the Notes (the "Pricing Supplement"), a copy of which is annexed
hereto. References herein to the Conditions shall be to the Terms and Conditions
of the Notes as set out in the First Schedule to the Trust Deed (as defined
below) as supplemented, replaced and modified by the Pricing Supplement but, in
the event of any conflict between the provisions of the said Conditions and the
information in the Pricing Supplement, the Pricing Supplement will prevail.
Words and expressions defined in the Conditions shall bear the same meanings
when used in this Global Note. This Global Note is issued subject to, and with
the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified
and/or supplemented and/or restated from time to time, the "Trust Deed") dated
1st May, 1998 and made between the Issuer, Countrywide Credit Industries, Inc.
as guarantor and Bankers Trustee Company Limited as trustee for the holders of
the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed,
promises to pay to the bearer hereof on each Instalment Date (if the Notes are
repayable in instalments) and on the Maturity Date and/or on such earlier
date(s) as all or any of the Notes represented by this Global Note may become
due and repayable in accordance with the Conditions and the Trust Deed, the
amount payable under the Conditions in respect of such Notes on each such date
and to pay interest (if any) on the nominal amount of the Notes from time to
time represented by this Global Note calculated and payable as provided in the
Conditions and the Trust Deed together with any other sums payable under the
Conditions and the Trust Deed, upon presentation and, at maturity, surrender of
this Global Note at the specified office of the Agent at 1 Appold Street,
Broadgate, London EC2A 2HE, England or such other specified office as may be
specified for this purpose in accordance with the Conditions or at the specified
office of any of the other Paying Agents located outside the United States, its
territories and possessions (except as provided in the Conditions) from time to
time appointed by the Issuer in respect of the Notes. On any redemption or
payment of an instalment or interest being made in respect of, or purchase and
cancellation of, any of the Notes represented by this Global Note details of
such redemption, payment, purchase and cancellation (as the case may be) shall
be entered by or on behalf of the Issuer in Schedule One hereto and the relevant
space in Schedule One hereto recording any such redemption, payment, purchase
and cancellation (as the case may be) shall be signed by or on behalf of the
Issuer. Upon any such redemption, payment of an instalment, purchase and
cancellation the nominal amount of this Global Note and the Notes represented by
this Global Note shall be reduced by the nominal amount of such Notes so
redeemed or purchased and cancelled or the amount of such instalment. The
nominal amount from time to time of this Global Note and of the Notes
represented by this Global Note following any such redemption, payment of an
instalment, purchase and cancellation as aforesaid or any exchange as referred
to below shall be the nominal amount most recently entered in the relevant
column in Part II, III or IV of Schedule One hereto or in Schedule Two hereto.
If the Notes represented by this Global Note were, on issue, represented by a
Temporary Global Note then on any exchange of such Temporary Global Note for
this Global Note or any part hereof, details of such exchange shall be entered
by or on behalf of the Issuer in Schedule Two hereto and the relevant space in
Schedule Two hereto recording such exchange shall be signed by or on behalf of
the Issuer, whereupon the nominal amount of this Global Note and the Notes
represented by this Global Note shall be increased by the nominal amount of the
Temporary Global Note so exchanged.
This Global Note may be exchanged (free of charge) in whole, but not in part,
for Definitive Notes and (if applicable) Receipts, Coupons and/or Talons in or
substantially in the forms set out in Parts III, IV, V and VI of the Second
Schedule to the Trust Deed (on the basis that all the appropriate details have
been included on the face of such Definitive Notes and (if applicable) Receipts,
Coupons and/or Talons and the relevant information supplementing, replacing or
modifying the Conditions appearing in the Pricing Supplement has been endorsed
on or attached to such Definitive Notes) either, as specified in the applicable
Pricing Supplement:
(i) upon not less than 60 days' written notice being given to the Agent by
Morgan Guaranty Trust Company of New York, Brussels office, as operator
of the Euroclear System ("Euroclear") and/or Cedel Bank, societe
anonyme ("Cedel Bank") (acting on the instructions of any holder of an
interest in this Global Note) or the Trustee; or
(ii) in the case of Notes with a maturity of 183 days or less only upon the
occurrence of an Exchange Event.
An "Exchange Event" means:
(1) an Event of Default has occurred and is continuing;
(2) the Issuer has been notified that both Euroclear and Cedel
Bank have been closed for business for a continuous period of
14 days (other than by reason of holiday, statutory or
otherwise) or have announced an intention permanently to cease
business or have in fact done so and no alternative clearing
system satisfactory to the Trustee is available; or
(3) the Issuer has or will become obliged to pay additional
amounts as provided for or referred to in Condition 7 which
would not be required were the Notes in definitive form.
Upon the occurrence of an Exchange Event:
(i) the Issuer will promptly give notice to Noteholders in
accordance with Condition 13 upon the occurrence of such
Exchange Event; and
(ii) Euroclear and/or Cedel Bank (acting on the instructions of any
holder of an interest in this Global Note) or the Trustee may
give notice to the Agent requesting exchange and, in the event
of the occurrence of an Exchange Event as described in (3)
above, the Issuer may also give notice to the Agent requesting
exchange. Any such exchange shall occur on a date specified in
the notice not later than 60 days after the date of receipt of
the first relevant notice by the Agent.
The first notice requesting exchange in accordance with the above provisions
shall give rise to the issue of Definitive Notes for the total nominal amount of
Notes represented by this Global Note.
Any such exchange as aforesaid will be made upon presentation of this Global
Note by the bearer hereof on any day (other than a Saturday or Sunday) on which
banks are open for business in London at the office of the Agent specified
above.
The aggregate nominal amount of Definitive Notes issued upon an exchange of this
Global Note will be equal to the aggregate nominal amount of this Global Note.
Upon exchange of this Global Note for Definitive Notes, the Agent shall cancel
it or procure that it is cancelled.
Until the exchange of the whole of this Global Note as aforesaid, the bearer
hereof shall (subject as provided in the next paragraph) in all respects be
entitled to the same benefits as if he were the bearer of Definitive Notes and
the relative Receipts, Coupons and/or Talons (if any) in the form(s) set out in
Parts III, IV, V and VI (as applicable) of the Second Schedule to the Trust
Deed.
Each person (other than Euroclear or Cedel Bank) who is for the time being shown
in the records of Euroclear or Cedel Bank as the holder of a particular nominal
amount of the Notes represented by this Global Note (in which regard any
certificate or other document issued by Euroclear or Cedel Bank as to the
nominal amount of such Notes standing to the account of any person shall be
conclusive and binding for all purposes save in the case of manifest error)
shall be treated by the Issuer, the Trustee, the Agent and any other Paying
Agent as the holder of such nominal amount of such Notes for all purposes other
than with respect to the payment of principal and interest on such nominal
amount of such Notes, the right to which shall be vested, as against the Issuer,
solely in the bearer of this Global Note in accordance with and subject to the
terms of this Global Note and the Trust Deed.
This Global Note is governed by, and shall be construed in accordance with,
English law.
This Global Note shall not be valid unless authenticated by Bankers Trust
Company as Agent.
IN WITNESS whereof the Issuer has caused this Global Note to be signed manually
or in facsimile by two persons duly authorised on its behalf.
COUNTRYWIDE HOME LOANS, INC.
By: ..................................................... By:
.....................................................
Duly Authorised Duly Authorised
Authenticated by
Bankers Trust Company
as Agent.
By: .....................................................
Authorised Officer
<PAGE>
Schedule One
PART I
INTEREST PAYMENTS
<TABLE>
<CAPTION>
Confirmation of
payment by or on
<S> <C> <C> <C> <C>
Date made Interest Payment Total amount of Amount of interest behalf of the Issuer
Date interest payable paid
- ------------------
</TABLE>
<PAGE>
PART II
PAYMENT OF INSTALMENT AMOUNTS
<TABLE>
<CAPTION>
Remaining nominal
amount of this Global
Total amount Amount of Note following such Confirmation of payment by
Date of Instalment Amounts Instalment payment * or on behalf of the Issuer
made payable Amounts paid
<S> <C> <C> <C> <C>
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
====== ============== ============ =============== ==================
* See most recent entry in Part II, III or IV or Schedule Two in order to
determine this amount.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART III
REDEMPTIONS
Remaining nominal
Total amount amount of this Global Confirmation of redemption
Date of principal Amount of Note following such by or on behalf of the Issuer
made payable principal paid redemption*
<S> <C> <C> <C> <C>
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
========= =========== ============= ================= ===================
- --------- ----------- ------------- ----------------- -------------------
* See most recent entry in Part II, III or IV or Schedule Two in order to
determine this amount.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART IV
PURCHASES AND CANCELLATIONS
Remaining nominal amount of
Part of nominal amount of this Global Note following Confirmation of purchase and
<S> <C> <C> <C>
Date this Global Note purchased such purchase and cancellation by or on behalf
made and cancelled cancellation* of the Issuer
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
========= ==================== ==================== ====================
- --------- -------------------- -------------------- --------------------
* See most recent entry in Part II, III or IV or Schedule Two in order to
determine this amount.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule Two
EXCHANGES
Nominal amount of Temporary
Global Note exchanged for Increased nominal amount of
this Global Note this Global Note following Notation made by or on
Date made such exchange* behalf of the Issuer
<S> <C> <C> <C>
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
========= =============== =============== ==================
- --------- --------------- --------------- ------------------
</TABLE>
* See most recent entry in Part II, III or IV of Schedule One or in this
Schedule Two in order to determine this amount.
<PAGE>
PART III
FORM OF DEFINITIVE NOTE
[ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED
STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE
UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS
165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]1
[BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANTS THAT IT IS NOT
A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION
6049(b)(4) OF THE INTERNAL REVENUE CODE OF THE UNITED STATES AND THE REGULATIONS
THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITED STATES PERSON
(OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION 6049(b)(4) OF THE INTERNAL
REVENUE CODE AND THE REGULATIONS THEREUNDER).]2
[THIS NOTE CONSTITUTES [COMMERCIAL PAPER/[A SHORTER/LONGER] TERM DEBT SECURITY]3
ISSUED IN ACCORDANCE WITH REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT
1987. THE ISSUER OF THIS NOTE IS NOT AN AUTHORISED INSTITUTION OR A EUROPEAN
AUTHORISED INSTITUTION (AS SUCH TERMS ARE DEFINED IN THE BANKING ACT 1987
(EXEMPT TRANSACTIONS) REGULATIONS 1997). REPAYMENT OF THE PRINCIPAL AND PAYMENT
OF ANY INTEREST OR PREMIUM IN CONNECTION WITH THIS NOTE HAS BEEN GUARANTEED BY
COUNTRYWIDE CREDIT INDUSTRIES, INC. WHICH IS NOT AN AUTHORISED INSTITUTION OR A
EUROPEAN AUTHORISED INSTITUTION.]4
COUNTRYWIDE HOME LOANS, INC.
(the "Issuer")
(incorporated with limited liability in the State of New York)
Unconditionally and irrevocably guaranteed by
COUNTRYWIDE CREDIT INDUSTRIES, INC.
(incorporated with limited liability in the State of Delaware)
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
This Note is one of a Series of Notes of [Specified Currency(ies) and Specified
Denomination(s)] each of the Issuer ("Notes"). References herein to the
Conditions shall be to the Terms and Conditions [endorsed hereon/set out in the
First Schedule to the Trust Deed (as defined below) which shall be incorporated
by reference herein and have effect as if set out herein] as supplemented,
replaced and modified by the relevant information (appearing in the Pricing
Supplement (the "Pricing Supplement")) endorsed hereon but, in the event of any
conflict between the provisions of the said Conditions and such information in
the Pricing Supplement, such information will prevail. Words and expressions
defined in the Conditions shall bear the same meanings when used in this Note.
This Note is issued subject to, and with the benefit of, the Conditions and a
Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from
time to time, the "Trust Deed") dated 1st May, 1998 and made between the Issuer,
Countrywide Credit Industries, Inc. as guarantor and Bankers Trustee Company
Limited as trustee for the holders of the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed,
promises to pay to the bearer hereof on [each Instalment Date and] the Maturity
Date or on such earlier date as this Note may become due and repayable in
accordance with the Conditions and the Trust Deed, the amount payable on
redemption of this Note and to pay interest (if any) on the nominal amount of
this Note calculated and payable as provided in the Conditions and the Trust
Deed together with any other sums payable under the Conditions and the Trust
Deed.
This Note shall not be valid unless authenticated by Bankers Trust Company as
Agent.
IN WITNESS whereof this Note has been executed on behalf of the Issuer.
COUNTRYWIDE HOME LOANS, INC.
By: ..................................................... By:
.....................................................
Duly Authorised Duly Authorised
Authenticated by
Bankers Trust Company
as Agent.
By: .....................................................
Authorised Officer
<PAGE>
[Conditions]
[Conditions to be as set out in the First Schedule to this Trust Deed or such
other form as may be agreed between the Issuer, the Agent, the Trustee and the
relevant Dealer(s), but shall not be endorsed if not required by the relevant
Stock Exchange]
<PAGE>
Pricing Supplement
[Here to be set out the text of the relevant information supplementing,
replacing or modifying the Conditions which appears in the Pricing
Supplement relating to the Notes]
<PAGE>
PART IV
FORM OF RECEIPT
COUNTRYWIDE HOME LOANS, INC.
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
Series No. [ ]
Receipt for the sum of [ ] being the instalment of principal payable in
accordance with the Terms and Conditions applicable to the Note to which this
Receipt appertains (the "Conditions") on [ ].
This Receipt is issued subject to and in accordance with the Conditions which
shall be binding upon the holder of this Receipt (whether or not it is for the
time being attached to such Note) and is payable at the specified office of any
of the Paying Agents set out on the reverse of the Note to which this Receipt
appertains (and/or any other or further Paying Agents and/or specified offices
as may from time to time be duly appointed and notified to the Noteholders).
This Receipt must be presented for payment together with the Note to which it
appertains. The Issuer shall have no obligation in respect of any Receipt
presented without the Note to which it appertains or any unmatured Receipts.
[ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED
STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE
UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS
165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]1
[BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANTS THAT IT IS NOT
A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION
6049(b)(4) OF THE INTERNAL REVENUE CODE OF THE UNITED STATES AND THE REGULATIONS
THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITED STATES PERSON
(OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION 6049(b)(4) OF THE INTERNAL
REVENUE CODE AND THE REGULATIONS THEREUNDER).]2
<PAGE>
PART V
FORM OF COUPON
On the front:
COUNTRYWIDE HOME LOANS, INC.
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
Series No. [ ]
[Coupon appertaining to a Note in the denomination of [Specified Currency and
Specified Denomination]].1
Part A
[For Fixed Rate Notes:
This Coupon is payable to bearer, separately Coupon for
negotiable and subject to the Terms and [ ]
Conditions of the said Notes. due on [ ], [ ]]
Part B
[For Floating Rate Notes or Indexed Interest Notes:
Coupon for the amount due in accordance with the Terms and Conditions endorsed
on, attached to or incorporated by reference into the said Notes on [the
Interest Payment Date falling in [ ] [ ]/[ ]].
This Coupon is payable to bearer, separately negotiable and subject to such
Terms and Conditions, under which it may become void before its due date.]
[ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED
STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE
UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS
165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]2
<PAGE>
[BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANTS THAT IT IS NOT
A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION
6049(b)(4) OF THE INTERNAL REVENUE CODE OF THE UNITED STATES AND THE REGULATIONS
THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITED STATES PERSON
(OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION 6049(b)(4) OF THE INTERNAL
REVENUE CODE AND THE REGULATIONS THEREUNDER).]1
<PAGE>
PART VI
FORM OF TALON
On the front:
COUNTRYWIDE HOME LOANS, INC.
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
Series No. [ ]
[Talon appertaining to a Note in the denomination of [Specified Currency and
Specified Denomination]] 1 .
On and after [ ] further Coupons [and a further Talon]2 appertaining to the Note
to which this Talon appertains will be issued at the specified office of any of
the Paying Agents set out on the reverse hereof (and/or any other or further
Paying Agents and/or specified offices as may from time to time be duly
appointed and notified to the Noteholders) upon production and surrender of this
Talon.
This Talon may, in certain circumstances, become void under the Terms and
Conditions endorsed on the Note to which this Talon appertains.
[ANY UNITED STATES PERSON (AS DEFINED IN THE INTERNAL REVENUE CODE OF THE UNITED
STATES) WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE
UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS
165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]3
[BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANTS THAT IT IS NOT
A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION
6049(b)(4) OF THE INTERNAL REVENUE CODE OF THE UNITED STATES AND THE REGULATIONS
THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITED STATES PERSON
(OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION 6049(b)(4) OF THE INTERNAL
REVENUE CODE AND THE REGULATIONS THEREUNDER).]4
<PAGE>
On the back of Receipts, Coupons and Talons:
AGENT
Bankers Trust Company
1 Appold Street
Broadgate
London EC2A 2HE
OTHER PAYING AGENTS
Bankers Trust Luxembourg S.A. Swiss Bank Corporation
14 boulevard F.D. Roosevelt Paradeplatz 6
L-2450 Luxembourg CH-8010 Zurich
<PAGE>
PART VII
FORM OF CERTIFICATE TO BE PRESENTED BY
EUROCLEAR OR CEDEL BANK
COUNTRYWIDE HOME LOANS, INC.
[Title of Notes]
(the "Securities")
This is to certify that, based solely on certifications we have received in
writing, by tested telex or by electronic transmission from member organisations
appearing in our records as persons being entitled to a portion of the nominal
amount set forth below (our "Member Organisations") substantially to the effect
set forth in the temporary Global Note representing the Securities, as of the
date hereof, [ ] nominal amount of the above-captioned Securities (i) is owned
by persons that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of its source
("United States persons"), (ii) is owned by United States persons that (a) are
foreign branches of United States financial institutions (as defined in U.S.
Treasury Regulations Sections 1.165-12(c)(1)(v) ("financial institutions")
purchasing for their own account or for resale, or (b) acquired the Securities
through foreign branches of United States financial institutions and who hold
the Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such United States financial
institution has agreed, on its own behalf or through its agent, that we may
advise the Issuer or the Issuer's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by United
States or foreign financial institutions for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign
financial institutions described in Clause (iii) above (whether or not also
described in Clause (i) or (ii)) have certified that they have not acquired the
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in Section 230.903(c)(3) of
Regulation S under the Securities Act of 1933, as amended, then this is also to
certify with respect to such principal amount of Securities set forth above
that, except as set forth below, we have received in writing, by tested telex or
by electronic transmission, from our Member Organisations entitled to a portion
of such principal amount, certifications with respect to such portion,
substantially to the effect set forth in the temporary Global Note representing
the Securities.
We further certify (i) that we are not making available herewith for exchange
(or, if relevant, exercise of any rights or collection of any interest) any
portion of the temporary Global Note excepted in such certifications and (ii)
that as of the date hereof we have not received any notification from any of our
Member Organisations to the effect that the statements made by such Member
Organisations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with certain tax
laws and, if applicable, certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings or official
enquiries are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorise you to produce
this certification to any interested party in such proceedings or enquiries.
Dated: , 199 1
Yours faithfully,
[Morgan Guaranty Trust
Company of New York,
Brussels office,
as operator of the Euroclear
System]
or
[Cedel Bank, societe anonyme]
By:...............................
<PAGE>
CERTIFICATE "A"
COUNTRYWIDE HOME LOANS, INC.
[Title of Notes]
(the "Securities")
This is to certify that as of the date hereof, and except as set forth below,
the above-captioned Securities held by you for our account (i) are owned by
person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of its source
("United States person(s)"), (ii) are owned by United States person(s) that (a)
are foreign branches of United States financial institutions (as defined in U.S.
Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions")
purchasing for their own account or for resale, or (b) acquired the Securities
through foreign branches of United States financial institutions and who hold
the Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may
advise the Issuer or the Issuer's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) are owned by United
States or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a
United States or foreign financial institution described in Clause (iii) above
(whether or not also described in Clause (i) or (ii)) this is to further certify
that such financial institution has not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
If the Securities are of the category contemplated in Section 230.903(c)(2) of
Regulation S under the Securities Act of 1933, as amended, (the "Act") then this
is also to certify that, except as set forth below, the Securities are
beneficially owned by (a) non-U.S. person(s) or (b) U.S. person(s) who purchased
the Securities in transactions which did not require registration under the Act.
As used in this paragraph, the term "U.S. person" has the meaning given to it by
Regulation S under the Act.
As used herein, "United States" means the United States of America (including
the States and the District of Columbia); and its "possessions" include Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date on
which you intend to submit your certification relating to the Securities held by
you for our account in accordance with your operating procedures if any
applicable statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification applies as of
such date.
This certification excepts and does not relate to [ ] of such interest in the
above Securities in respect of which we are not able to certify and as to which
we understand exchange and delivery of definitive Securities (or, if relevant,
exercise of any right or collection of any interest) cannot be made until we do
so certify.
We understand that this certification is required in connection with certain tax
laws and, if applicable, certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings or official
enquiries are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorise you to produce
this certification to any interested party in such proceedings or enquiries.
Dated: , 199 1
Name of person making certification
By: .................................................
<PAGE>
THE THIRD SCHEDULE
PROVISIONS FOR MEETINGS OF NOTEHOLDERS
1. (A) As used in this Schedule the following expressions shall
have the following meanings unless the context otherwise
requires:
(i) "voting certificate" shall mean an English language
certificate issued by a Paying Agent and dated in
which it is stated:
(a) that on the date thereof Notes (whether in definitive form or represented by
a Global Note and not being Notes in respect of which a block voting instruction
has been issued and is outstanding in respect of the meeting specified in such
voting certificate or any adjourned such meeting) were deposited with such
Paying Agent or (to the satisfaction of such Paying Agent) were held to its
order or under its control or blocked in an account with a clearing system and
that no such Notes will cease to be so deposited or held or blocked until the
first to occur of:
(1) the conclusion of the meeting specified in such certificate or, if later, of
any adjourned such meeting; and
(2) the surrender of the certificate to the Paying Agent who issued the same;
and
(b) that the bearer thereof is entitled to
attend and vote at such meeting and any
adjourned such meeting in respect of the
Notes represented by such certificate;
(ii) "block voting instruction" shall mean an English
language document issued by a Paying Agent and dated
in which:
(a) it is certified that Notes (whether in definitive form or represented by a
Global Note and not being Notes in respect of which a voting certificate has
been issued and is outstanding in respect of the meeting specified in such block
voting instruction and any adjourned such meeting) have been deposited with such
Paying Agent or (to the satisfaction of such Paying Agent) were held to its
order or under its control or blocked in an account with a clearing system and
that no such Notes will cease to be so deposited or held or blocked until the
first to occur of:
(1) the conclusion of the meeting specified in such document or, if later, of
any adjourned such meeting; and
(2) the surrender to the Paying Agent not less than 48 hours before the time for
which such meeting or any adjourned such meeting is convened of the receipt
issued by such Paying Agent in respect of each such deposited Note which is to
be released or (as the case may require) the Note or Notes ceasing with the
agreement of the Paying Agent to be held to its order or under its control or so
blocked and the giving of notice by the Paying Agent to the Issuer in accordance
with paragraph 17 hereof of the necessary amendment to the block voting
instruction;
(b) it is certified that each holder of such Notes has instructed such Paying
Agent that the vote(s) attributable to the Note or Notes so deposited or held or
blocked should be cast in a particular way in relation to the resolution or
resolutions to be put to such meeting or any adjourned such meeting and that all
such instructions are during the period commencing 48 hours prior to the time
for which such meeting or any adjourned such meeting is convened and ending at
the conclusion or adjournment thereof neither revocable nor capable of
amendment;
(c) the aggregate principal amount of the Notes so deposited or held or blocked
are listed distinguishing with regard to each such resolution between those in
respect of which instructions have been given as aforesaid that the votes
attributable thereto should be cast in favour of the resolution and those in
respect of which instructions have been so given that the votes attributable
thereto should be cast against the resolution; and
(d) one or more persons named in such document (each hereinafter called a
"proxy") is or are authorised and instructed by such Paying Agent to cast the
votes attributable to the Notes so listed in accordance with the instructions
referred to in (c) above as set out in such document;
(iii) "24 hours" shall mean a period of 24 hours including all or part of a day
upon which banks are open for business in both the place where the relevant
meeting is to be held and in each of the places where the Paying Agents have
their specified offices (disregarding for this purpose the day upon which such
meeting is to be held) and such period shall be extended by one period or, to
the extent necessary, more periods of 24 hours until there is included as
aforesaid all or part of a day upon which banks are open for business in all of
the places as aforesaid; and
(iv) "48 hours" shall mean a period of 48 hours including all or part of two
days upon which banks are open for business both in the place where the relevant
meeting is to be held and in each of the places where the Paying Agents have
their specified offices (disregarding for this purpose the day upon which such
meeting is to be held) and such period shall be extended by one period or, to
the extent necessary, more periods of 24 hours until there is included as
aforesaid all or part of two days upon which banks are open for business in all
of the places as aforesaid.
(B) A holder of a Note (whether in definitive form or represented by a Global
Note) may obtain a voting certificate in respect of such Note from a Paying
Agent or require a Paying Agent to issue a block voting instruction in respect
of such Note by depositing such Note with such Paying Agent or (to the
satisfaction of such Paying Agent) by such Note being held to its order or under
its control or being blocked in an account with a clearing system, in each case
not less than 48 hours before the time fixed for the relevant meeting and on the
terms set out in sub-paragraph (A)(i)(a) or (A)(ii)(a) above (as the case may
be), and (in the case of a block voting instruction) instructing such Paying
Agent to the effect set out in sub-paragraph (A)(ii)(b) above. The holder of any
voting certificate or the proxies named in any block voting instruction shall
for all purposes in connection with the relevant meeting or adjourned meeting of
Noteholders be deemed to be the holder of the Notes to which such voting
certificate or block voting instruction relates and the Paying Agent with which
such Notes have been deposited or the person holding the same to the order or
under the control of such Paying Agent or the clearing system in which such
Notes have been blocked shall be deemed for such purposes not to be the holder
of those Notes.
2. The Issuer, the Guarantor or the Trustee may at any time and the Issuer
shall upon a requisition in writing in the English language signed by
the holders of not less than five per cent. in nominal amount of the
Notes for the time being outstanding convene a meeting of the
Noteholders and if the Issuer makes default for a period of seven days
in convening such a meeting the same may be convened by the Trustee or
the requisitionists. Every such meeting shall be held at such time and
place as the Trustee may appoint or approve.
3. At least 21 days' notice (exclusive of the day on which the notice is given
and the day on which the meeting is to be held) specifying the place, day and
hour of meeting shall be given to the holders of the relevant Notes prior to any
meeting of such holders in the manner provided by Condition 13. Such notice,
which shall be in the English language, shall state generally the nature of the
business to be transacted at the meeting thereby convened but (except for an
Extraordinary Resolution) it shall not be necessary to specify in such notice
the terms of any resolution to be proposed. Such notice shall include
statements, if applicable, to the effect that Notes may, not less than 48 hours
before the time fixed for the meeting, be deposited with Paying Agents or (to
their satisfaction) held to their order or under their control or blocked in an
account with a clearing system for the purpose of obtaining voting certificates
or appointing proxies. A copy of the notice shall be sent by post to the Trustee
(unless the meeting is convened by the Trustee), to the Issuer (unless the
meeting is convened by the Issuer) and to the Guarantor (unless the meeting is
convened by the Guarantor).
4. A person (who may but need not be a Noteholder) nominated in writing by
the Trustee shall be entitled to take the chair at the relevant meeting
or adjourned meeting but if no such nomination is made or if at any
meeting or adjourned meeting the person nominated shall not be present
within 15 minutes after the time appointed for holding the meeting or
adjourned meeting the Noteholders present shall choose one of their
number to be Chairman, failing which the Issuer may appoint a Chairman.
The Chairman of an adjourned meeting need not be the same person as was
Chairman of the meeting from which the adjournment took place.
5. At any such meeting one or more persons present holding Definitive Notes or
voting certificates or being proxies and holding or representing in the
aggregate not less than one-twentieth of the nominal amount of the Notes for the
time being outstanding shall (except for the purpose of passing an Extraordinary
Resolution) form a quorum for the transaction of business and no business (other
than the choosing of a Chairman) shall be transacted at any meeting unless the
requisite quorum be present at the commencement of the relevant business. The
quorum at any such meeting for passing an Extraordinary Resolution shall
(subject as provided below) be one or more persons present holding Definitive
Notes or voting certificates or being proxies and holding or representing in the
aggregate a clear majority in nominal amount of the Notes for the time being
outstanding PROVIDED THAT at any meeting the business of which includes any of
the following matters (each of which shall, subject only to Clause 19(B)(ii),
only be capable of being effected after having been approved by Extraordinary
Resolution) namely:
(i) reduction or cancellation of the amount payable or, where
applicable, modification, except where such modification is in
the opinion of the Trustee bound to result in an increase, of
the method of calculating the amount payable or modification
of the date of payment or, where applicable, of the method of
calculating the date of payment in respect of any principal or
interest in respect of the Notes;
(ii) alteration of the currency in which payments under the Notes, Receipts and
Coupons are to be made;
(iii) alteration of the majority required to pass an Extraordinary Resolution;
(iv) the sanctioning of any such scheme or proposal as is described in paragraph
18(I) below; and
(v) alteration of this proviso or the proviso to paragraph 6 below;
the quorum shall be one or more persons present holding Definitive
Notes or voting certificates or being proxies and holding or
representing in the aggregate not less than two-thirds of the nominal
amount of the Notes for the time being outstanding.
6. If within 15 minutes (or such longer period not exceeding 30 minutes as the
Chairman may decide) after the time appointed for any such meeting a quorum is
not present for the transaction of any particular business, then, subject and
without prejudice to the transaction of the business (if any) for which a quorum
is present, the meeting shall if convened upon the requisition of Noteholders be
dissolved. In any other case it shall stand adjourned to the same day in the
next week (or if such day is a public holiday the next succeeding business day)
at the same time and place (except in the case of a meeting at which an
Extraordinary Resolution is to be proposed in which case it shall stand
adjourned for such period, being not less than 13 clear days nor more than 42
clear days, and to such place as may be appointed by the Chairman either at or
subsequent to such meeting and approved by the Trustee). If within 15 minutes
(or such longer period not exceeding 30 minutes as the Chairman may decide)
after the time appointed for any adjourned meeting a quorum is not present for
the transaction of any particular business, then, subject and without prejudice
to the transaction of the business (if any) for which a quorum is present, the
Chairman may either (with the approval of the Trustee) dissolve such meeting or
adjourn the same for such period, being not less than 13 clear days (but without
any maximum number of clear days), and to such place as may be appointed by the
Chairman either at or subsequent to such adjourned meeting and approved by the
Trustee, and the provisions of this sentence shall apply to all further
adjourned such meetings. At any adjourned meeting one or more persons present
holding Definitive Notes of the relevant one or more Series or voting
certificates or being proxies (whatever the nominal amount of the Notes so held
or represented by them) shall (subject as provided below) form a quorum and
shall have power to pass any Extraordinary Resolution or other resolution and to
decide upon all matters which could properly have been dealt with at the meeting
from which the adjournment took place had the requisite quorum been present
PROVIDED THAT at any adjourned meeting the quorum for the transaction of
business comprising any of the matters specified in the proviso to paragraph 5
above shall be one or more persons present holding Definitive Notes or voting
certificates or being proxies and holding or representing in the aggregate not
less than one-third of the nominal amount of the Notes for the time being
outstanding.
7. Notice of any adjourned meeting at which an Extraordinary Resolution is
to be submitted shall be given in the same manner as notice of an
original meeting but as if 10 were substituted for 21 in paragraph 3
above and such notice shall state the relevant quorum. Subject as
aforesaid it shall not be necessary to give any notice of an adjourned
meeting.
8. Every question submitted to a meeting shall be decided in the first
instance by a show of hands and in case of equality of votes the
Chairman shall both on a show of hands and on a poll have a casting
vote in addition to the vote or votes (if any) to which he may be
entitled as a Noteholder or as a holder of a voting certificate or as a
proxy.
9. At any meeting unless a poll is (before or on the declaration of the
result of the show of hands) demanded by the Chairman, the Issuer, the
Guarantor, the Trustee or any person present holding a Definitive Note
of the relevant Series or a voting certificate or being a proxy
(whatever the nominal amount of the Notes so held or represented by
him) a declaration by the Chairman that a resolution has been carried
or carried by a particular majority or lost or not carried by a
particular majority shall be conclusive evidence of the fact without
proof of the number or proportion of the votes recorded in favour of or
against such resolution.
10. Subject to paragraph 12 below, if at any such meeting a poll is so
demanded it shall be taken in such manner and subject as hereinafter
provided either at once or after an adjournment as the Chairman directs
and the result of such poll shall be deemed to be the resolution of the
meeting at which the poll was demanded as at the date of the taking of
the poll. The demand for a poll shall not prevent the continuance of
the meeting for the transaction of any business other than the motion
on which the poll has been demanded.
11. The Chairman may with the consent of (and shall if directed by) any
such meeting adjourn the same from time to time and from place to place
but no business shall be transacted at any adjourned meeting except
business which might lawfully (but for lack of required quorum) have
been transacted at the meeting from which the adjournment took place.
12. Any poll demanded at any such meeting on the election of a Chairman or
on any question of adjournment shall be taken at the meeting without
adjournment.
13. The Trustee and its lawyers and any director, officer or employee of a
corporation being a trustee of these presents and any director or officer of the
Issuer or, as the case may be, the Guarantor and its or their lawyers and any
other person authorised so to do by the Trustee may attend and speak at any
meeting. Save as aforesaid, but without prejudice to the proviso to the
definition of "outstanding" in Clause 1, no person shall be entitled to attend
and speak nor shall any person be entitled to vote at any meeting of Noteholders
or join with others in requesting the convening of such a meeting or to exercise
the rights conferred on Noteholders by Condition 9 unless he either produces the
Definitive Note or Definitive Notes of which he is the holder or a voting
certificate or is a proxy. No person shall be entitled to vote at any meeting in
respect of Notes held by, for the benefit of, or on behalf of, the Issuer, the
Guarantor or any other Subsidiary of the Guarantor. Nothing herein shall prevent
any of the proxies named in any block voting instruction from being a director,
officer or representative of or otherwise connected with the Issuer or the
Guarantor.
14. Subject as provided in paragraph 13 hereof at any meeting:
(A) on a show of hands every person who is present in person and
produces a Definitive Note or voting certificate or is a proxy
shall have one vote; and
(B) on a poll every person who is so present shall have one vote
in respect of each U.S.$1 or such other amount as the Trustee
may in its absolute discretion stipulate (or, in the case of
meetings of holders of Notes denominated in another currency,
such amount in such other currency as the Trustee in its
absolute discretion may stipulate) in nominal amount of the
Definitive Notes so produced or represented by the voting
certificate so produced or in respect of which he is a proxy.
Without prejudice to the obligations of the proxies named in any block
voting instruction any person entitled to more than one vote need not
use all his votes or cast all the votes to which he is entitled in the
same way.
15. The proxies named in any block voting instruction need not be Noteholders.
16. Each block voting instruction together (if so requested by the Trustee) with
proof satisfactory to the Trustee of its due execution on behalf of the relevant
Paying Agent shall be deposited by the relevant Paying Agent at such place as
the Trustee shall approve not less than 24 hours before the time appointed for
holding the meeting or adjourned meeting at which the proxies named in the block
voting instruction propose to vote and in default the block voting instruction
shall not be treated as valid unless the Chairman of the meeting decides
otherwise before such meeting or adjourned meeting proceeds to business. A
notarially certified copy of each block voting instruction shall be deposited
with the Trustee before the commencement of the meeting or adjourned meeting but
the Trustee shall not thereby be obliged to investigate or be concerned with the
validity of or the authority of the proxies named in any such block voting
instruction.
17. Any vote given in accordance with the terms of a block voting instruction
shall be valid notwithstanding the previous revocation or amendment of the block
voting instruction or of any of the relevant Noteholders' instructions pursuant
to which it was executed provided that no intimation in writing of such
revocation or amendment shall have been received from the relevant Paying Agent
by the Issuer at its principal office (or such other place as may have been
required or approved by the Trustee for the purpose) by the time being 24 hours
and 48 hours respectively before the time appointed for holding the meeting or
adjourned meeting at which the block voting instruction is to be used.
18. A meeting of the Noteholders shall in addition to the powers
hereinbefore given have the following powers exercisable only by
Extraordinary Resolution (subject to the provisions relating to quorum
contained in paragraphs 5 and 6 above) namely:
(A) Power to sanction any compromise or arrangement proposed to be
made between the Issuer, the Guarantor, the Trustee, any
Appointee and the Noteholders, Receiptholders and
Couponholders or any of them.
(B) Power to sanction any abrogation, modification, compromise or
arrangement in respect of the rights of the Trustee, any
Appointee, the Noteholders, the Receiptholders, Couponholders,
the Issuer, the Guarantor or against any other or others of
them or against any of their property whether such rights
shall arise under these presents or otherwise.
(C) Power to assent to any modification of the provisions of these
presents which shall be proposed by the Issuer, the Guarantor,
the Trustee or any Noteholder.
(D) Power to give any authority or sanction which under the
provisions of these presents is required to be given by
Extraordinary Resolution.
(E) Power to appoint any persons (whether Noteholders or not) as a
committee or committees to represent the interests of the
Noteholders and to confer upon such committee or committees
any powers or discretions which the Noteholders could
themselves exercise by Extraordinary Resolution.
(F) Power to approve of a person to be appointed a trustee and
power to remove any trustee or trustees for the time being of
these presents.
(G) Power to discharge or exonerate the Trustee and/or any
Appointee from all liability in respect of any act or omission
for which the Trustee and/or such Appointee may have become
responsible under these presents.
(H) Power to authorise the Trustee and/or any Appointee to concur
in and execute and do all such deeds, instruments, acts and
things as may be necessary to carry out and give effect to any
Extraordinary Resolution.
(I) Power to sanction any scheme or proposal for the exchange or sale of the
Notes for or the conversion of the Notes into or the cancellation of the Notes
in consideration of shares, stock, notes, bonds, debentures, debenture stock
and/or other obligations and/or securities of the Issuer or any other company
formed or to be formed, or for or into or in consideration of cash, or partly
for or into or in consideration of such shares, stock, notes, bonds, debentures,
debenture stock and/or other obligations and/or securities as aforesaid and
partly for or into or in consideration of cash and for the appointment of some
person with power on behalf of the Noteholders to execute an instrument of
transfer of the Registered Notes held by them in favour of the persons with or
to whom the Notes are to be exchanged or sold respectively.
19. Any resolution passed at a meeting of the Noteholders duly convened and held
in accordance with these presents shall be binding upon all the Noteholders
whether present or not present at such meeting and whether or not voting and
upon all Receiptholders and Couponholders and each of them shall be bound to
give effect thereto accordingly and the passing of any such resolution shall be
conclusive evidence that the circumstances justify the passing thereof. Notice
of the result of the voting on any resolution duly considered by the Noteholders
shall be published in accordance with Condition 13 by the Issuer within 14 days
of such result being known PROVIDED THAT the non-publication of such notice
shall not invalidate such result.
20. The expression "Extraordinary Resolution" when used in these presents
means (a) a resolution passed at a meeting of the Noteholders duly
convened and held in accordance with these presents by a majority
consisting of not less than three-fourths of the persons voting thereat
upon a show of hands or if a poll is duly demanded by a majority
consisting of not less than three-fourths of the votes cast on such
poll; or (b) a resolution in writing signed by or on behalf of all the
Noteholders, which resolution in writing may be contained in one
document or in several documents in like form each signed by or on
behalf of one or more of the Noteholders.
21. Minutes of all resolutions and proceedings at every meeting of the
Noteholders shall be made and entered in books to be from time to time
provided for that purpose by the Issuer and any such minutes as
aforesaid if purporting to be signed by the Chairman of the meeting at
which such resolutions were passed or proceedings transacted shall be
conclusive evidence of the matters therein contained and until the
contrary is proved every such meeting in respect of the proceedings of
which minutes have been made shall be deemed to have been duly held and
convened and all resolutions passed or proceedings transacted thereat
to have been duly passed or transacted.
22. (A) If and whenever the Issuer shall have issued and have
outstanding Notes of more than one Series the foregoing
provisions of this Schedule shall have effect subject to the
following modifications:
(i) a resolution which in the opinion of the Trustee
affects the Notes of only one Series shall be deemed
to have been duly passed if passed at a separate
meeting of the holders of the Notes of that Series;
(ii) a resolution which in the opinion of the Trustee
affects the Notes of more than one Series but does
not give rise to a conflict of interest between the
holders of Notes of any of the Series so affected
shall be deemed to have been duly passed if passed at
a single meeting of the holders of the Notes of all
the Series so affected;
(iii) a resolution which in the opinion of the Trustee
affects the Notes of more than one Series and gives
or may give rise to a conflict of interest between
the holders of the Notes of one Series or group of
Series so affected and the holders of the Notes of
another Series or group of Series so affected shall
be deemed to have been duly passed only if passed at
separate meetings of the holders of the Notes of each
Series or group of Series so affected; and
(iv) to all such meetings all the preceding provisions of
this Schedule shall mutatis mutandis apply as though
references therein to Notes and Noteholders were
references to the Notes of the Series or group of
Series in question or to the holders of such Notes,
as the case may be.
(B) If the Issuer shall have issued and have outstanding Notes which are not
denominated in U.S. dollars in the case of any meeting of holders of Notes of
more than one currency the principal amount of such Notes shall (i) for the
purposes of paragraph 2 above be the equivalent in U.S. dollars at the spot rate
of a bank nominated by the Trustee for the conversion of the relevant currency
or currencies into U.S. dollars on the seventh dealing day prior to the day on
which the requisition in writing is received by the Issuer and (ii) for the
purposes of paragraphs 5, 6 and 14 above (whether in respect of the meeting or
any adjourned such meeting or any poll resulting therefrom) be the equivalent at
such spot rate on the seventh dealing day prior to the day of such meeting. In
such circumstances, on any poll each person present shall have one vote for each
U.S.$1 (or such other U.S. dollar amount as the Trustee may in its absolute
discretion stipulate) in principal amount of the Notes (converted as above)
which he holds or represents.
23. Subject to all other provisions of these presents the Trustee may
without the consent of any of the Issuer, the Guarantor, the
Noteholders, the Receiptholders or the Couponholders prescribe such
further regulations regarding the requisitioning and/or the holding of
meetings of Noteholders and attendance and voting thereat as the
Trustee may in its sole discretion think fit.
<PAGE>
EXECUTED as a deed by
COUNTRYWIDE HOME LOANS, INC.
by JENNIFER SANDEFUR JENNIFER SANDEFUR
acting under the authority of that Executive Vice President and Treasurer
company in the presence of:
Witness's Signature: JANET HARRIGAN
Name: JANET HARRIGAN
Address: 4500 Park Granada, CH-43, Calabas, CS 91302
Occupation: Executive Secretary
EXECUTED as a deed by
COUNTRYWIDE CREDIT INDUSTRIES,
INC. acting by THOMAS K. McLAUGHLIN
THOMAS K. McLAUGHLIN Managing Director and Treasurer
acting under the authority of that
company in the presence of:
Witness's Signature: KATHY COLOMA
Name: KATHY COLOMA
Address: 4500 Park Grarnada, CH-78, Calabasas, CA 91302
Occupation: Executive Administrative Assistant
THE COMMON SEAL of BANKERS
TRUSTEE COMPANY LIMITED
was affixed to this deed in SEAL
----
the presence of:
A. G. BUCKLAND
Director
MARK JONES
Director
ICM2:327045.3
<PAGE>
DATED 1ST MAY, 1998
COUNTRYWIDE HOME LOANS, INC.
- and -
COUNTRYWIDE CREDIT INDUSTRIES, INC.
- and -
BANKERS TRUSTEE COMPANY LIMITED
-------------------------------------
TRUST DEED
relating to a
U.S.$2,000,000,000
Euro Medium Term Note Programme
-------------------------------------
For Bankers Trustee Company Limited
as to English law:
ALLEN & OVERY
One New Change
London EC4M 9QQ
<PAGE>
CONFORMED COPY
DATED 1ST MAY, 1998
COUNTRYWIDE HOME LOANS, INC.
- and -
COUNTRYWIDE CREDIT INDUSTRIES, INC.
- and -
BANKERS TRUSTEE COMPANY LIMITED
-------------------------------------
TRUST DEED
relating to a
U.S.$2,000,000,000
Euro Medium Term Note Programme
-------------------------------------
For Bankers Trustee Company Limited as to English law:
ALLEN & OVERY
One New Change
London EC4M 9QQ
<PAGE>
la-195654v.4
la-195654v.4
TABLE OF CONTENTS
CLAUSE PAGE
1. DEFINITIONS...........................................................1
2. AMOUNT AND ISSUE OF THE NOTES.........................................1
3. FORMS OF THE NOTES....................................................1
4. FEES, DUTIES AND TAXES................................................1
5. COVENANT OF COMPLIANCE................................................1
6. CANCELLATION OF NOTES AND RECORDS.....................................1
7. GUARANTEE.............................................................1
8. NON-PAYMENT...........................................................1
9. PROCEEDINGS, ACTION AND INDEMNIFICATION...............................1
10. APPLICATION OF MONEYS.................................................1
11. NOTICE OF PAYMENTS....................................................1
12. INVESTMENT BY TRUSTEE.................................................1
13. PARTIAL PAYMENTS......................................................1
14. COVENANTS BY THE ISSUER AND THE GUARANTOR.............................1
15. REMUNERATION AND INDEMNIFICATION OF TRUSTEE..........................25
16. SUPPLEMENT TO TRUSTEE ACT 1925........................................1
17. TRUSTEE'S LIABILITY...................................................1
18. TRUSTEE CONTRACTING WITH THE ISSUER AND THE GUARANTOR.................1
19. WAIVER, AUTHORISATION AND DETERMINATION...............................1
MODIFICATION..........................................................1
BREACH................................................................1
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER.........................1
20. HOLDER OF DEFINITIVE NOTE ASSUMED TO BE RECEIPTHOLDER AND COUPONHOLDER1
21. CURRENCY INDEMNITY....................................................1
22. NEW TRUSTEE...........................................................1
23. TRUSTEE'S RETIREMENT AND REMOVAL......................................1
24. TRUSTEE'S POWERS TO BE ADDITIONAL.....................................1
25. NOTICES...............................................................1
26. GOVERNING LAW.........................................................1
27. SUBMISSION TO JURISDICTION............................................1
28. COUNTERPARTS..........................................................1
SCHEDULES
THE FIRST SCHEDULE .............- TERMS AND CONDITIONS OF THE NOTES.........37
THE SECOND SCHEDULE - FORM OF TEMPORARY GLOBAL NOTE..............1
- FORM OF PERMANENT GLOBAL NOTE..............1
- FORM OF DEFINITIVE NOTE....................1
- FORM OF RECEIPT............................1
- FORM OF COUPON.............................1
- FORM OF TALON..............................1
THE THIRD SCHEDULE - PROVISIONS FOR MEETINGS OF NOTEHOLDERS.....1
COUNTRYWIDE CREDIT INDUSTRIES, INC.
DEFERRED COMPENSATION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
THIS AGREEMENT is made and entered into as of the ___ day of _____, 1998,
by and between Countrywide Credit Industries, Inc., a Delaware
corporation (hereinafter "CCI"), and _________________ ((hereinafter, the
"Director"), a non-employee member of the Board of Directors of CCI
(hereinafter the "Board").
WITNESSETH:
WHEREAS, fees are currently paid monthly to the Director as a retainer for
serving on the Board; and
WHEREAS, the Director and CCI desire that the payment of all or a portion
of said fees to the Director be deferred, pursuant to the terms and
provisions of this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. This Agreement shall be effective as of the date specified above, and
shall continue in effect until this Agreement is terminated as provided
herein.
2. CCI shall credit to an account on CCI's books and records, in the
Director's name (the "Director Deferral Account"), all or a portion of
such Director's fees otherwise payable to Director as may be specified by
the Director on an Election Form (the "Election Form") substantially in
the form attached hereto as Exhibit A. The Election Form shall be
submitted to CCI simultaneously with the execution of this Agreement with
regard to the deferral of fees during the 1998 calendar year and on or
before each December 31 thereafter, with respect to amounts to be
deferred in the next calendar year.
3. Each January, there shall be credited to the Director Deferral Account
interest in an amount equal to the "Applicable Interest Rate" for the
immediately preceding twelve months beginning on January 1 and ending on
December 31 (or relevant portion thereof) during the term of this Agreement.
(Each twelve month period or relevant portion thereof being a "Deferral Year.").
Such interest shall be credited against the balance in the Director Deferral
Account as of the first day of each month during the Deferral Year. All amounts
otherwise due and payable to the Director shall be deemed received and credited
to the Director Deferral Account as of the first day of the month in which the
amount was due and payable by CCI to the Director.
4. Unless otherwise agreed to by CCI and the Director, the Applicable
Interest Rate shall be as set forth in Section B of the Election Form.
5. CCI shall pay the Director an amount equal to the amount credited to the
Director Deferral Account pursuant to paragraphs 2 and 3 hereof in the manner
and on the date specified by the Director on the Director's Election Form. In
the event the Director has specified a payout over a period of years, the
Director Deferral Account shall be reduced by the amount of the payment at the
time the payment is made. In the event of the Director's death before any
payment due under this Paragraph 5 has been paid, such payment due shall be paid
either over the time period previously elected by the Director, but commencing
the first month following the Director's death, or in a lump sum to Director's
beneficiary, as specified by the Director on the Election Form.
6. Once, but not more than once, in a Deferral Year, the Director may submit
a new Election Form to CCI changing, or continuing in effect, the portion
of fees payable that are subject to deferral hereunder and/or the time
within which the amount credited to the Director Deferral Account shall
be paid. Each such election shall apply only with respect to fees payable
on or after the first day of the calendar year following the date such
election is made.
7. In the event the Director undergoes what CCI considers to be a severe
financial hardship, upon the Director's written request therefor, the
entire amount due the Director as of the date of such written request
shall be immediately payable in a single lump sum.
8. The Director shall have no ownership rights in the amounts credited to the
Director Deferral Account by CCI other than as set forth in this Agreement. CCI
will not set aside, earmark or entrust any fund or money with which to pay its
obligations under this Agreement. The Director and any successor in interest
shall be and remain simply an unsecured creditor of CCI in the same manner as
any other creditor having a general claim for unpaid compensation if and when
the Director had the right to receive payment of deferred compensation
hereunder. To the extent permitted by law, the rights of the Director or any
successor in interest in any benefit or to any payment pursuant to this
Agreement shall not be subject in any manner to attachment or any other legal
process for the debts of the Director or any successor in interest. Any such
benefit or payment shall not be subject to anticipation, alienation, sale,
transfer, assignment or encumbrance.
9. Nothing contained in this Agreement and no action taken pursuant to the
provisions of this Agreement shall create or be construed to create a
trust of any kind, or a fiduciary relationship between CCI and the
Director or any other person.
10. The existence of this Agreement shall not confer upon the Director any
right to continue to serve as a director of CCI for any period of time.
11. This Agreement shall be binding upon and inure to the benefit of CCI, its
successors and assigns, and the Director and his heirs, executors,
administrators and legal representatives.
12. This Agreement may be terminated by CCI upon 30 days' written notice to
the Director. Except as provided in Paragraph 13, such termination shall
be applicable only with respect to fees payable to the Director on and
after the first day of the calendar year following the date of
termination.
13. This Agreement may be amended at any time with the written consent of
both parties. Any amounts deferred hereunder may continue to be deferred
under any successor agreement executed by the parties hereto which by its
terms provides for an arrangement similar to that provided hereunder,
except that any successor agreement shall only be effective for the
period commencing with the date of its execution.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first written above.
ATTEST: COUNTRYWIDE CREDIT INDUSTRIES, INC.
By: ________________ By: ___/s/_________________________
Secretary
Title: ___________________________
DIRECTOR
By: ___/s/________________________
EXHIBIT A
COUNTRYWIDE CREDIT INDUSTRIES, INC.
DEFERRED COMPENSATION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
ELECTION FORM
TO: Countrywide Credit Industries, Inc.
In accordance with the provisions of the above-named Agreement, I hereby elect
to defer the cash compensation otherwise to become payable to me for services to
be rendered by me as a non-employee member of the Board of Directors, and
committees thereof, of Countrywide Credit Industries, Inc. during the period
commencing [insert date] and ending on [insert date], as follows:
A. Amount of Deferral: _______% of annual retainer and fees.
B. The Director Deferral Account shall be credited with interest as described in
The Agreement.
C. The cash compensation deferral is to be paid to me as follows (check one,
either number 1 or 2):
1. _______ In a single lump payment by January 31 of the first full
calendar year following (check one, either a, b or c):
a. ______ The termination of my services as a director.
b. ______ The completion of _____ (insert a whole number not less
than 3) calendar years following the year of deferral.
c. ______ The first to occur of either a or b.
2. _______ In equal monthly payments calculated to exhaust the amount
of the deferral and credit interest to the Director Deferral
Account within ________ (insert a whole number between 2 and 15)
years. The first such monthly payment will be made on the first of
the month following the termination of my services as a director.
D. In the event that my death occurs before I have received all of the
deferred payments, a lump sum payment shall be made to (insert name and
address of beneficiary):
---------------------------------------------
---------------------------------------------
---------------------------------------------
The death benefit shall be paid to the beneficiary specified above as
follows (check one, either number 1 or 2):
1. ______ over the period of years specified
above, with the first payment to be made on
the first of the month following my death.
2. ______ in a single lump sum to be payable (check one, either a or b)
a) _____ in the month following my death.
b) _____ in the first month of the year following my death.
I hereby agree to be bound by the terms of the Agreement, including any
amendments thereof, and recognize that the foregoing election, with the
exception of the above-designated beneficiary, is irrevocable and may not be
altered by me.
__/s/_______________________________________
Received on behalf of
Countrywide Credit Industries, Inc.
By: _/s/___________________
Sandor E. Samuels
Secretary
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (the "Agreement") is made and
dated as of the 15th day of April, 1998, by and among the lenders signatory
hereto (collectively, the "Lenders"); ROYAL BANK OF CANADA ("RBC"), as lead
administrative agent for the Lenders (in such capacity, the "Lead Administrative
Agent"); THE BANK OF NEW YORK ("BNY"), as co-administrative agent (in such
capacity, the "Co-Administrative Agent"); MORGAN GUARANTY TRUST COMPANY OF NEW
YORK ("MGTC"), as syndication agent (in such capacity, the "Syndication Agent");
CREDIT LYONNAIS, SAN FRANCISCO BRANCH ("CL"), as documentation agent (in such
capacity, the "Documentation Agent"); RBC, as arranger (in such capacity, the
"Arranger"), BNY, MGTC and CL, as co-arrangers (in such capacity, the
"Co-Arrangers"); the Lenders acting as co-agents, as indicated on the signature
pages hereof (in such capacity, the "Co-Agents"); and COUNTRYWIDE HOME LOANS,
INC., a New York corporation (the "Company").
RECITALS
A. The Company has requested that the Lenders extend credit to
the Company in the form of a short term, unsecured revolving credit facility and
that the Lead Administrative Agent, the Co-Administrative Agent, the Syndication
Agent, the Documentation Agent, the Arranger, the Co-Arrangers and the Co-Agents
agree to act in such capacities with respect thereto.
B. The Lenders and such other Persons have agreed to do so on
the terms and subject to the conditions set forth more particularly herein.
NOW, THEREFORE, in consideration of the above Recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Credit Facilities.
1(a) Primary Facility. On the terms and subject to the conditions set forth
herein, each of the Lenders severally agrees that it shall, from time to time to
but not including the Maturity Date, advance its respective Primary Percentage
Share of loans (the "Primary Loans" or a "Primary Loan") to the Company in
amounts not to exceed in the aggregate at any date outstanding the Aggregate
Credit Limit minus the aggregate dollar amount of Swing Loans outstanding on
such date (including Swing Loans to be funded on such date but excluding Swing
Loans to be repaid on
such date).
1(b) Swing Loan Facility. On the terms and subject to the conditions set forth
herein, each of the Swing Line Lenders severally agrees that it shall, from time
to time to but not including the Maturity Date, advance its respective Swing
Line Percentage Share of loans (the "Swing Loans" or a "Swing Loan") to the
Company in amounts such that the aggregate amount of Swing Loans outstanding
does not exceed at any date the lesser of:
(1) The Aggregate Swing Line Commitment; and (2) The Aggregate Credit Limit
minus the aggregate dollar amount of Primary Loans outstanding on such date
(including Primary Loans to be funded on such date and excluding Primary Loans
to be repaid on such date).
At the request of any Swing Line Lender, made through the Lead Administrative
Agent at any time and from time to time, including, without limitation,
following the occurrence of an Event of Default, each Lender (including each of
the Swing Line Lenders) absolutely and unconditionally agrees to refund Swing
Loans held by the Swing Line Lenders by advancing its Primary Percentage Share
thereof to the Lead Administrative Agent for disbursement to the Swing Line
Lenders pro rata, in accordance with their respective Swing Line Percentage
Shares. Such fundings shall be made no later than 12:00 noon (Los Angeles time)
on the date request therefor is made if such request is made on or before 11:00
a.m. (Los Angeles time) on such date, and no later than 12:00 noon (Los Angeles
time) on the next succeeding Business Day if request therefor is made after
11:00 a.m. (Los Angeles time). Advances made by the Lenders hereunder for the
purpose of refunding Swing Loans shall, for all purposes of the Credit
Documents: (i) constitute Primary Loans to the extent of such Lender's Primary
Percentage Share thereof, and (ii) be advanced as Alternate Base Rate Loans. In
the event, for whatever reason, the Lenders are not able to advance their
respective Primary Percentage Shares for the purpose of refunding Swing Loans as
required hereunder, then each of the Lenders (including each of the Swing Line
Lenders) absolutely and unconditionally agrees to purchase and take from the
Swing Line Lenders on demand an undivided participation interest in Swing Loans
outstanding in an amount equal to their respective Primary Percentage Shares of
such Swing Loans. Notwithstanding anything contained herein, in no event shall
any Lender be required to advance its Primary Percentage Share of any Swing Loan
or to purchase any undivided participation interest in any Swing Loan: a. unless
such Swing Loan was initially made in accordance with the requirements of this
Agreement (as such requirements may be amended or waived from time to time as
permitted hereunder) or b. if upon such advance or purchase the aggregate dollar
amount of Primary Loans and Swing Loans held by such Lender would exceed such
Lender's Maximum Commitment.
2. Requests for Loans; Funding.
2(a) Requests for Loans. Subject to the advance notice required with respect to
Eurodollar Loans pursuant to Paragraph 4(a) below, on any Business Day that the
Company desires to borrow Loans, it shall deliver a Loan Request, Interest Rate
Election and Payoff Notice to the Lead Administrative Agent no later than: (1)
in the case of Primary Loans, 10:00 a.m. (Los Angeles time) on such date, and
(2) in the case of Swing Loans, 11:00 a.m. (Los Angeles time) on such date;
provided, however, that in the event the Lead Administrative Agent receives a
request for a Swing Loan after 11:00 a.m. (Los Angeles time) on a Business Day,
the Lead Administrative Agent shall work with the Swing Line Lenders on a best
efforts basis with a view toward funding the requested Swing Loans no later than
1:00 p.m. (Los Angeles time) on such date, the Company expressly acknowledging
and agreeing that there is no assurance that any such funding can be provided.
Only one Loan Request, Interest Rate Election and Payoff Notice requesting
Primary Loans and only one Loan Request, Interest Rate Election and Payoff
Notice requesting Swing Loans shall be submitted to the Lead Administrative
Agent on any date. Any request for Primary Loans shall be in such amount that
the aggregate dollar amount of Primary Loans which the Lenders are required to
actually newly fund with respect thereto is not less than $5,000,000.00, and any
request for Swing Loans shall be in an amount not less than $1,000,000.00. On
each Business Day on which a Loan Request, Interest Rate Election and Payoff
Notice is delivered to the Lead Administrative Agent, the Lead Administrative
Agent shall notify the applicable Lenders (which notification may be telephonic
and, if telephonic, shall be promptly confirmed in writing) no later than 11:00
a.m. (Los Angeles time) or in the case of a Swing Loan, 11:30 a.m. (Los Angeles
time)) of the aggregate amount of Loans which will be funded on such date. 2(b)
Funding of Loans. Loans requested pursuant to any Loan Request, Interest Rate
Election and Payoff Notice shall be funded as follows: (1) Each Lender shall
make its Primary Percentage Share of Primary Loans available by wiring the
amount thereof in immediately available same day (including Federal) funds, to
the Funding Account no later than 12:30 p.m. (Los Angeles time) on the proposed
funding date; and (2) Each Swing Line Lender shall make its Swing Line
Percentage Share of each Swing Loan available by wiring the amount thereof in
immediately available same day (including Federal) funds to the Funding Account
no later than 2:00 p.m. (Los Angeles time) on the proposed funding date. 2(c)
Funding Method. Each Lender shall be entitled to fund all or any portion of its
Primary Percentage Share of Primary Loans and refund its Primary Percentage
Share of Swing Loans, and each Swing Lender shall be entitled to fund all or any
portion of its Swing Line Percentage Share of Swing Loans in any manner it may
determine in its sole discretion, including, without limitation, in the Grand
Cayman inter-bank market, the eurocurrency inter-bank market and within the
United States, but all calculations and transactions hereunder shall be
conducted as though all Lenders actually fund Eurodollar Loans funded by them
hereunder through the purchase of offshore dollar deposits in such amounts with
maturities corresponding to the applicable Interest Periods. 3. Payment of
Principal; Prepayments. 3(a) Required Principal Payments. Subject to the
provisions of Paragraph 3(b) below, the Company shall pay to the Lead
Administrative Agent for the account of the Lenders, the unpaid principal
balance of each Eurodollar Loan on the last day of the applicable Interest
Period and the unpaid principal balance of each Primary Loan which is an
Alternate Base Rate Loan and each Swing Loan on the Maturity Date. 3(b)
Prepayments. The Company: (1) May voluntarily prepay Loans in whole or in part
at any time; provided, however, that any prepayment shall be accompanied by
accrued but unpaid interest on the Loan or portion thereof being prepaid. (2)
Shall pay in connection with any prepayment hereunder any amount payable on
account thereof pursuant to Paragraph 4(e) below concurrently with such
prepayment. 4. Calculation and Payment of Interest; Related Provisions. 4(a)
Interest on Primary Loans. (1) The Company shall pay interest to each Lender on
such Lender's Primary Percentage Share of Primary Loans outstanding calculated,
at the election of the Company made from time to time as permitted herein and
set forth on a duly executed Loan Request, Interest Rate Election and Payoff
Notice, at either: (i) the Alternate Base Rate, and/or (ii) the Applicable
Eurodollar Rate. Primary Loans bearing interest at the Alternate Base Rate shall
be referred to herein as "Alternate Base Rate Loans"; and Primary Loans bearing
interest at the Applicable Eurodollar Rate shall be referred to herein as
"Eurodollar Loans". (2) The Company may elect from time to time to convert
Primary Loans from Eurodollar Loans to Alternate Base Rate Loans or to have
Primary Loans funded as Alternate Base Rate Loans by giving the Lead
Administrative Agent irrevocable notice of such election as set forth on a duly
executed Loan Request, Interest Rate Election and Payoff Notice delivered on the
proposed conversion or funding date; provided, however, that any conversion of
Eurodollar Loans may only be made on the last day of the applicable Eurodollar
Interest Period. The Company may elect from time to time to convert Primary
Loans from Alternate Base Rate Loans to Eurodollar Loans or to have Primary
Loans funded as Eurodollar Loans by giving the Lead Administrative Agent at
least three Eurodollar Business Days' prior irrevocable notice of such election
by delivery of a duly executed Loan Request, Interest Rate Election and Payoff
Notice. Upon receipt of any such notice, the Lead Administrative Agent shall
promptly notify each of the Lenders thereof. No Primary Loan shall be funded as
or converted into a Eurodollar Loan if an Event of Default or Potential Default
has occurred and is continuing on the day occurring two Business Days prior to
the date of the funding or conversion requested by the Company. (3) Any
Eurodollar Loan may be continued as such upon the expiration of the Interest
Period applicable thereto by giving the Lead Administrative Agent (which shall
notify the Lenders) at least three Eurodollar Business Days' prior irrevocable
notice of such election as set forth on a duly executed Loan Request, Interest
Rate Election and Payoff Notice; provided, however, that no Eurodollar Loan may
be continued as such when any Event of Default or Potential Default has occurred
and is continuing, but shall be automatically converted to an Alternate Base
Rate Loan on the last day of the then current Interest Period applicable
thereto. The Lead Administrative Agent shall notify the Lenders and the Company
promptly that such automatic conversion will occur. If the Company shall fail to
give notice as provided above, the Company shall be deemed to have elected to
convert the affected Eurodollar Loan to an Alternate Base Rate Loan on the last
day of the Interest Period applicable thereto. (4) The Lead Administrative Agent
shall give prompt written notice (or notice by telephone immediately confirmed
in writing) to the Company and the Lenders of the applicable interest rate
determined by the Lead Administrative Agent. (5) Under no circumstances shall
the Lenders be required to make or maintain Eurodollar Loans under this
Agreement with more than an aggregate number of eight (8) different Interest
Periods. 4(b) Interest on Swing Loans. The Company shall pay interest to each
Swing Line Lender on such Swing Line Lender's Swing Line Percentage Share of
Swing Loans outstanding from the date advanced to but not including the date of
payment thereof at the Applicable Fed Funds Rate. 4(c) Payment of Interest. The
Company shall pay interest, in each case as more specifically provided in
Paragraph 5(d) below: (1) On Alternate Base Rate Loans and Swing Loans, monthly,
in arrears, on the fifth day of each month for the period from and including the
first day of the immediately preceding month to and including the last day of
such month; and (2) On Eurodollar Loans on the last day of the applicable
Eurodollar Interest Period relating thereto. 4(d) Inability to Determine Rate.
In the event that the Lead Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company) that by reason
of circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for any given
Eurodollar Interest Period, the Lead Administrative Agent shall forthwith give
notice (which may be telephonic and promptly confirmed in writing or by
facsimile transmission) of such determination to each Lender and to the Company
at least two Eurodollar Business Days prior to, as the case may be, the
conversion date of an Alternate Base Rate Loan to a Eurodollar Loan or the
proposed funding or continuation date of a Primary Loan as a Eurodollar Loan. If
such notice is given: (1) any Primary Loan that was to have been converted to or
funded as a Eurodollar Loan shall, subject to the provisions hereof, be
continued or funded as an Alternate Base Rate Loan, and (2) any outstanding
Eurodollar Loan shall be converted, on the last day of the then current Interest
Period with respect thereto, to an Alternate Base Rate Loan. Until such notice
has been withdrawn by the Lead Administrative Agent, the Company shall not have
the right to convert a Primary Loan to or fund or continue a Primary Loan as a
Eurodollar Loan. 4(e) Funding Indemnification. In addition to all other payment
obligations hereunder, in the event: (1) any Eurodollar Loan is prepaid prior to
the last day of the applicable Eurodollar Interest Period, whether following
acceleration upon the occurrence of an Event of Default or otherwise, including,
without limitation, pursuant to Paragraphs 14(a), 14(b) and 14(c) below, or (2)
the Company shall fail to make a conversion into or a borrowing as a Eurodollar
Loan after the Company has given notice thereof as provided in Paragraph 4(a)(2)
above, or (3) the Company shall fail to continue any Eurodollar Loan which it
has elected to have continued as a Eurodollar Loan, or (4) the Company shall
fail to make any payment of principal or interest on any Loan when due, then the
Company shall immediately pay to each of the affected Lenders, through the Lead
Administrative Agent, an additional amount compensating such Lender for all
losses, costs and expenses incurred by such Lender in connection therewith,
including, without limitation, such as may arise out of the re-employment of
funds obtained by such Lender or from fees payable to terminate the deposits
from which such funds were obtained, such losses, costs and expenses and the
method of calculation thereof being set forth in reasonable detail in a
statement delivered to the Company by such Lender, such statement to be
conclusive in the absence of manifest error. Under no circumstances shall any
Lender have any obligation to remit monies to the Company upon prepayment of any
Eurodollar Loan, even under circumstances which do not result in the necessity
for the payment by the Company of any amount hereunder. The provisions hereof
shall survive termination of this Agreement and payment of the outstanding Loans
and all other Obligations. 4(f) Illegality; Impracticality. Notwithstanding any
other provisions herein, if any law, regulation, treaty or directive or any
change therein or in the interpretation or application thereof shall or may in
the opinion of any Lender make it unlawful or impractical for such Lender to
make or maintain Eurodollar Loans: (1) the commitment of such Lender hereunder
to make, continue or convert into Eurodollar Loans shall forthwith be cancelled
and (2) such Lender's Primary Percentage Share of Loans outstanding as
Eurodollar Loans, if any, shall be converted automatically to Alternate Base
Rate Loans at the end of their respective Eurodollar Interest Periods or within
such earlier period as required by law. In the event of a conversion of any
Eurodollar Loan prior to the end of its applicable Eurodollar Interest Period
the Company hereby agrees promptly to pay each Lender, upon its written demand,
the amounts required pursuant to Paragraph 4(e) above, it being agreed and
understood that such conversion shall constitute a prepayment for all purposes
hereof. The provisions hereof shall survive the termination of this Agreement
and payment of the outstanding Loans and all other Obligations. 4(g)
Requirements of Law; Increased Costs. In the event that a change subsequent to
the date hereof in any applicable law, regulation, treaty or directive or in the
governmental or judicial interpretation or application thereof, or compliance by
any Lender with any request or directive (whether or not having the force of
law) issued subsequent to the date hereof by any central bank or other
governmental authority, agency or instrumentality: (1) Does or shall subject any
Lender to any tax of any kind whatsoever with respect to this Agreement or any
Loans purchased or made hereunder, or changes the basis of taxation of payments
to such Lender of principal, fees, interest or any other amount payable
hereunder (except for changes in the rate of tax on the overall net income of
such Lender); (2) Does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, advances or loans by,
or other credit extended by, or any other acquisition of funds by, any office of
such Lender which are not otherwise included in the determination of the
Alternate Base Rate or the Applicable Eurodollar Rate; or (3) Does or shall
impose on such Lender any other condition; and the result of any of the
foregoing is to increase the cost to such Lender of purchasing, making, agreeing
to make, renewing or maintaining or issuing any Loan or to reduce any amount
receivable in respect thereof then, in any such case, the Company shall promptly
pay to such Lender, upon its written demand, any additional amounts necessary to
compensate such Lender for such additional cost or reduced amounts receivable as
determined by such Lender with respect to this Agreement or such credit
extensions. If a Lender becomes entitled to claim any additional amounts
pursuant to this Paragraph 4(g), it shall promptly notify the Company of the
event by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by a
Lender to the Company shall be conclusive in the absence of manifest error. The
obligations of the Company under this Paragraph 4(g) shall survive the
termination of this Agreement and the payment of all other Obligations. 4(h)
Taxes. (1) All payments made by the Company, the Lead Administrative Agent and
the Lenders on account of the Obligations shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding, in the case of the Lenders,
net income taxes and franchise taxes (imposed in lieu of net income taxes),
imposed on the Lenders, as the case may be, as a result of a present or former
connection between the jurisdiction of the government or taxing authority
imposing such tax, or any political subdivision or taxing authority thereof or
therein, and such Lender (other than a connection arising solely from such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, the Credit Documents) (all such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter called "Taxes"). If any Taxes are required to be withheld from any
amounts payable to any Lender under the Credit Documents, the amounts so payable
by the Company to the Lead Administrative Agent for the benefit of such Lender
shall be increased to the extent necessary to yield to such Lender (after
payment of all Taxes) interest or any such other amounts payable thereunder at
the rates or in the amounts specified in the Credit Documents. Whenever any
Taxes are payable by the Company or on behalf of the Company, as promptly as
possible thereafter the Company shall send to the Lead Administrative Agent for
its own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the Company showing
payment thereof. If the Company fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Lead Administrative Agent
the required receipts or other required documentary evidence, the Company shall
indemnify the Lead Administrative Agent and such Lender for any incremental
taxes, interest or penalties that may become payable by the Lead Administrative
Agent and the Lenders as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
all other Obligations. Each Lender by executing this Agreement represents and
warrants to the Company and the Lead Administrative Agent that at the date of
this Agreement no Taxes are imposed upon such Lender which would result in
increased liability of the Company to such Lender pursuant to this Paragraph
4(h)(1). (2) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof agrees that it will deliver to the Company
and the Lead Administrative Agent (i) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form. Each such Lender also agrees to deliver to the Company and the
Lead Administrative Agent two further copies of the said Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms or other manner of certification,
as the case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Company, and such extensions or
renewals thereof as may reasonably be requested by the Company or the Lead
Administrative Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender so advises the
Company and the Lead Administrative Agent. Such Lender shall certify (y) in the
case of a Form 1001 or 4224, that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes and (z) in the case of a Form W-8 or W-9, that it is entitled to an
exemption from United States backup withholding tax. 4(i) Buy-Down Provisions.
Notwithstanding anything contained in this Agreement, the Company and any
individual Lender (as used in this Paragraph 4(i), a "Buy-Down Lender") may
notify the Lead Administrative Agent in writing that the Company and such
Buy-Down Lender have entered into a Buy-Down Agreement with respect to all or a
portion of the Loans from time to time outstanding held by such Buy-Down Lender
(the Loans held by such Buy-Down Lender which are subject to a Buy-Down
Agreement being referred to herein as "Buy-Down Rate Loans"), and that, pursuant
to said Buy-Down Agreement, the interest rate otherwise applicable to the
Buy-Down Rate Loans during any interest calculation period shall be reduced to
the Buy-Down Rate and the interest otherwise payable by the Company to such
Buy-Down Lender during such interest calculation period shall be reduced
accordingly. Interest payable to such Buy-Down Lender with respect to Buy-Down
Rate Loans shall be billed as provided in Paragraph 5(d) below. In no event
shall the Lead Administrative Agent have any obligation or duty to verify the
amount of any Buy-Down Deposits supporting the pricing of Buy-Down Rate Loans
held by any Buy-Down Lender or the amount of any interest billing with respect
thereto. Any deficiency fees payable to such Buy-Down Lender by the Company
under the applicable Buy-Down Agreement shall be billed by such Buy-Down Lender
to the Company directly. Any Buy-Down Lender may elect not to make demand for
the payment of deficiency fees accruing in respect of Buy-Down Deposits from
time to time and it is expressly agreed and understood that: (1) any such
deficiency fee shall not, by reason of such failure of such Buy-Down Lender or
otherwise, be deemed to have been waived by such Buy-Down Lender (except as such
waiver is expressly acknowledged in writing by such Buy-Down Lender from time to
time), and (2) all deficiency fees accrued and unpaid hereunder and not so
expressly waived, whether or not previously declared due and owing by any such
Buy-Down Lender, shall automatically be due and payable in full upon the
Maturity Date. 4(j) Obligation of Lenders to Mitigate; Replacement of Lenders.
Each Lender agrees that: (1) As promptly as practicable after the officer of
such Lender responsible for administering the Loans of such Lender becomes aware
of any event or condition that would entitle such Lender to receive payments
under Paragraph 4(g) above or to cease making Eurodollar Loans pursuant to
Paragraph 4(f) above, such Lender will use reasonable efforts (i) to make,
issue, fund or maintain the affected Loans of such Lender through another
lending office of such Lender or (ii) take such other measures as such Lender
may deem reasonable, if as a result thereof the additional amounts which would
otherwise be required to be paid to such Lender pursuant to Paragraph 4(g) above
would be materially reduced or eliminated or the conditions rendering such
Lender incapable of making Eurodollar Loans under Paragraph 4(f) above no longer
would be applicable, and if, as determined by such Lender in its sole
discretion, the making, issuing, funding or maintaining such Loans through such
other lending office or in accordance with such other measures, as the case may
be, would not otherwise materially adversely affect such Loans or the interests
of such Lender. (2) If the Company receives a notice pursuant to Paragraph 4(g)
above or a notice pursuant to Paragraph 4(f) above stating that a Lender is
unable to extend Eurodollar Loans (for reasons not generally applicable to the
Majority Lenders), so long as (i) no Potential Default or Event of Default shall
have occurred and be continuing, (ii) the Company has obtained a commitment from
another Lender or another financial institution reasonably acceptable to the
Lead Administrative Agent to purchase at par such Lender's Loans, Maximum
Commitment and accrued interest and fees and to assume all obligations of the
Lender to be replaced under the Credit Documents, and (iii) such Lender to be
replaced is unwilling to withdraw the notice delivered to the Company, upon
thirty (30) days' prior written notice to such Lender and the Lead
Administrative Agent and payment of any amounts due under Paragraph 4(g) above,
the Company may require, at the Company's expense and subject to Paragraph 4(e)
above, the Lender giving such notice to assign, without recourse, all of its
Loans, Maximum Commitment and accrued interest and fees to such other Lender or
financial institution pursuant to the provisions of Paragraph 14 below. 5.
Miscellaneous Lending Provisions. 5(a) Use of Proceeds. The proceeds of Loans
shall be utilized by the Company for general corporate purposes, including,
without limitation, repayment of Indebtedness of the Company to the Parent
permitted to be repaid by the Company to the Parent pursuant to the terms of the
Credit Documents and including CPNs. 5(b) Assumption of Funding/Purchase. The
Lead Administrative Agent may (but shall not be obligated to) assume that each
Lender has advanced its Primary Percentage Share of Primary Loans and that each
Swing Line Lender has advanced its Swing Line Percentage Share of Swing Loans
required to be funded by such Lender hereunder on the funding date therefor and
may, in reliance upon such assumption, make available to the Company on such
date a corresponding amount. If and to the extent any Lender shall not have so
made such amounts available, such Lender and the Company jointly and severally
agree to repay to the Lead Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Company until the date such amount is
repaid to the Lead Administrative Agent, at, in the case of the Company, the
interest rate applicable at the time to the subject Loan and, in the case of the
Lenders, the Federal Funds Effective Rate. If such Lender shall repay to the
Lead Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Primary Percentage Share or Swing Line Percentage
Share, as applicable, of the subject Loan, as applicable for all purposes of the
Credit Documents. Nothing contained herein shall affect the liability of any
Lender for its failure to make its Primary Percentage Share of Primary Loans or
its Swing Line Percentage Share of Swing Loans available to the Company as
required pursuant to this Agreement and the other Credit Documents. 5(c)
Evidence of Indebtedness. The obligation of the Company to repay Loans shall be
evidenced by notations on the books and records of the Lead Administrative Agent
and the Lenders. Such accounts shall be conclusive absent manifest error. Any
failure to record the advance of any Loan, the interest rate applicable thereto
or any other information regarding the Obligations, or any error in doing so,
shall not limit or otherwise affect the obligation of the Company with respect
to any of the Obligations. Upon the request of any Lender, the Company shall
promptly execute a promissory note or promissory notes in favor of such Lender
evidencing the Obligations held by such Lender hereunder. 5(d) Interest and Fee
Billing and Payment. The Lead Administrative Agent shall: (1) On or before the
first Business Day of each month notify the Company (which notification may be
telephonic) of the estimated amount of interest payable with respect to
Alternate Base Rate Loans and Swing Loans as of the fifth day of the current
month for the period from and including the first day of the immediately
preceding month to and including the last day of such month, with the actual
amount confirmed by notification by the Lead Administrative Agent to the Company
(which notification may be telephonic and which, if telephonic, shall be
promptly confirmed in writing) given no later than 9:00 a.m. (Los Angeles time)
on the due date of payment thereof; (2) On the last day of the Interest Period
for each Eurodollar Loan notify the Company (which notification may be
telephonic and which, if telephonic, shall be promptly confirmed in writing) of
the amount of interest payable on such date on account thereof; (3) On or before
the first Business Day of the first month of each calendar quarter notify the
Company (which notification may be telephonic) of the amount of facility fees
payable pursuant to the Fee Letter on the fifth day of such month for the period
from and including the first day of the first month of the immediately preceding
calendar quarter to and including the last day of such calendar quarter, with
the actual amount confirmed by notification by the Lead Administrative Agent to
the Company (which notification may be telephonic and which, if telephonic,
shall be promptly confirmed in writing) given no later than 9:00 a.m. (Los
Angeles time) on the due date of payment thereof; and (4) From time to time upon
the request of any Lender, deliver to the Company a funding indemnification
billing for amounts payable to such Lender pursuant to Paragraph 4(e) above or a
billing for amounts payable to such Lender pursuant to Paragraphs 4(g), 4(h) and
4(i) above and Paragraph 5(l) below. The Company shall pay the full amount of
interest and fees of which it has been notified pursuant to subparagraphs (1)
and (3) above on the fifth day of each month, shall pay the full amount of
interest of which it has been notified pursuant to subparagraph (2) above on the
date such notification is given and shall pay the full amount of each billing
delivered to it pursuant to subparagraph (4) above within five Business Days
thereafter. Interest payable with respect to Buy-Down Loans prior to the
occurrence of an Event of Default and acceleration of the Obligations shall be
billed to the Company directly by each Buy-Down Lender in accordance with the
timeframes set forth in subparagraph (1) above, and the Company shall pay the
full amount of interest due on Buy-Down Loans directly to such Buy-Down Lender
on the fifth day of each month. Following the occurrence of an Event of Default
and acceleration of the Obligations, interest payable on all Loans shall be
billed through the Lead Administrative Agent. 5(e) Nature and Place of Payments.
Except as otherwise expressly provided in the Credit Documents, all payments
made on account of the Obligations shall be made to the Lead Administrative
Agent at the Contact Office for distribution to the Lenders, as the Company
shall, subject to Paragraph 5(h) below, direct pursuant to a Loan Request,
Interest Rate Election and Payoff Notice, without set-off or counterclaim in
lawful money of the United States of America in immediately available same day
funds, and must be received by the Lead Administrative Agent accompanied by a
Loan Request, Interest Rate Election and Payoff Notice at the Contact Office by
11:30 a.m. (Los Angeles time) on the day of payment, it being expressly agreed
and understood that if a payment is received after 11:30 a.m. (Los Angeles time)
by the Lead Administrative Agent or the Lead Administrative Agent does not
receive a Loan Request, Interest Rate Election and Payoff Notice therefor, such
payment will be considered to have been made on the next succeeding Business Day
or such later date as the Lead Administrative Agent receives the Loan Request,
Interest Rate Election and Payoff Notice therefor and interest thereon shall be
payable by the Company at the then applicable rate during such extension. If any
payment required to be made by the Company hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension. The Lead Administrative Agent is hereby
authorized to debit accounts of the Company maintained with the Lead
Administrative Agent for amounts payable by the Company under this Agreement
through the Lead Administrative Agent and the Lead Administrative Agent will
promptly notify the Company of any such debit. 5(f) Post-Default Interest.
Following the occurrence of an Event of Default and until such Event of Default
is cured or waived as provided herein, Obligations shall bear interest at a per
annum rate equal to the Alternate Base Rate plus three percent (3%). 5(g)
Computations. All computations of interest and fees payable hereunder and under
the Fee Letter shall be based upon a year of 360 days for the actual number of
days elapsed. The determination by the Lead Administrative Agent of any interest
rate hereunder shall be conclusive and binding on the Company and the Lenders
absent manifest error. 5(h) Disbursement of Payments Received. (1) All amounts
received by the Lead Administrative Agent on account of the Obligations shall be
disbursed by the Lead Administrative Agent to the Lenders by wire transfer prior
to the cut-off deadline of the Federal Reserve Wire System on the date of
receipt if received by the Lead Administrative Agent before 11:30 a.m. (Los
Angeles time) and accompanied by a Loan Request, Interest Rate Election and
Payoff Notice (or disbursed on the day of receipt although received later than
11:30 a.m. (Los Angeles time) with the agreement of the Lead Administrative
Agent and any Lender) or if received later or if the Lead Administrative Agent
has not received a Loan Request, Interest Rate Election and Payoff Notice
therefor, on the next succeeding Business Day or such later date as the Lead
Administrative Agent receives the Loan Request, Interest Rate Election and
Payoff Notice relating thereto, without interest payable by the Lead
Administrative Agent. (2) Prior to the occurrence of an Event of Default and
acceleration of the Obligations, amounts received by the Lead Administrative
Agent on account of the Obligations shall be disbursed in accordance with the
written direction of the Company, subject only to the requirements that amounts
disbursed to the Lenders on account of Primary Loans be disbursed pro rata in
accordance with the Lenders' respective Primary Percentage Shares and that
amounts disbursed to the Swing Line Lenders on account of Swing Loans be
disbursed pro rata in accordance with the Swing Line Lenders' respective Swing
Line Percentage Shares. (3) Following the occurrence of an Event of Default and
acceleration of the Obligations, amounts received by the Lead Administrative
Agent on account of the Obligations shall be disbursed as follows: (i) first
among the Lenders, pro rata in accordance with their respective Primary
Percentage Shares, on account of the Obligations until the Obligations have been
paid in full, and (ii) then, to the Lead Administrative Agent with respect to
the remaining Obligations held by it in its capacity as Lead Administrative
Agent until such Obligations have been paid in full. 5(i) Fees. The Company
shall pay: (1) To the Lead Administrative Agent, such fees as may from time to
time be agreed upon in writing by the Lead Administrative Agent and the Company;
and (2) To each of the Lenders, the facility fees described in the Fee Letter.
5(j) Wire Transfers of Funds. Notwithstanding anything to the contrary contained
herein and in the other Credit Documents, funds which the Lead Administrative
Agent and the Lenders are transmitting by wire transfer shall be deemed to have
been sent and received upon release by the transmitting party of such funds into
the Federal Reserve Wire System. 5(k) Reduction in Aggregate Credit Limit. Upon
not less than thirty (30) days' prior written notice to the Lead Administrative
Agent, which shall promptly transmit such notice to each of the Lenders, the
Company may permanently reduce the Aggregate Credit Limit in full or in
increments of $5,000,000.00; provided, however, that any such reduction shall be
in a minimum amount of $25,000,000.00; and, provided, further, that upon the
effective date of any such reduction, the aggregate amount of Loans outstanding
shall not exceed the Aggregate Credit Limit as so reduced. 5(l) Capital
Requirements. The Company shall pay from time to time upon demand such amounts
as any Lender may determine to be necessary to compensate such Lender for all
reasonable costs which such Lender determines are attributable to its making,
agreeing to make, purchasing or maintaining its Primary Percentage Share of any
Primary Loan or its Swing Line Percentage Share of any Swing Loan under this
Agreement, including, without limitation, reserve requirements attributed to the
unused portion of the Aggregate Credit Limit, in respect of any amount of
capital required to be maintained by such Lender pursuant to any law or
regulation of any jurisdiction or any interpretation, directive or request
affecting banks, savings and loan institutions and/or financial institutions
generally notwithstanding the creditworthiness of any particular bank, savings
and loan institution or other financial institution (whether or not having the
force of law) of any court or governmental or monetary authority, whether in
effect on the date of this Agreement or thereafter. The obligations of the
Company under this Paragraph 5(l) shall survive the termination of this
Agreement and the payment of all Loans and all other Obligations. 6. Guaranty;
Subordination; Additional Documents. 6(a) Guaranty and Subordination Agreement.
As support for the Obligations, the Company shall execute and deliver and shall
cause to be executed and delivered to the Lead Administrative Agent on behalf of
the Lenders: (1) the Guaranty and (2) the Subordination Agreement. 6(b) Further
Documents. The Company agrees to execute and deliver and to cause to be executed
and delivered to the Lead Administrative Agent or such Persons as the Lead
Administrative Agent may direct from time to time such documents, instruments
and agreements as the Lead Administrative Agent on behalf of the Lenders may
reasonably request, which are in any of the Lenders' judgment necessary or
desirable to obtain for the Lead Administrative Agent, the Co-Administrative
Agent, the Documentation Agent, the Syndication Agent, the Arranger, the
Co-Arrangers, the Co-Agents and the Lenders the benefit of the Credit Documents.
7. Conditions Precedent. 7(a) First Loan. As conditions precedent to the
Effective Date and the funding of the first Loan hereunder: (1) There shall have
been delivered to the Lead Administrative Agent, in form and substance and in
quantities reasonably satisfactory to the Lenders and their counsel, each of the
following: (i) A duly executed copy of this Agreement; (ii) A duly executed copy
of each of the Guaranty and the Subordination Agreement; (iii) A duly executed
copy of the Fee Letter; (iv) Such credit applications, financial statements, pro
forma financial statements, authorizations and information concerning the
Company and its business, operations and condition (financial and otherwise) as
the Lead Administrative Agent or any Lender may reasonably request; (v)
Certified copies of resolutions of the Boards of Directors of the Company and
the Parent approving the execution and delivery of all documents required to be
delivered by the Company and the Parent hereunder; (vi) Certificates of the
Secretary or an Assistant Secretary of each of the Company and the Parent
certifying the names, incumbency and true signatures of the officers of the
Company and the Parent authorized to sign the documents required to be executed
and delivered by the Company and the Parent hereunder; (vii) An opinion of
counsel for the Company and the Parent (which counsel may be in-house counsel)
in form and substance satisfactory to the Lenders and covering such matters as
the Lenders may reasonably request; (viii) A certificate of an executive officer
of each of the Company and the Parent in the form of that attached hereto as
Exhibit A dated as of the date of this Agreement; and (ix) A Covenant Compliance
Certificate, dated as of February 28, 1998, for each of the Company and the
Parent demonstrating in detail satisfactory to the Lenders the Company's
compliance with the covenants set forth in Paragraphs 10(g), 10(i) and 10(j)
below, and the Parent's compliance with the financial covenants set forth in
Paragraphs 11(d) and 11(e) of the Guaranty. (2) All acts and conditions
(including, without limitation, the obtaining of all necessary regulatory
approvals and the making of all required filings, recordings and registrations)
required to be done and performed and to have happened precedent to the
execution, delivery and performance of the Credit Documents and to constitute
the same legal, valid and binding obligations, enforceable in accordance with
their respective terms, shall have been done and performed and shall have
happened in due and strict compliance with all applicable laws. (3) All
documentation, including, without limitation, documentation for corporate and
legal proceedings in connection with the transactions contemplated by the Credit
Documents, shall be satisfactory in form and substance to the Lenders and their
counsel. (4) The Company shall have delivered to the Arranger a letter
acceptable to the Arranger regarding the payment by the Company to the Arranger
of fees, and the Company shall have paid all fees required under such letter to
have been paid prior to the funding of the first Loan hereunder. (5) No material
adverse change in the business, operations, assets or financial or other
condition of the Company or the Company and its consolidated Subsidiaries taken
as a whole shall have occurred since the Statement Date and the Company by
presenting the initial Loan Request, Interest Rate Election and Payoff Notice
shall be deemed to have so represented and warranted hereunder. 7(b) All Loans.
As conditions precedent to the funding of each Loan hereunder, including the
first Loan, at and as of the date of, and after giving effect to, the funding of
such Loan: (1) The representations and warranties of the Company and the Parent
contained in the Credit Documents shall be accurate and complete in all respects
as of such date; <PAGE> (2) If there has occurred a Potential Default or an
Event of Default (other than under Paragraph 11(a) below or under Paragraph
11(e) below resulting from a breach or potential breach of Paragraph 10(i) or
10(j) below), the Majority Lenders have not elected in writing to cease funding
Loans hereunder; (3) If there has occurred an Event of Default under Paragraph
11(a) below, one hundred percent (100%) of the Lenders have elected in writing
to waive such Event of Default; (4) If there has occurred an Event of Default or
Potential Default under Paragraph 11(e) below resulting from a breach or
potential breach of Paragraph 10(i) or 10(j) below, the Majority Lenders have
elected in writing to waive such Event of Default or Potential Default; (5)
Following such Credit Event, the aggregate principal amount of Loans outstanding
shall not exceed the applicable limitations of Paragraphs 1(a) and 1(b) above
nor shall the aggregate principal amount of Primary Loans held by any Lender
plus such Lender's Percentage Share of Swing Loans outstanding exceed such
Lender's Maximum Commitment; and (6) The Company shall have delivered to the
Lead Administrative Agent a duly executed Loan Request, Interest Rate Election
and Payoff Notice requesting such Credit Event. By delivering a Loan Request,
Interest Rate Election and Payoff Notice to the Lead Administrative Agent, the
Company shall be deemed to have represented and warranted the accuracy and
completeness of the statements set forth in subparagraphs (b)(1) through (b)(6)
above and all information set forth in such Loan Request, Interest Rate Election
and Payoff Notice. 8. Representations and Warranties of the Company. As an
inducement to the Lead Administrative Agent, the Co-Administrative Agent, the
Documentation Agent, the Syndication Agent, the Arranger, the Co-Arrangers, the
Co-Agents and each Lender to enter into this Agreement, the Company represents
and warrants to the Lead Administrative Agent, the Co-Administrative Agent, the
Documentation Agent, the Syndication Agent, the Arranger, the Co-Arrangers, the
Co-Agents and each Lender that: 8(a) Financial Condition. The financial
statements dated the Statement Date, copies of which have heretofore been
furnished to each Lender, are complete and correct and present fairly in
accordance with GAAP the consolidated and consolidating financial condition of
the Company and its consolidated Subsidiaries at such date and the consolidated
and consolidating results of their operations and changes in financial position
for the fiscal period then ended. 8(b) Corporate Existence; Compliance with Law.
Each of the Company and its Subsidiaries: (1) is duly organized, validly
existing and in good standing as a corporation under the laws of the state of
its incorporation, and is in good standing as a foreign corporation in each
jurisdiction where its ownership of property or conduct of business requires
such qualification and where failure to be in good standing could have a
material adverse effect on the Company, any of its Subsidiaries, or their
respective property and/or business or on the ability of the Company or <PAGE>
the Parent to pay or perform the Credit Documents; (2) has the corporate power
and authority and the legal right to own and operate its property and to conduct
business in the manner in which it does and proposes so to do; and (3) is in
compliance with all Requirements of Law and Contractual Obligations except to
the extent that failure to comply could not have a material adverse effect on
the Company, any of its Subsidiaries, or their respective property and/or
business or on the ability of the Company or the Parent to pay or perform the
Credit Documents. 8(c) Corporate Power; Authorization; Enforceable Obligations.
Each of the Company and the Parent has the corporate power and authority and the
legal right to execute, deliver and perform the Credit Documents to which it is
a party and has taken all necessary corporate action to authorize the execution,
delivery and performance of the Credit Documents. The Credit Documents have been
duly executed and delivered on behalf of each of the Company and the Parent and
constitute legal, valid and binding obligations of such party enforceable
against such party in accordance with their respective terms. 8(d) No Legal Bar.
The execution, delivery and performance of the Credit Documents, the borrowing
thereunder and the use of the proceeds thereof, will not violate any Requirement
of Law or any Contractual Obligation of the Company or the Parent to the extent
that failure to comply therewith could have a material adverse effect on the
Company or its property and/or business or on the ability of the Company or the
Parent to pay or perform the Credit Documents. 8(e) No Material Litigation.
Except as disclosed on Exhibit B attached hereto, no litigation, investigation
or proceeding of or before any court, arbitrator or Governmental Authority is
pending or, to the knowledge of the Company, threatened by or against the
Company or any of its Subsidiaries or against any of such parties' properties or
revenues involving amounts, in the case of any such individual litigation,
investigation or proceeding, in excess of $10,000,000.00 or which, regardless of
the amount in controversy, is likely to be adversely determined and which, if
adversely determined, could have a material adverse effect on the business,
operations, property or financial or other condition of the Company or any of
its Subsidiaries. 8(f) Taxes. The Company and each of its Subsidiaries have
filed or caused to be filed all tax returns that are required to be filed and
have paid all taxes (other than incidental local business and other municipal
taxes which are not material to the operation of the Company and its
Subsidiaries) shown to be due and payable on said returns or on any assessments
made against them or any of their property other than taxes which are being
contested in good faith by appropriate proceedings and as to which the Company
or the applicable Subsidiary has established adequate reserves in conformity
with GAAP. 8(g) Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended. 8(h) Subsidiaries. Exhibit C
attached hereto sets forth an accurate and complete list of all presently
existing Subsidiaries of the Company, their respective jurisdictions of
incorporation and the percentage of their capital stock owned by the Company or
other Subsidiaries of the Company. All of the issued and outstanding shares of
capital stock of the Subsidiaries of the Company have been duly authorized and
issued and are fully paid and non-assessable. 8(i) Federal Reserve Board
Regulations. Neither the Company nor any of its Subsidiaries is engaged or will
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of such terms under Regulation U. No part
of the proceeds of any Loan made hereunder will be used for "purchasing" or
"carrying" "margin stock" as so defined or for any purpose which violates, or
which would be inconsistent with, the provisions of the Regulations of the Board
of Governors of the Federal Reserve System. 8(j) ERISA. The Company and each of
its Subsidiaries are in compliance in all material respects with the
requirements of ERISA and no Reportable Event has occurred under any Plan
maintained by the Parent, the Company or any of its or their Subsidiaries which
is likely to result in the termination of such Plan for purposes of Title IV of
ERISA. 8(k) Assets. The Company and each of its Subsidiaries have good and
marketable title to all property and assets reflected in the financial
statements referred to in Paragraph 8(a) above, except property and assets sold
or otherwise disposed of in the ordinary course of business subsequent to that
date. Neither the Company nor any of its Subsidiaries has outstanding Liens on
any of its properties or assets nor are there any security agreements to which
the Company or any of its Subsidiaries is a party, or title retention
agreements, whether in the form of leases or otherwise, of any personal property
except as reflected in said financial statements referred to in Paragraph 8(a)
above or as permitted under Paragraph 10(a) below. 9. Affirmative Covenants. The
Company hereby covenants and agrees with the Lead Administrative Agent and each
Lender that, as long as any Obligations remain unpaid or any Lender has any
obligation to make all or any portion of any Loans, the Company shall: 9(a)
Financial Statements. Furnish or cause to be furnished directly to the Lead
Administrative Agent and each Lender: (1) Within ninety (90) days after the last
day of each fiscal year of the Parent, consolidated statements of income and
statements of changes in cash flow of the Parent and its Subsidiaries for such
year and a balance sheet as of the end of such year (including therein as
supplemental information, consolidating statements of income and statements of
changes in cash flow and balance sheets as of the end of such year) in each case
presented fairly in accordance with GAAP and, in the case of the Company, the
requirements of HUD Handbook IG 4000.3 REV and accompanied, in all cases, by an
unqualified report of a firm of independent certified public accountants
acceptable to the Majority Lenders; (2) Within forty-five (45) days after the
last day of each fiscal quarter, consolidated and consolidating statements of
income and statements of changes in cash flow of the Parent and its Subsidiaries
for such fiscal quarter or calendar month, as applicable, and balance sheets of
the Parent and its Subsidiaries as of the last day of such fiscal quarter,
presented fairly in accordance with GAAP, in each case certified in writing as
to fairness of presentation by the chief financial officer or treasurer of the
Company and the Parent; (3) Within forty-five (45) days following each
Applicable Financial Test Date, a Covenant Compliance Certificate from the chief
financial officer or treasurer of each of the Company and the Parent, certifying
that there does not exist an Event of Default or Potential Default and, in
addition, demonstrating in detail satisfactory to the Majority Lenders the
Company's compliance with the covenants set forth in Paragraphs 10(g), 10(i) and
10(j) below as of and at such Applicable Financial Test Date, and the Parent's
compliance with the covenants set forth in Paragraphs 11(d) and 11(e) of the
Guaranty, as of and at such Applicable Financial Test Date; (4) As soon as is
available any written report pertaining to material items in respect of the
internal control matters of the Parent or the Company submitted to any of such
Persons by their respective independent accountants in connection with each
annual or interim special audit of the financial condition of such Persons made
by such independent public accountants; and (5) Copies of all proxy statements,
financial statements, and reports which the Parent sends to its stockholders,
and copies of all regular, periodic and special reports, and all registration
statements under the Securities Act of 1933, as amended (the "Act"), which the
Parent or the Company files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange; provided, however, that there shall not be required to be
delivered hereunder to the Lead Administrative Agent such copies for any Lender
of prospectuses relating to future series of offerings under registration
statements filed under Rule 415 of the Act or other items which such Lender has
indicated in writing to the Parent or the Company from time to time need not be
delivered to such Lender. 9(b) Certificates; Reports; Other Information. Furnish
or cause to be furnished directly to the Lead Administrative Agent and each
Lender: (1) Within forty-five (45) days following each Applicable Financial Test
Date, prepared as of such Applicable Financial Test Date and certified by an
appropriate officer of the Company, a report covering the servicing portfolio of
the Company covering such matters as the Majority Lenders, through the Lead
Administrative Agent, may reasonably request (but which shall in any event list
the aggregate principal amount of mortgage notes serviced and the number and
types of loans evidenced by such notes, and show all loans in the servicing
portfolio more than thirty (30) days past due the due dates set forth in such
notes). (2) Promptly, such additional financial and other information,
including, without limitation, financial statements of the Company, the Parent,
any Affiliate of the Company or the Parent, as any Lender, through the Lead
Administrative Agent, may from time to time reasonably request, including,
without limitation, such information as is necessary for any Lender to
participate out any of its interests in Loans hereunder or to enable another
financial institution to become a signatory hereto. (3) Promptly upon receipt
thereof by the Company, copies of all audit reports prepared by or on behalf of
FNMA, FHLMC and GNMA. 9(c) Payment of Indebtedness. Pay, discharge or otherwise
satisfy at or before maturity or before it becomes delinquent, defaulted or
accelerated, as the case may be, all its Indebtedness, except: (1) Indebtedness
(other than Indebtedness with respect to CPNs) being contested in good faith and
for which provision is made to the satisfaction of the Majority Lenders for the
payment thereof in the event the Company is found to be obligated to pay such
Indebtedness and which Indebtedness is thereupon promptly paid by the Company,
and (2) additional Indebtedness (other than Indebtedness with respect to CPNs)
in the aggregate not to exceed $100,000.00. 9(d) Maintenance of Existence and
Properties. Maintain all rights, privileges, licenses, approvals, franchises,
properties and assets necessary in the normal conduct of its business, and
comply with all Contractual Obligations and Requirements of Law. The Company
will at all times be a FNMA, FHLMC and GNMA-approved Seller/ Servicer and a
wholly-owned Subsidiary of the Parent. 9(e) Inspection of Property; Books and
Records; Discussions. Keep proper books of record and account in which full,
true and correct entries in conformity with GAAP and all Requirements of Law
shall be made of all dealings and transactions in relation to its business and
activities, and permit representatives of each Lender (at no cost or expense to
the Company unless there shall have occurred and be continuing an Event of
Default) to visit and inspect those of its properties and examine and make
abstracts from those of its books and records as are reasonably necessary to
enable such Lender to conduct appropriate credit due diligence in connection
with customary credit approval practices for credit facilities of this type, at
any reasonable time and as often as may reasonably be desired by any of the
Lenders, and to discuss the business, operations, properties and financial and
other condition of the Company and any of its Subsidiaries with officers and
employees of such parties, and with their independent certified public
accountants. 9(f) Notices. Promptly give written notice to the Lead
Administrative Agent (who shall promptly notify each of the Lenders thereof) of:
(1) The occurrence of any Potential Default or Event of Default; (2) Any
litigation or proceeding affecting the Company or any of its Subsidiaries
involving amounts, in the case of any such individual litigation, investigation
or proceeding, in excess of $10,000,000.00 or which, regardless of the amount in
controversy, is likely to be adversely determined and which, if adversely
determined, could have a material adverse effect on the business, operations,
property, or financial or other condition of the Company or the ability of the
Company to pay and perform the Obligations; (3) Receipt by the Company or the
Parent of notice from any rating agency concerning a potential change in any
credit rating previously accorded the Company or the Parent by such rating
agency; and (4) A material adverse change in the business, operations, property
or financial or other condition of the Parent, the Company or any of their
Subsidiaries. 9(g) Expenses. Pay all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) of the Lead Administrative Agent,
the Arranger and the Co-Arrangers incident to the preparation, negotiation,
administration and amendment of the Credit Documents and, following the
occurrence of an Event of Default, of the Lead Administrative Agent and each of
the Lenders incident to the protection of the rights of the Lenders, the
Arranger, the Co-Arrangers and the Lead Administrative Agent under the Credit
Documents, and incident to the enforcement of payment of the Obligations,
whether by judicial proceedings or otherwise, including, without limitation, in
connection with bankruptcy, insolvency, liquidation, reorganization, moratorium
or other similar proceedings involving the Parent or the Company or a "workout"
of the Obligations. The obligations of the Company under this Paragraph 9(g)
shall be effective and enforceable whether or not any Loan is advanced by any
Lender hereunder and shall survive payment of all other Obligations. 9(h) Credit
Documents. Comply with and observe all terms and conditions of the Credit
Documents. 9(i) Insurance. Obtain and maintain insurance with responsible
companies in such amounts and against such risks as are usually carried by
corporations engaged in similar businesses similarly situated, including,
without limitation, errors and omissions coverage and fidelity coverage in form
and substance acceptable under FNMA or FHLMC guidelines, and furnish the Lenders
on request full information as to all such insurance. 9(j) CPN Program. Obtain
the written approval of the Majority Lenders to any modification of the
documentation relating to the issuance of CPNs of the Company as in effect on
the date of this Agreement. 9(k) Hedging Program. Maintain at all times a
Hedging Program consistent with the Hedging Program in effect at and as of the
Effective Date. 10. Negative Covenants. The Company hereby agrees that, as long
as any Obligations remain unpaid or any Lender has any obligation to make all or
any portion of any Loans, the Company shall not, directly or indirectly:
10(a)Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property and assets (including servicing rights) other than: (1) Liens or
charges for current taxes, assessments or other governmental charges which are
not delinquent or which remain payable without penalty, or the validity of which
are contested in good faith by appropriate proceedings upon stay of execution of
the enforcement thereof, provided the Company shall have set aside on its books
and shall maintain adequate reserves for the payment of same in conformity with
GAAP; (2) Liens, deposits or pledges made to secure statutory obligations,
surety or appeal bonds, or bonds for the release of attachments or for stay of
execution, or to secure the performance of bids, tenders, contracts (other than
for the payment of borrowed money), leases or margin call requirements or for
purposes of like general nature in the ordinary course of the Company's
business; (3) Liens on Mortgage Loans and Mortgage-Backed Securities which are
the subject of repurchase agreements; (4) Liens on real property (including
fixtures and improvements thereon) securing Indebtedness in an amount not to
exceed $50,000,000.00 in the aggregate at any time outstanding; (5) Liens on
property and assets of the Company securing short term Indebtedness of the
Company (Indebtedness with a maturity of one year or less and not automatically
renewable by the Company at its sole option) in an amount not to exceed at any
date twenty five percent (25%) of Mortgage Loans and MBS Held for Sale; and (6)
Liens on servicing rights of the Company securing Indebtedness in an amount not
to exceed at any date ten percent (10%) of Mortgage Servicing Rights.
10(b)Indebtedness. Create, incur, assume or suffer to exist, or otherwise become
or be liable in respect of any Indebtedness if upon such creation, incurrence or
assumption there would exist an Event of Default or the Company would fail to be
in compliance with the requirements of Paragraphs 10(i) or 10(j) below (assuming
such compliance were tested at such date immediately following such creation,
incurrence or assumption). 10(c)Consolidation and Merger. Liquidate or dissolve
or enter into any consolidation, merger, partnership, joint venture, syndicate
or other combination, except that the Company may be consolidated with or merged
with any corporation provided that (1) in any such merger or consolidation the
Company shall be the surviving or resulting corporation and (2) at the time of
and immediately after the effectiveness of such merger or consolidation there
shall not have occurred and be continuing an Event of Default or Potential
Default. 10(d)Acquisitions. Purchase or acquire or incur liability for the
purchase or acquisition of any or all of the assets or business of any Person
other than in the normal course of a mortgage banking-related business (it being
expressly agreed and understood that the acquisition of servicing is a normal
course of business activity); provided, however, that the Company may acquire
all or a portion of the stock or assets of another mortgage company or companies
so long as no Event of Default or Potential Default shall exist immediately
following the consummation of such acquisition, and, provided, further, that the
Company shall be in compliance with the financial covenants set forth in
Paragraphs 10(i) and 10(j) below, assuming for purposes of this Paragraph 10(d)
that the "Applicable Financial Test Date" referenced in such covenants is the
day immediately following the consummation of such acquisition. 10(e)Payment of
Dividends. Declare or pay any dividends upon any shares of the Company's stock
now or hereafter outstanding, except dividends payable in the capital stock of
the Company, or make any distribution of assets to its stockholders as such,
whether in cash, property or securities, if at the date of payment or
distribution (either before or after giving effect thereto) there should exist
an Event of Default or Potential Default. 10(f)Purchase or Retirement of Stock.
Acquire, purchase, redeem or retire any shares of its capital stock now or
hereafter outstanding for value. 10(g)Investments; Advances; Receivables. Make
or commit to make any advance, loan or extension of credit ("Advances") to, or
hold any receivable ("Receivable") of, or make or commit to make any capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities ("Investments") of, or make any other investment in, any Person,
except: (1) Advances constituting Mortgage Loans made in the ordinary course of
the Company's business and (2) Investments in, unsecured and secured Advances
to, and Receivables of, any Affiliate (and Servicing Pass-Through Ventures which
are not otherwise Affiliates) in an aggregate amount not to exceed ten percent
(10%) of the net worth of the Company determined in accordance with GAAP, it
being agreed and understood that any unsecured Advances made by the Company to
any Affiliate must be funded with equity of the Company and that any secured
Advances made by the Company to any Affiliate must be fully secured on a first
priority, perfected basis, by readily marketable securities pledged by such
Affiliate. 10(h)Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its assets (other than obsolete or worn out property), whether
now owned or hereafter acquired, other than in the ordinary course of business
as presently conducted and at fair market value (it being expressly agreed and
understood that the sale or other disposition of Mortgage Loans with or without
servicing released and the sale or other disposition of servicing rights are in
the ordinary course of business); provided, however, that in no event shall the
Company enter into any sale and leaseback transaction involving any of its
assets without the prior written consent of the Majority Lenders; and, provided
further, that the Company may sell, lease, assign, transfer or otherwise dispose
of any of its assets to a Subsidiary of the Company (which, for the purpose of
this proviso shall include any limited partnership the general and limited
partners of which are Subsidiaries of the Company) so long as: (1) all classes
of stock of, or partnership interests in, such Subsidiary are owned, directly or
indirectly, by the Company, (2) such Subsidiary incurs no obligations for third
party indebtedness except such obligations to employees and vendors as are
necessary or desirable in the normal conduct of the business of servicing 1-4
unit single family mortgage loans and in managing an office building owned by
such Subsidiary, and (3) any such unpaid obligations as are described in
subsection (2) above (other than payroll and benefits obligations to employees)
shall not exceed at any time $50,000,000.00 in the aggregate. 10(i)Minimum Net
Worth. Permit its net worth determined in accordance with GAAP on and as of each
Applicable Financial Test Date to be less than $1,200,000,000.00. 10(j)Maximum
Total Debt. Permit Total Debt on and as of each Applicable Financial Test Date
to exceed the sum of: (1) One hundred percent (100%) of Cash, plus (2) Ninety
percent (90%) of Margins, plus (3) Ninety-seven percent (97%) of the amount of
Mortgage Loans and MBS Held for Sale (including Mortgage Loans and
Mortgage-Backed Securities subject to a Lien under a repurchase agreement but
excluding all other Mortgage Loans and Mortgage-Backed Securities which are
excluded from "Eligible Mortgage Assets" pursuant to subparagraphs (a), (b) and
(c) of the definition of such term), plus (4) Ninety percent (90%) of Pool Loan
Purchases and Mortgage Claims Receivable to the extent such assets represent VA
and FHA Mortgage Loans repurchased by the Company from pools supporting GNMA
Mortgage-Backed Securities, plus (5) Fifty percent (50%) of Deferred Commitment
Fees, plus (6) Fifty percent (50%) of Property and Equipment, plus (7)
Seventy-five percent (75%) of Mortgage Servicing Rights, plus (8) Fifty percent
(50%) of Other Assets, excluding any unsecured Advances made to Affiliates
permitted under Paragraph 10(g)(2) above. 11. Events of Default. Upon the
occurrence of any of the following events (an "Event of Default"): 11(a)The
Company shall fail to make any payment on account of that portion of the
Obligations consisting of principal or interest on Loans on the date when due;
or 11(b)Any representation or warranty made or deemed made by the Company or the
Parent in any Credit Document or in connection with any Credit Document shall be
materially inaccurate or incomplete in any respect on or as of the date made or
deemed made; or 11(c)The Company shall default in the observance or performance
of any covenant or agreement contained in Paragraph 10 above (other than those
contained in Paragraphs 10(i) and 10(j) above); or 11(d)The Parent shall fail to
observe or comply with any term or provision contained in the Guaranty (other
than those contained in Paragraph 11(d) thereof); or 11(e)The Company or the
Parent shall fail to observe or perform any other term or provision contained in
the Credit Documents and such failure shall continue for thirty (30) days; or
11(f)The Company, any of its Subsidiaries or the Parent shall default in any
payment of any Indebtedness (other than the Obligations or as permitted under
Paragraph 9(c) above) in an aggregate amount of more than $10,000,000.00 or any
other event shall occur and, as a result, the holder or holders thereof, or any
trustee or agent for such holders, either: (1) cause such Indebtedness to become
due and payable prior to its stated maturity, or (2) elect not to cause such
Indebtedness to become so due and payable, but such event continues for a period
of thirty (30) days and is not cured or waived; or 11(g)(1) The Parent, the
Company or any of its Subsidiaries shall commence any case, proceeding or other
action (i) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (ii) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or the Parent, the Company or any of its
Subsidiaries shall make a general assignment for the benefit of its creditors;
or (2) there shall be commenced against the Parent, the Company or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (1) above which (i) results in the entry of an order for relief or any
such adjudication or appointment, or (ii) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (3) there shall be commenced
against the Parent, the Company or any of its Subsidiaries any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within sixty (60)
days from the entry thereof; or (4) the Parent, the Company or any of its
Subsidiaries shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (1),
(2) or (3) above; or (5) the Parent, the Company or any of its Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or 11(h)(1) Any Person shall
engage in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) involving any Plan, (2) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or nor waived, shall
exist with respect to any Plan, (3) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or institution of proceedings is, in the reasonable
opinion of the Lead Administrative Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, and, in the case of a Reportable
Event, the continuance of such Reportable Event unremedied for ten days after
notice of such Reportable Event pursuant to Section 4043(a), (c) or (d) of ERISA
is given or the continuance of such proceedings for ten days after commencement
thereof, as the case may be, (4) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (5) any withdrawal liability to a Multiemployer
Plan shall be incurred by the Company or the Parent or any Commonly Controlled
Entity, or (6) any other event or condition shall occur or exist; and in each
case in clauses (1) through (6) above, such event or condition, together with
all other such events or conditions, if any, could subject the Parent, the
Company or any of its Subsidiaries to any tax, penalty or other liabilities in
the aggregate material in relation to the business, operations, property or
financial or other condition of the Parent, the Company or any of its
Subsidiaries; or 11(i)One or more judgments or decrees in amounts aggregating
$1,000,000.00 or more not fully covered by insurance (exclusive of
self-insurance (not to exceed $5,000,000.00) and deductibles) during any
consecutive twelve (12) month period shall be entered against the Company or any
of its Subsidiaries and all such judgments or decrees shall not have been
vacated, discharged or satisfied, or stayed or bonded pending appeal, within
sixty (60) days from the entry thereof unless counsel to the Company reasonably
acceptable to the Majority Lenders has delivered to the Lenders within such
sixty (60) day period an opinion that the Company has the legal right to have
such judgment or decree vacated without the expenditure of funds (other than for
costs of proceedings) and the Company is diligently proceeding to accomplish
such vacation; or 11(j)The Parent shall notify the Lead Administrative Agent or
any Lender of its intention to rescind or revoke the Guaranty or the
Subordination Agreement, in whole or in part, with respect to future
transactions or otherwise; or 11(k)The Parent shall cease to own one hundred
percent (100%) of the outstanding capital stock of the Company; THEN: (1)
Automatically upon the occurrence of an Event of Default under Paragraph 11(g)
above, (2) At the option of any Lender upon the occurrence of an Event of
Default under Paragraph 11(a) above unless such Event of Default is expressly
waived in writing by one hundred percent (100%) of the Lenders, and (3) In all
other cases, at the option of the Majority Lenders, each Lender's obligation to
make Loans shall terminate and the principal balance of outstanding Loans and
interest accrued but unpaid thereon and all other Obligations shall become
immediately due and payable, without demand upon or notice or presentment to the
Company, all of which are hereby waived. 12. Agency Provisions.
12(a)Appointment. Each Lender hereby irrevocably designates and appoints each
Agent as the agent of such Lender under the Credit Documents and each Lender
hereby irrevocably authorizes each Agent, as the agent for such Lender, to take
such action on its behalf under the provisions of the Credit Documents and to
exercise such powers and perform such duties as are expressly delegated to such
Agent by the terms of the Credit Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in the Credit Documents, no Agent shall have any duties or
responsibilities, except those expressly set forth herein or therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the
Credit Documents or otherwise exist against any Agent. 12(b)Delegation of
Duties. The Lead Administrative Agent may execute any of its duties under the
Credit Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Lead
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care.
12(c)Exculpatory Provisions. No Agent nor any of its respective officers,
directors, employees, agents, counsel, attorneys-in-fact or Affiliates shall be
(1) liable to any Lender, any other Agent, the holder of any CPN or the Company
for any action taken or omitted to be taken by it or such Person under or in
connection with the Credit Documents (except for its or such Person's own gross
negligence or willful misconduct), or (2) responsible in any manner to any of
the Lenders, any other Agent, the holder of any CPN or the Company for: (i) any
recitals, statements, representations or warranties made by the Company or any
officer thereof contained in the Credit Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by such
Agent under or in connection with, the Credit Documents (except such as are
prepared by such Agent and, then, only to the extent such Agent is responsible
for verification of the accuracy and completeness of the information contained
therein or the facts upon which such information is based as expressly provided
herein) or for the value, validity, effectiveness, genuineness, enforceability,
collectability or sufficiency of the Credit Documents or for any failure of the
Company to perform its obligations thereunder or (ii) assuring compliance of the
Credit Documents and/or the transactions contemplated by the Credit Documents
with any law or regulation binding upon such Person, it being expressly
acknowledged, agreed and understood that each such Person has obtained
independent advice satisfactory to it in all such regards. No Agent shall be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, the Credit Documents (other than agreements required to be complied with by
such Agent thereunder and subject to the standards of care set forth herein with
respect thereto) or to inspect the properties, books or records of the Company.
Each Agent shall be entitled to refrain from exercising any discretionary powers
or actions under this Agreement or any other Credit Document until it shall have
received the prior written consent of one hundred percent (100%) of the Lenders
to such action. 12(d)Reliance by Agent. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, consent, certification, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other document or
conversation reasonably believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by such Agent. The
Lead Administrative Agent may deem and treat each Lender designated on the
current Commitment Schedule as a Lender hereunder for all purposes of the Credit
Documents unless a written notice of assignment, negotiation or transfer of such
Lender's interests hereunder and thereunder as permitted pursuant to Paragraph
14 below shall have been filed with the Lead Administrative Agent. Each Agent
shall be fully justified in failing or refusing to take any action under the
Credit Documents unless it shall first receive such advice or concurrence of the
Majority Lenders (or all Lenders, as required under the Credit Documents) or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any action (other than liability and/or expense arising out
of such Agent's gross negligence or willful misconduct). Each Agent shall in all
cases be fully protected in acting, or in refraining from acting, under the
Credit Documents in accordance with a request of the Majority Lenders (or all
Lenders, if applicable) absent gross negligence and willful misconduct on the
part of such Agent in the method in which it acts or refrains from acting in
accordance therewith, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders. 12(e)Notice of Default;
Agreement to Advance. No Agent shall be deemed to have knowledge or notice of
the occurrence of any Event of Default or Potential Default unless such Agent
has received notice from a Lender or the Company referring to the Credit
Documents, describing such Event of Default or Potential Default and stating
that such notice is a "notice of default". In the event that any Agent receives
such a notice, such Agent shall give notice thereof to the Lenders and the other
Agents. 12(f)Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that no Agent nor any of its respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by such Agent hereafter taken, including any
review of the affairs of the Company, shall be deemed to constitute any
representation or warranty by such Agent to any Lender. Each Lender represents
to each Agent that it has, independently and without reliance upon such Agent or
any other Lender or their respective counsel, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Company and made its own decision to
extend credit hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon any Agent or
any other Lender or their respective counsel, and based on such documents,
information and legal advice (including, without limitation, advice of
regulatory counsel to it) as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in entering into the
Credit Documents and taking or not taking action thereunder, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Company. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by an Agent hereunder, such Agent shall not have any
duty or responsibility to provide any Lender with any legal advice or credit or
other information concerning the business, operations, property, financial and
other condition or creditworthiness of the Company which may come into the
possession of such Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates. 12(g)Indemnification. The Company agrees to
indemnify, defend and hold harmless each Agent in its capacity as such from and
against any and all claims, obligations, penalties, actions, suits, judgments,
costs, disbursements, losses, liabilities and/or damages (including, without
limitation, attorneys' fees) of any kind whatsoever which may at any time be
imposed on, assessed against or incurred by such Agent in any way (1) relating
to or arising out of the Credit Documents or any documents contemplated by or
referred to therein or the transactions contemplated thereby or any action taken
or omitted to be taken by such Agent in connection with the foregoing; provided,
the Company shall not be liable for any portion of any such claims, obligations,
etc., arising out of or resulting from the gross negligence or willful
misconduct of such Agent or (2) resulting from any action taken or omitted to be
taken by such Agent in accordance with written instructions given as provided in
the Credit Documents or (3) relating to any one or more of the matters covered
by Paragraph 12(c) above. The Lenders agree to indemnify and hold harmless each
Agent in its capacity as such ratably in accordance with their Primary
Percentage Shares to the extent required by the Company hereunder if any Agent
is not reimbursed by the Company hereunder and without limiting the obligation
of the Company to do so. To the extent indemnification payments made by the
Lenders pursuant to this Paragraph 12(g) are subsequently recovered by any Agent
from, or for the account of, the Company, such Agent will promptly refund such
previously paid indemnity payments to the Lenders. The indemnification
obligations of the Company and Lenders under this Paragraph 12(g) shall survive
termination of this Agreement and payment in full of the Obligations. 12(h)Agent
in Its Individual Capacity. Any Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Company as though such Agent were not an Agent hereunder. With respect to such
loans made or renewed by them and any note issued to them hereunder, each Agent
shall have the same rights and powers under the Credit Documents as any Lender
thereunder and may exercise the same as though it were not an Agent, and the
terms "Lender" and "Lenders" shall include Agents in their individual
capacities. 12(i)Successor Agents. Any Agent may resign as such under the Credit
Documents upon ninety (90) days' prior written notice to the Lenders and the
Company and the Lead Administrative Agent shall resign in the event its Maximum
Commitment shall be less than $25,000,000.00. In addition, in the event any
Agent fails to perform its obligations under the Credit Documents in any
material manner and fails to correct its performance within thirty (30) days of
written notice of such failure of performance given by not less than the
Majority Lenders, then such Agent may be removed upon thirty (30) days notice
given by not less than the Majority Lenders. If an Agent shall resign or be so
removed, then, on or before the effective date of such resignation or removal,
the Majority Lenders shall appoint a successor agent reasonably acceptable to
the Company or, if the Majority Lenders are unable to agree on the appointment
of a successor agent, such Agent shall appoint a successor agent for the
Lenders, which successor agent shall be reasonably acceptable to the Company,
whereupon such successor agent shall succeed to the rights, powers and duties of
such Agent, and the term "Documentation Agent," "Syndication Agent," "Lead
Administrative Agent," "Co-Administrative Agent," "Arranger", "Co-Arranger" or
"Co-Agents," as applicable, shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties shall be
terminated without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any of the other Credit
Documents or successors thereto. After any Agent's resignation or removal
hereunder, the provisions of this Paragraph 12 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under the
Credit Documents. 12(j)Sharing of Set-Offs. If following the occurrence and
during the continuance of an Event of Default any Lender (a "benefitted Lender")
shall at any time receive any payment of all or part of the Obligations held by
it or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off or otherwise) in a greater proportion than any such
payment to and collateral received by any other Lender, if any, in respect of
such other Lender's portion of the Obligations, or interest thereon, such
benefitted Lender shall purchase for cash from the other Lenders such portion of
each such other Lender's Obligations, or shall provide such other Lenders with
the benefits of such collateral, or the proceeds thereof, as shall be necessary
to cause such benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery but without
interest. The Company agrees that each Lender so purchasing a portion of another
Lender's Obligations may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion. 13. Miscellaneous Provisions.
13(a)No Assignment. The Company may not assign its rights or obligations under
the Credit Documents without the prior written consent of one hundred percent
(100%) of the Lenders. Subject to the foregoing, all provisions contained in
this Agreement or any document or agreement referred to herein or relating
hereto shall inure to the benefit of each Lender, its successors and assigns,
and shall be binding upon the Company, its successors and assigns.
13(b)Amendment. The Credit Documents may not be amended or terms or provisions
hereof waived unless such amendment or waiver is in writing and signed by the
Majority Lenders and the Company; provided, however, that without the prior
written consent of one hundred percent (100%) of the Lenders, no amendment or
waiver shall: (1) Waive or amend any term or provision of Paragraph 4(e), 4(f)
or 4(g) above, or this Paragraph 13(b); (2) Reduce the principal of, or interest
on, the Obligations or any amount of fees payable under this Agreement (other
than fees payable pursuant to the Fee Letter), or extend the required payment
date of principal or interest on the Obligations or any fees; (3) Increase the
Aggregate Credit Limit above $2,000,000,000.00; (4) Modify any Lender's Primary
Percentage Share or Swing Line Percentage Share except modifications resulting
from an increase, permanent or temporary, in a Lender's Maximum Commitment or
Swing Line Commitment made as permitted under this Agreement; (5) Modify the
definition of "Majority Lenders"; (6) Include any Person other than the Lenders
signatory hereto as a "Lender" hereunder except as expressly permitted pursuant
to Paragraph 14(a) below; (7) Cancel or terminate the Guaranty or permit the
revocation of the Subordination Agreement; or (8) Extend the Maturity Date;
provided, however, that nothing contained herein shall in any manner or to any
extent be deemed to supersede any provision of the Credit Documents which
expressly designates which Lenders are empowered to modify such provision,
including, without limitation, any provision of the Credit Documents which
expressly requires the consent of one hundred percent (100%) of the Lenders to
any modification thereof. No amendment or waiver shall, unless agreed to in
writing by the affected Agent, modify the rights or duties of such Agent. The
Lead Administrative Agent shall provide notice and a copy of all amendments to
the Credit Documents to all parties to the Credit Documents. 13(c)Cumulative
Rights; No Waiver. The rights, powers and remedies of the Lenders hereunder are
cumulative and in addition to all rights, powers and remedies provided under any
and all agreements between the Company and the Lenders relating hereto, at law,
in equity or otherwise. Any delay or failure by the Lenders to exercise any
right, power or remedy shall not constitute a waiver thereof by the Lenders, and
no single or partial exercise by the Lenders of any right, power or remedy shall
preclude any other or further exercise thereof or any exercise of any other
rights, powers or remedies. 13(d)Entire Agreement; Severability. This Agreement
and the documents and agreements referred to herein embody the entire agreement
and understanding between the parties hereto and supersede all prior agreements
and understandings relating to the subject matter hereof and thereof. All
waivers by the Company provided for in the Credit Documents have been
specifically negotiated by the parties with full cognizance and understanding of
their rights. If any of the provisions of the Credit Documents shall be held
invalid or unenforceable, the Credit Documents shall be construed as if not
containing such provisions, and the rights and obligations of the parties hereto
shall be construed and enforced accordingly. 13(e)Survival. All representations,
warranties, covenants and agreements herein contained on the part of the Company
shall survive the termination of this Agreement and shall be effective until the
Obligations are paid and performed in full or longer as expressly provided
herein. 13(f)Notices. All notices given by any party to any of the others shall
be in writing (which may be by facsimile transmission), delivered personally, by
commercial courier service or by depositing the same in the United States mail,
registered, with postage prepaid, addressed to such party at the address set
forth on Annex II attached hereto. Any party may change the address to which
notices are to be sent by notice of such change to the other party or parties
given as provided herein. 13(g)Governing Law. This Agreement shall be deemed to
be a contract made under the laws of the State of California, and for all
purposes shall be construed in accordance with the laws of said State, without
regard to principles of conflicts of law. 13(h)Counterparts. This Agreement may
be executed in counterparts each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement. 14. Additional Lenders; Assignments and Participations;
Increases in Availability. 14(a)Addition of New Lender. (1) Subject to the
limitation on the Aggregate Credit Limit set forth in the definition of such
term, the Company or any Lender may at any time propose that one or more
financial institutions (each, an "Applicant Financial Institution") become an
additional Lender hereunder. At such time, the Company or such Lender, as
applicable, shall notify the other parties hereto, including the Lead
Administrative Agent, of the identity of such Applicant Financial Institution
and such Applicant Financial Institution's proposed Maximum Commitment and, as
applicable, Swing Line Commitment. The addition of any Applicant Financial
Institution shall be subject to: (i) If such Applicant Financial Institution is
proposed for inclusion as a Lender hereunder by a Lender, the prior written
consent of the Company and the Lead Administrative Agent, and if such Applicant
Financial Institution is proposed for inclusion as a Lender hereunder by the
Company, the prior written consent of the Lead Administrative Agent, none of
which consents shall be unreasonably withheld and which, if given, shall be
given in writing to the other parties hereto no later than the tenth day
following receipt by the Company of a written request for the inclusion of such
Applicant Financial Institution as a Lender hereunder; and (ii) Delivery of each
of the items and the occurrence of each of the events described in subparagraph
(2) below. (2) Assuming delivery of the consent of the Company and/or Lead
Administrative Agent as required pursuant to subparagraph (1)(i) above, the Lead
Administrative Agent, the Company and, if such Applicant Financial Institution
will be acquiring a portion of an existing Lender's Maximum Commitment by way of
assignment from such existing Lender, such existing Lender, shall mutually agree
on the Adjustment Date on which such Applicant Financial Institution shall
become a party hereto and a Lender hereunder. On such Adjustment Date: (i) The
Lead Administrative Agent shall deliver to the Company and each of the Lenders a
Commitment Schedule to be effective as of such Adjustment Date, reflecting the
inclusion of such Applicant Financial Institution as a party hereto and a Lender
hereunder. (ii) No later than 12:30 p.m. (Los Angeles time) on such Adjustment
Date, such Applicant Financial Institution shall pay to the Lead Administrative
Agent an amount equal to such Applicant Financial Institution's Primary
Percentage Share of Primary Loans outstanding and, as applicable, Swing Line
Percentage Share of Swing Loans outstanding. If such Applicant Financial
Institution is becoming a Lender hereunder as a result of an increase in the
Aggregate Credit Limit, the Lead Administrative Agent shall thereupon remit to
the Lenders, as applicable, their shares of such funds. If such Applicant
Financial Institution is acquiring a portion of an existing Lender's outstanding
Primary Loans, the Lead Administrative Agent shall thereupon remit such funds to
the assigning Lender. Following such Adjustment Date, fees and interest accrued
on the Obligations to but not including such Adjustment Date shall be payable to
the Lenders in accordance with their respective Primary Percentage Shares and
Swing Line Percentage Shares prior to such Adjustment Date before giving effect
to the readjustment thereof pursuant to the Commitment Schedule provided by the
Company on such Adjustment Date. (iii) If such Applicant Financial Institution
is acquiring a portion of an existing Lender's Maximum Commitment by way of
assignment from such existing Lender, the Lead Administrative Agent, the
Company, the assigning Lender and the Applicant Financial Institution shall
execute and deliver an Assignment Agreement, or if such Applicant Financial
Institution is becoming a Lender hereunder as a result of an increase in the
Aggregate Credit Limit, the Lead Administrative Agent, the Company and the
Applicant Financial Institution shall execute and deliver an Additional Lender
Agreement, either of which Assignment Agreement or Additional Lender Agreement
shall constitute an amendment to this Agreement to the extent necessary to
reflect the inclusion of the Applicant Financial Institution as a Lender
hereunder. (iv) The Applicant Financial Institution shall pay to the Lead
Administrative Agent a registration fee of $3,500.00. Subject to the
requirements described above, the Applicant Financial Institution shall become a
party hereto and a Lender hereunder and shall be entitled to all rights,
benefits and privileges accorded a Lender under the Credit Documents and shall
be subject to all obligations of a Lender under the Credit Documents.
14(b)Assignments Among Existing Lenders. Any Lender may at any time agree to
assign a portion of such Lender's Maximum Commitment to a Transferee Lender. In
such event the Lender and the Transferee Lender shall so notify the Lead
Administrative Agent and the Company of the Adjustment Date on which such
assignment is to be effective. On such Adjustment Date: (1) The Company shall
deliver to the Lead Administrative Agent and each of the Lenders a Commitment
Schedule to be effective as of such Adjustment Date reflecting the assignment.
(2) The Lead Administrative Agent, the Company, the assigning Lender and the
Transferee Lender shall execute and deliver an Assignment Agreement, which shall
constitute an amendment to this Agreement to the extent necessary to reflect
such transfer. (3) No later than 12:30 p.m. (Los Angeles time) on such
Adjustment Date, the Transferee Lender shall pay to the Lead Administrative
Agent an amount equal to, as applicable, such Transferee Lender's Primary
Percentage Share of Primary Loans and Swing Line Percentage Share of Swing Loans
outstanding in excess of such Transferee Lender's previous Primary Percentage
Share and, as applicable, Swing Line Percentage Share thereof. The Lead
Administrative Agent shall thereupon remit to the transferring Lender the amount
thereof. 14(c)Minimum Loan Commitment. Notwithstanding anything to the contrary
contained herein, the inclusion of any Applicant Financial Institution as a
Lender hereunder pursuant to Paragraph 14(a) above and the assignment by a
Lender of a portion of such Lender's Maximum Commitment to a Transferee Lender
pursuant to Paragraph 14(b) above shall be subject to the following
restrictions: (1) If an Applicant Financial Institution is acquiring a portion
of an existing Lender's Maximum Commitment by way of an assignment from such
existing Lender, then: (i) such assignment of Maximum Commitment must be in the
minimum amount of $5,000,000.00 (or if in a higher amount, in integral multiples
of $5,000,000.00 in excess thereof), and (ii) following the consummation of the
contemplated assignment and after giving effect to any other assignments
occurring on the related Adjustment Date, such existing Lender must continue to
hold an Maximum Commitment of not less than $25,000,000.00 and such Applicant
Financial Institution must hold a Maximum Commitment of not less than
$25,000,000.00; (2) If an existing Lender is assigning a portion of its Maximum
Commitment to a Transferee Lender, such assignment of Maximum Commitment is in
the minimum amount of $5,000,000.00 (or if in a higher amount, in integral
multiples of $5,000,000.00 in excess thereof) and such existing Lender shall
continue to hold an Maximum Commitment of not less than $25,000,000.00 following
the consummation of the contemplated assignment. There shall be no minimum hold
requirement in the event that an existing Lender is assigning one hundred
percent (100%) of its Maximum Commitment. 14(d)Sub-Participations by Lenders.
Any Lender may at any time sell participating interests in any of the
Obligations held by such Lender and its commitments hereunder; provided,
however, that: (1) No participation contemplated by this Paragraph 14(d) shall
relieve such Lender from its obligations hereunder or under any other Credit
Document; (2) Such Lender shall remain solely responsible for the performance of
such obligations; (3) The Company, the Lead Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Credit Documents;
(4) The participation agreement between such Lender and the Person purchasing
such participation interest (a "Participant") shall provide that: (i) the
participation interest of the Participant is an undivided interest in such
Lender's Maximum Commitment, and (ii) the sole voting rights of the Participant
are with respect to those items on which such Lender is entitled to vote
pursuant to Paragraphs 13(b)(2) and 13(b)(7) above; and (5) Such Lender shall
not enter into participation agreements with more than two Participants for each
$25,000,000.00 of Maximum Commitment held by such Lender. The Company
acknowledges and agrees that each Participant shall be considered a Lender for
purposes of Paragraphs 4(e), 4(f), 4(g) and 5(l) above; provided, however, that
in no event shall any Participant be entitled to receive any payment or
compensation in excess of that to which such Participant's selling Lender would
be entitled with respect to the participation interest held by such Participant
if such Lender had not sold any participation interest to such Participant.
14(e)Federal Reserve Bank. Notwithstanding the provisions of Paragraphs 14(a)
and 14(b) above, any Lender may at any time pledge or assign all or any portion
of such Lender's rights under this Agreement and the other Credit Documents to a
Federal Reserve Bank. 14(f)Increases in Availability. From time to time the
Company and any Lender (an "Increasing Lender") may agree, with the prior
written consent of the Lead Administrative Agent, to permanently or temporarily
increase such Lender's Maximum Commitment and Primary Percentage Share, the
dollar amount of any such increase to be, subject to the Aggregate Credit Limit
limitation, in the minimum dollar amount of $5,000,000.00 and integral multiples
of $5,000,000.00 in excess thereof. The Company and the Increasing Lender shall
agree on the Adjustment Date for said increase and, if the increase is a
temporary rather than permanent increase, the date on which said increase shall
terminate (the "Temporary Increase Termination Date"). The Lead Administrative
Agent shall deliver to the Company and each of the Lenders a Commitment Schedule
to be effective as of such Adjustment Date. On the Temporary Increase
Termination Date the aggregate amount of such Increasing Lender's Primary
Percentage Share of outstanding Primary Loans in excess of its Maximum
Commitment after giving effect to the termination of the subject increase shall,
if but only if at such Temporary Increase Termination Date there does not exist
an Event of Default, be payable in full. If at the Temporary Increase
Termination Date there exists an Event of Default, the temporary increase of the
Increasing Lender shall continue in effect and, unless otherwise agreed by one
hundred percent (100%) of the Lenders, shall be treated thereafter as a
permanent increase in said Increasing Lender's Maximum Commitment.
14(g)Provision of Information; Confidentiality. The Company hereby acknowledges
and agrees that in connection with the proposed assignment or subparticipation
by a Lender of its interest in the Obligations, such Lender may disclose to
prospective assignees and Participants any and all information provided to such
Lender hereunder; provided, however, that such information shall be furnished to
such prospective assignees and Participants on a confidential basis. 14(h)Waiver
of Jury Trial. EACH OF THE PARTIES HERETO WAIVES ITS RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER CREDTI DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE PARTIES
HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
PARAGRAPH 14(h) AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS,
IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL <PAGE>
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
COUNTRYWIDE HOME LOANS, INC.,
a New York corporation
By
Name
Title
ROYAL BANK OF CANADA, as Lead Administrative Agent, Arranger and a
Lender
By
Name
Title
THE BANK OF NEW YORK, as Co-Administrative Agent, a Co-Arranger, a
Co-Agent and a Lender
By
Name
Title
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Syndication Agent, a
Co-Arranger, a Co-Agent and a
Lender
By
Name
Title
CREDIT LYONNAIS, SAN FRANCISCO BRANCH, as Documentation Agent, a
Co-Arranger, a Co-Agent and a Lender
By
Name
Title
ABN AMRO BANK, N.V., as a Co-Agent and a Lender
By
Name
Title
By
Name
Title
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a
Co-Agent and a Lender Agent
By
Name
Title
BARCLAYS BANK PLC, as a Co-Agent and a Lender
By
Name
Title
<PAGE>
THE CHASE MANHATTAN BANK, as a Co-Agent and a Lender
By
Name
Title
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES, as a
Co-Agent and a Lender
By
Name
Title
By
Name
Title
NATIONSBANK OF TEXAS, N.A., as a Co-Agent and a Lender
By ________________________________________________________
Name ______________________________________________________
Title _____________________________________________________
BANQUE NATIONALE DE PARIS, as a Lender
By
Name
Title
By
Name
Title
CANADIAN IMPERIAL BANK OF COMMERCE, as a Lender
By
Name
Title
THE SUMITOMO BANK, LIMITED, LOS ANGELES BRANCH, as a Lender
By
Name
Title
BANQUE PARIBAS, as a Lender
By
Name
Title
By
Name
Title
BANK ONE, TEXAS, N.A., as a Lender
By
Name
Title
BANK OF HAWAII, as a Lender
By
Name
Title
ACKNOWLEDGED AND AGREED TO as of the day and year first above written:
COUNTRYWIDE CREDIT INDUSTRIES, INC.
By ___________________________________
Name ________________________________
Title _________________________________
<PAGE>
SCHEDULE OF EXHIBITS TO CREDIT AGREEMENT
EXHIBIT DOCUMENT
A Form of Officer's Certificate
B Litigation Schedule
C Schedule of Existing Subsidiaries
Annex I: Glossary
Annex II: Schedule of Notice Addresses
<PAGE>
la-195654
REVOLVING CREDIT AGREEMENT
By and Among
COUNTRYWIDE HOME LOANS, INC.
and
ROYAL BANK OF CANADA
as Lead Administrative Agent and Arranger
THE BANK OF NEW YORK ("BNY")
as Co-Administrative Agent
MORGAN GUARANTY AND TRUST COMPANY OF NEW YORK ("MGTC")
as Syndication Agent
CREDIT LYONNAIS, SAN FRANCISCO BRANCH ("CL")
as Documentation Agent
BNY, MGTC and CL
as Co-Arrangers
and
THE LENDERS PARTY THERETO
April 15, 1998
<PAGE>
TABLE OF CONTENTS
Page
RECITALS 1
AGREEMENT......................................................................1
1. Credit Facilities............................................1
1(a) Primary Facility...............................................1
1(b) Swing Loan Facility...........................................1
2. Requests for Loans; Funding..................................1
2(a) Requests for Loans.............................................1
2(b) Funding of Loans..............................................1
2(c) Funding Method.................................................1
3. Payment of Principal; Prepayments............................1
3(a) Required Principal Payments....................................1
3(b) Prepayments....................................................1
4. Calculation and Payment of Interest; Related Provisions......1
4(a) Interest on Primary Loans......................................1
4(b) Interest on Swing Loans........................................1
4(c) Payment of Interest............................................1
4(d) Inability to Determine Rate....................................1
4(e) Funding Indemnification........................................1
4(f) Illegality; Impracticality....................................1
4(g) Requirements of Law; Increased Costs...........................1
4(h) Taxes..........................................................7
4(i) Buy-Down Provisions............................................8
4(j) Obligation of Lenders to Mitigate; Replacement of Lenders......1
5. Miscellaneous Lending Provisions.............................1
5(a) Use of Proceeds.....................................................1
5(b) Assumption of Funding/Purchase.................................1
5(c) Evidence of Indebtedness.......................................1
5(d) Interest and Fee Billing and Payment...........................1
5(e) Nature and Place of Payments...................................1
5(f) Post-Default Interest..........................................1
5(g) Computations.................................................1
5(h) Disbursement of Payments Received..............................1
5(i) Fees...........................................................1
5(j) Wire Transfers of Funds........................................1
5(k) Reduction in Aggregate Credit Limit............................1
5(l) Capital Requirements...........................................1
6. Security Agreement; Guaranty; Subordination; Additional Documents..1
6(a) Guaranty and Subordination Agreement...........................1
6(b) Further Documents..............................................1
7. Conditions Precedent.........................................1
7(a) First Loan.....................................................1
7(b) All Loans......................................................1
8. Representations and Warranties of the Company................1
8(a) Financial Condition............................................1
8(b) Corporate Existence; Compliance with Law.......................1
8(c) Corporate Power; Authorization; Enforceable....................1
8(d) No Legal Bar...................................................1
8(e) No Material Litigation.........................................1
8(f) Taxes..........................................................1
8(g) Investment Company Act.........................................1
8(h) Subsidiaries...................................................1
8(i) Federal Reserve Board Regulations..............................1
8(j) ERISA..........................................................1
8(k) Assets.........................................................1
9. Affirmative Covenants........................................1
9(a) Financial Statements...........................................1
9(b) Certificates; Reports; Other Information.......................1
9(c) Payment of Indebtedness........................................1
9(d) Maintenance of Existence and Properties........................1
9(e) Inspection of Property; Books and Records;....................1
9(f) Notices........................................................1
9(g) Expenses.......................................................1
9(h) Credit Documents...............................................1
9(i) Insurance......................................................1
9(j) CPN Program....................................................1
9(k) Hedging Program................................................1
10. Negative Covenants...........................................1
10(a) Liens........................................................1
10(b) Indebtedness.................................................1
10(c) Consolidation and Merger.....................................1
10(d) Acquisitions.................................................1
10(e) Payment of Dividends.........................................1
10(f) Purchase or Retirement of Stock..............................1
10(g) Investments; Advances; Receivables...........................1
10(h) Sale of Assets...............................................1
10(i) Minimum Net Worth...........................................1
10(j) Maximum Total Debt...........................................1
11. Events of Default............................................1
12. Agency Provisions............................................1
12(a) Appointment.................................................1
12(b) Delegation of Duties........................................1
12(c) Exculpatory Provisions.................................1
12(d) Reliance by Agent......................................1
12(e) Notice of Default; Agreement to Advance.....................1
12(f) Non-Reliance on Agent and Other Lenders.....................1
12(g) Indemnification.............................................1
12(h) Agent in Its Individual Capacity............................1
12(i) Successor Agents............................................1
12(j) Sharing of Set-Offs.........................................1
13. Miscellaneous Provisions.....................................1
13(a) No Assignment................................................1
13(b) Amendment....................................................1
13(c) Cumulative Rights; No Waiver.................................1
13(d) Entire Agreement; Severability...............................1
13(e) Survival.....................................................1
13(f) Notices......................................................1
13(g) Governing Law................................................1
13(h) Counterparts.................................................1
14. Additional Lenders; Assignments and Participations; Increases in
Availability;..............1
14(a) Addition of New Lender.....................................1
14(b) Assignments Among Existing Lenders........................1
14(c) Minimum Loan Commitment...................................1
14(d) Sub-Participations by Lenders.............................1
14(e) Federal Reserve Bank......................................1
14(f) Increases in Availability.................................1
14(g) Provision of Information; Confidentiality.................1
14(h) Waiver of Jury Trial......................................36
AMENDMENT NUMBER FOUR
COUNTRYWIDE CREDIT INDUSTRIES, INC.
1987 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF JULY 12, 1989)
WHEREAS, Countrywide Credit Industries, Inc. (the "Company") desires to
amend its 1987 Stock Option Plan, amended and restated as of July 12, 1989, and
as further amended (the "Plan"), to allow for the transfer of options to
immediate family members and related entities;
NOW, THEREFORE, the Plan shall be amended as follows effective March 23, 1998.
1. Section 8(a) shall be amended in its entirety to read as follows: "(a) If an
option holder's employment or service as a director terminates for any reason
other than death, permanent disability, retirement or Cause (as hereinafter
defined), the option holder may at any time within three (3) months after his or
her termination as an employee or director of the Company, exercise an option to
the extent, and only to the extent, that the option or portion thereof was
exercisable on the date of termination."
2. Section 8(c) shall be amended in its entirety to read as follows:
"(c) If an option holder dies while a director or an employee
of the Company or any Subsidiary or within three (3) months
after termination as described in clause (a) of this Section 8
or within one (1) year after termination as a result of
Disability as described in clause (b) of this Section 8, the
Option may be exercised at any time within one (1) year after
the Optionee's death by the person or persons to whom the
Optionee's rights pass by transfer or designation, as the case
may be, pursuant to Section 9 or 21, or, absent such a
transfer or designation, as the case may be, by the person or
persons to whom such rights under the Option shall pass by
will or by the laws of descent and distribution; provided,
however, that an Option may be exercised to the extent, and
only to the extent, that the Option or portion thereof was
exercisable on the date of death or earlier termination.
3. New Section 8(d) shall be added to read as follows:
"(d) If an option holder's employment terminates as a
result of Retirement, the option holder may at any
time within one (1) year after termination of service
for Retirement, exercise such option to the extent,
and only to the extent, the option or portion thereof
was exercisable at the date of such termination. For
purpose of this Section 8(d) "Retirement" shall mean
the attainment of "Early Retirement Age" or "Normal
Retirement Age" as these terms are defined in the
Countrywide Credit Industries, Inc. Defined Benefit
Pension Plan.
4. Section 9 shall be amended in its entirety to read as follows:
9. "Options not Transferable. Options granted under the Plan shall, by their
terms, ------------------------ be nontransferable except pursuant to a
beneficiary designation made under Section 21 hereof or by will or by the laws
of descent and distribution and, during the lifetime of the person to whom an
Option is granted, only the grantee or the duly appointed guardian or personal
representative of the grantee may exercise it. Notwithstanding the foregoing, in
the case of Options not intended to constitute Incentive Stock Options under
Internal Revenue Code Section 422, the Committee may, in its discretion,
authorize all or a portion of the Options granted to an Optionee to be on terms
which permit transfer by such Optionee to (i) the spouse, children (including
step-children) or grandchildren of the Optionee (each such individual and the
Optionee shall be referred to as an "Eligible Group Member"), (ii) a trust or
trusts for the exclusive benefit of one or more Eligible Group Members or for
the benefit of one or more Eligible Group Members and one or more organizations
exempt from income tax and described in Code Section 501(c)(3), (iii) a
partnership or similar vehicle in which such Eligible Group Members are the only
partners or participants, or (iv) an organization exempt from income tax and
described in Code Section 501(c)(3) in which an Eligible Group Member is
involved in either participation and/or management; provided that (x) there may
be no consideration for any such transfer, (y) the instrument of transfer must
be approved by the Company's Administrative Committee of Employee Benefits, and
(z) transferred Options shall not again be transferable other than by will or by
the laws of descent and distribution. Following transfer, any such Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. The events of termination in Section 8 hereof
shall continue to be applied with respect to the original Optionee, following
which the Options shall be exercisable by the transferee or beneficiary only to
the extent, and for the periods, specified by such Section 8." 5. The first
sentence of Section 10 shall be amended by inserting ", beneficiary,
transferee," after "legatee" in the second line thereof. 6. A new section 21
shall be added to read as follows:
"21. Designation of Beneficiaries. The person granted an Option hereunder may
file ---------------------------- with the Company a written designation of a
beneficiary or beneficiaries under this Plan on a form and in such manner as the
Committee prescribes and may from time to time revoke or change any such
designation of beneficiary. Any designation of beneficiary under the Plan shall
be controlling over any other disposition, testamentary or otherwise; provided,
however, that if the Committee is in doubt as to the entitlement of any such
beneficiary to any Option, the Committee may determine to recognize only the
legal representative of the Option grantee in which case the Company, the
Committee and the members thereof shall not be under any further liability to
anyone."
<PAGE>
IN WITNESS WHEREOF, the Company has caused this amendment number three
to be executed by its duly authorized officer this 23rd day of March, 1998.
Countrywide Credit Industries, Inc.
By:_/s/_____________________
Sandor E. Samuels
Managing Director
Attest:
__/s/__________________________
Susan Bow
Assistant Secretary
DOCUMENT.04/0+
AMENDMENT NUMBER EIGHT
COUNTRYWIDE CREDIT INDUSTRIES, INC.
1991 STOCK OPTION PLAN
WHEREAS, Countrywide Credit Industries, Inc. (the "Company") desires to amend
its 1991 Stock Option Plan, as amended (the "Plan"), to allow for the transfer
of options to immediate family members and related entities;
NOW, THEREFORE, the Plan shall be amended as follows, effective March 23, 1998:
1. The first sentence of Section 7(a) shall be amended to read as follows: "(a)
Non-transferability. No Option granted hereunder shall be transferable by the
- ------------------- Optionee to whom granted otherwise than pursuant to a
beneficiary designation made under Section 14(d) hereof or by will or the laws
of descent and distribution, and an Option may be exercised during the lifetime
of such Optionee only by the Optionee or his or her guardian or legal
representative. Notwithstanding the foregoing, in the case of Options not
intended to constitute Incentive Stock Options under Internal Revenue Code
Section 422, the Committee may, in its discretion, authorize all or a portion of
the Options to be granted to an Optionee to be on terms which permit transfer by
such Optionee to (i) the spouse, children (including step-children) or
grandchildren of the Optionee (each such individual and the Optionee shall be
referred to as an "Eligible Group Member"), (ii) a trust or trusts for the
exclusive benefit of one or more Eligible Group Members or for the benefit of
one or more Eligible Group Members and one or more organizations exempt from
income tax and described in Code Section 501(c)(3), (iii) a partnership or
similar vehicle in which such Eligible Group Members are the only partners or
participants, or (iv) an organization exempt from income tax and described in
Code Section 501(c)(3) in which an Eligible Group Member is involved in either
participation and/or management, provided that (x) there may be no consideration
for any such transfer, (y) the instrument of transfer must be approved by the
Company's Administrative Committee of Employee Benefits, and (z) transferred
Options shall not again be transferable other than by will or by the laws of
descent and distribution. Following transfer, any such Options shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer. The events of termination of employment in Section 7(d) hereof
shall continue to be applied with respect to the original Optionee, following
which the Options shall be exercisable by the transferee or beneficiary only to
the extent, and for the periods, specified by such Section 7(d)."
2. Section 7(d)(1) shall be amended in its entirety to read as follows: "(1) If
an Optionee's employment or service as a director terminates for any reason
other than death, Disability, Retirement or Cause (as hereinafter defined), the
Optionee may at any time within three (3) months after his or her termination of
employment or service as a director, exercise an Option to the extent, and only
to the extent, the Option or portion thereof was exercisable at the date of such
termination." 3. Section 7(d)(4) shall be amended in its entirety to read as
follows: "(4) If an Optionee dies while a director or an employee of the Company
or any Subsidiary or within three (3) months after termination as described in
clause (1) of this Section 7(d) or within one (1) year after termination as a
result of Disability as described in clause (2) of this Section 7(d), the Option
may be exercised at any time within one (1) year after the Optionee's death by
the person or persons to whom the Optionee's rights pass by transfer or
designation, as the case may be, pursuant to Section 7(a) or 14(d), or, absent
such a transfer or designation, as the case may be, by the person or persons to
whom such rights under the Option shall pass by will or by the laws of descent
and distribution; provided, however, that an Option may be exercised to the
extent, and only to the extent, that the Option or portion thereof was
exercisable on the date of death or earlier
termination."
4. New Section 7(d)(5) shall be added to read as follows:
"(5) If an option holder's employment terminates as a
result of Retirement, the option holder may at any
time within one (1) year after termination of service
for Retirement, exercise such option to the extent,
and only to the extent, the option or portion thereof
was exercisable at the date of such termination. For
purposes of this Section 7(d)(5) "Retirement" shall
mean the attainment of "Early Retirement Age" or
"Normal Retirement Age" as these terms are defined in
the Countrywide Credit Industries, Inc., Defined
Benefit Pension Plan."
5. New Sections 14(c) and (d) shall be added to read as follows:
"(c) Effect of Death. In the event of the death of any
Optionee hereunder, the term "Optionee" as used
hereunder shall thereafter be deemed to refer to the
transferee or transferees under Section 7(a) or
beneficiary or beneficiaries designated pursuant to
Section 14(d) hereof or if no such transfer or
designation is in effect, the person to whom the
Optionee's rights pass by will or applicable law, or,
if no such person has such right, the executor or
administrator of the estate of such Optionee." "(d) Designation of
Beneficiaries. An Optionee hereunder may file with the Company a
- ---------------------------- written designation of a beneficiary or
beneficiaries under this Plan on a form and in such manner as the Committee
prescribes and may from time to time revoke or amend any such designation. Any
designation of beneficiary under the Plan shall be controlling over any other
disposition, testamentary or otherwise; provided, however that if the Committee
is in doubt as to the entitlement of any such beneficiary to any Option, the
Committee may determine to recognize only the legal representative of the
Optionee in which case the Company, the Committee and the members thereof shall
not be under any further liability to anyone."
<PAGE>
IN WITNESS WHEREOF, the Company has caused this amendment
number seven to be executed by its duly authorized officer
this _______ day of March, 1998.
Countrywide Credit Industries, Inc.
By:____________________________
Sandor E. Samuels
Managing Director
Attest:
- -------------------------------
Susan Bow
Assistant Secretary
DOCUMENT.03/0+
AMENDMENT NUMBER THREE
COUNTRYWIDE CREDIT INDUSTRIES, INC.
1992 STOCK OPTION PLAN
WHEREAS, Countrywide Credit Industries, Inc. (the "Company") desires to
amend its 1992 Stock Option Plan, as amended (the "Plan"), to add further
provisions to clarify the procedure in the Plan allowing for the transfer of
options to immediate family members and related entities;
NOW, THEREFORE, the Plan shall be amended as follows effective March
23, 1998: 1. The first sentence of Section 5(f) shall be amended in its
entirety to read as follows:
"(f) Non-transferability. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise then
pursuant to a beneficiary designation made under Section 12(c)
hereof or by will or the laws of descent and distribution, and
an Option may be exercised during the lifetime of such
Optionee only by the Optionee or his or her guardian or legal
representative. Notwithstanding the foregoing, in the case of
Options not intended to constitute Incentive Stock Options
under Internal Revenue Code Section 422, the Committee may, in
its discretion, authorize all or a portion of the Options to
be granted to an Optionee to be on terms which permit transfer
by such Optionee to (i) the spouse, children (including
step-children) or grandchildren of the Optionee (each such
individual and the Optionee shall be referred to as an
"Eligible Group Member"), (ii) a trust or trusts for the
exclusive benefit of one or more Eligible Group Members or for
the benefit of one or more Eligible Group Members and one or
more organizations exempt from income tax and described in
Code Section 501(c)(3), (iii) a partnership or similar vehicle
in which such Eligible Group Members are the only partners or
participants, or (iv) an organization exempt from income tax
and described in Code Section 501(c)(3) in which an Eligible
Group Member is involved in either participation and/or
management; provided that (x) there may be no consideration
for any such transfer, (y) the instrument of transfer must be
approved by the Company's Administrative Committee of Employee
Benefits, and (z) transferred Options shall not again be
transferable other than by will or by the laws of descent and
distribution. Following transfer, any such Options shall
continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer. The events of
termination of employment in Section 5(i) hereof shall
continue to be applied with respect to the original Optionee,
following which the Options shall be exercisable by the
transferee only to the extent, and for the periods, specified
by such Section 5(i)."
2. Section 5(i)(1) shall be amended in its entirety to read as
follows: "(1) If an Optionee's employment or service as a
director terminates for any reason other than death,
Disability, Retirement or Cause (as hereinafter defined), the
Optionee may at any time within three (3) months after his or
her termination of employment or service as a director,
exercise an Option to the extent, and only to the extent, the
Option or portion thereof was exercisable at the date of such
termination."
3. Section 5(i)(4) shall be amended in its entirety to read as follows: "(4) If
an Optionee dies while an employee of the Company or any Subsidiary or within
three (3) months after termination as described in clause (1) of this Section
5(i) or within one (1) year after termination as a result of Disability as
described in clause (2) of this Section 5(i), the Option may be exercised at any
time within one (1) year after the Optionee's death by the person or persons to
whom the Optionee's rights pass by transfer or designation, as the case may be,
pursuant to Section 5(f) or 12(c), or, absent such a transfer or designation, as
the case may be, by the person or persons to whom such rights under the Option
shall pass by will or by the laws of descent and distribution; provided,
however, that an Option -----------------
may be exercised to the extent, and only to the extent, that the Option or
portion thereof was exercisable on the date of death or earlier termination."
4. New Section 5 (i)(5) shall be added to read as follows:
"(5) If an Optionee's employment terminates as a result of
Retirement, the Optionee may at any time within one
(1) year after termination of service for Retirement,
exercise such option to the extent, and only to the
extent, the option or portion thereof was exercisable
at the date of such termination. For purposes of this
Section 5(i)(5) "Retirement" shall mean the
attainment of "Early Retirement" Age" or "Normal
Retirement Age" or these terms are defined in the
Countrywide Credit Industries, Inc. Defined Benefit
Pension Plan."
5. A new Section 12(d) shall be added to read as follows:
"(d) Effect of Death. In the event of the death of any
Optionee hereunder, the term "Optionee" as used
hereunder shall thereafter be deemed to refer to the
transferee or transferees under Section 5(i) or the
beneficiary or beneficiaries designated pursuant to
Section 12(c) hereof, or if no such transfer or
designation is in effect, the person to whom the
Optionee's rights pass by will or applicable law, or,
if no such person has such right, the executor or
administrator of the estate of such Optionee."
<PAGE>
IN WITNESS WHEREOF, the Company has caused this first amendment to be
executed by its duly authorized officer this ____ day of March, 1998.
Countrywide Credit Industries, Inc.
By:___/s/_________________________
Sandor E. Samuels
Managing Director
Attest:
__/s/_____________________________
Susan Bow
Assistant Secretary
DOCUMENT.02/0+
AMENDMENT NUMBER FOUR
COUNTRYWIDE CREDIT INDUSTRIES, INC.
1993 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF MARCH 27, 1996)
WHEREAS, Countrywide Credit Industries, Inc. (the "Company") desires to
amend its 1993 Stock Option Plan, amended and restated as of March 27, 1996 (the
"Plan"), to allow for the transfer of options to immediate family members and
related entities;
NOW, THEREFORE, the Plan shall be amended as follows effective March
23, 1998: 1. The first sentence of Section 7(a) shall be amended to
read as follows:
"(a) Non-transferability. No Option granted hereunder shall be transferred by
the ------------------- Optionee to whom granted otherwise then pursuant to a
beneficiary designation made under Section 14(d) hereof or by will or the laws
of descent and distribution, and an Option may be exercised during the lifetime
of such Optionee only by the Optionee or his or her guardian or legal
representative. Notwithstanding the foregoing, in the case of Options not
intended to constitute Incentive Stock Options under Internal Revenue Code
Section 422, the Committee may, in its discretion, authorize all or a portion of
the Options to be granted to an Optionee to be on terms which permit transfer by
such Optionee to (i) the spouse, children (including step-children) or
grandchildren of the Optionee (each such individual and the Optionee shall be
referred to as an "Eligible Group Member"), (ii) a trust or trusts for the
exclusive benefit of one or more Eligible Group Members or for the benefit of
one or more Eligible Group Members and one or more organizations exempt from
income tax and described in Code Section 501(c)(3), (iii) a partnership or
similar vehicle in which such Eligible Group Members are the only partners or
participants, or (iv) an organization exempt from income tax and described in
Code Section 501(c)(3) in which an Eligible Group Member is involved in either
participation and/or management, provided that (x) there may be no consideration
for any such transfer, (y) the instrument of transfer must be approved by the
Company's Administrative Committee of Employee Benefits, and (z) transferred
Options shall not again be transferable other than by will or by the laws of
descent and distribution. Following transfer, any such Options shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer. The events of termination of employment of Section 7(d) hereof
shall continue to be applied with respect to the original Optionee, following
which the Options shall be exercisable by the transferee only to the extent, and
for the periods, specified by such Section 7(d)."
2. Section 7(d)(1) shall be added to read as follows:
"(1) If an Optionee's employment or service as a director
terminates for any reason other than death,
Disability, Retirement or Cause (as hereinafter
defined), the Optionee may at any time within three
(3) months after his or her termination of employment
or service as a director, exercise an Option to the
extent, and only to the extent, and only to the
extent, the Option or portion thereof was exercisable
at the date of such termination."
3. Section 7(d)(4) shall be amended in its entirety to read as follows: "(4) If
an Optionee dies while a director or an employee of the Company or any
Subsidiary or within three (3) months after termination as described in clause
(1) of this Section 7(d) or within one (1) year after termination as a result of
Disability as described in clause (2) of this Section 7(d), the Option may be
exercised at any time within one (1) year after the Optionee's death by the
person or persons to whom the Optionee's rights pass by transfer or designation,
as the case may be, pursuant to Section 7(a) or 14(d), or, absent such a
transfer or designation, as the case may be, by the person or persons to whom
such rights under the Option shall pass by will or by the laws of descent and
distribution; provided, however, that an Option may be exercised to the extent,
and only to the extent, that the Option or portion thereof was exercisable on
the date of death or earlier termination."
4. New Section 7(d)(5) shall be added to read as follows:
"(5) If an option holder's employment terminates as a
result of Retirement, the option holder may at any
time within one (1) year after termination of service
for Retirement, exercise such option to the extent,
and only to the extent, the option or portion thereof
was exercisable at the date of such termination. For
purpose of this Section 7(d)(5) "Retirement" shall
mean the attainment of "Early Retirement Age" or
"Normal Retirement Age" as these terms are defined in
the Countrywide Credit Industries, Inc. Defined
Benefit Pension Plan.
5. New Sections 14(c) and (d) shall be added to read as follows:
"(c) Effect of Death. In the event of the death of any
Optionee hereunder, the term "Optionee" as used
hereunder shall thereafter be deemed to refer to the
transferee or transferees under Section 7(a) or the
beneficiary or beneficiaries designated pursuant to
Section 14(d) hereof or if no such transfer or
designation is in effect, the person to whom the
Optionee's rights pass by will or applicable law, or,
if no such person has such right, the executor or
administrator of the estate of such Optionee."
"(d) Designation of Beneficiaries. An Optionee hereunder may file with the
Company a
----------------------------
written designation of a beneficiary or beneficiaries under this Plan and may
from time to time revoke or amend any such designation. Any designation of
beneficiary under the Plan shall be controlling over any other disposition,
testamentary or otherwise; provided, however that if the Committee is in doubt
as to the entitlement of any such beneficiary to any Option, the Committee may
determine to recognize only the legal representative of the Optionee in which
case the Company, the Committee and the members thereof shall not be under any
further liability to anyone."
<PAGE>
IN WITNESS WHEREOF, the Company has caused this fourth amendment to be
executed by its duly authorized officer this 23rd day of March, 1998.
Countrywide Credit Industries, Inc.
By:_/s/________________________
Sandor E. Samuels
Managing Director
Attest:
__/s/__________________________
Susan Bow
Assistant Secretary
Exhibit 11.1
COUNTRYWIDE CREDIT INDUSTRIES, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months
Ended May 31,
1998 1997
---------------- -----------------
(Dollar amounts in thousands,
except per share data)
Basic
<S> <C> <C>
Net earnings applicable to common stock $90,754 $69,969
================ =================
Average shares outstanding 110,127 106,257
================ =================
Per share amount $0.64 $0.66
================ =================
Diluted
Net earnings applicable to common stock $90,754 $69,969
================ =================
Average shares outstanding 110,127 106,257
Net effect of dilutive stock options --
based on the treasury stock method using
the closing market price, if higher than
average market price. 6,416 3,000
---------------- -----------------
Total average shares 116,543 109,257
================ =================
Per share amount $0.78 $0.64
================ =================
</TABLE>
COUNTRYWIDE CREDIT INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 12.1 - COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
The following table sets forth the ratio of earnings to fixed charges of the
Company for the three months ended May 31, 1998 and 1997 and for the five fiscal
years ended February 28, 1998 computed by dividing net fixed charges (interest
expense on all debt plus the interest element (one-third) of operating leases)
into earnings (income before income taxes and fixed charges).
Three Months Ended
May 31, Fiscal Years Ended February 29(28),
------------------------- ------------------------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
------------ ------------ ------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net earnings $90,754 $69,969 $257,358 $257,358 $195,720 $ 88,407 $179,460
Income tax expense 58,023 44,734 164,540 164,540 130,480 58,938 119,640
Interest charges 168,420 81,834 316,705 316,705 281,573 205,464 219,898
Interest portion of rental
expense 3,107 2,161 7,420 7,420 6,803 7,379 6,372
------------ ------------ ------------- ------------ ------------- ------------ ------------
Earnings available to cover
fixed charges $320,304 $198,698 $746,023 $746,023 $614,576 $360,188 $525,370
============ ============ ============= ============ ============= ============ ============
Fixed charges
Interest charges $168,420 $81,834 $316,705 $316,705 $281,573 $205,464 $219,898
Interest portion of rental
expense 3,107 2,161 7,420 7,420 6,803 7,379 6,372
------------ ------------ ------------- ------------ ------------- ------------ ------------
Total fixed charges $171,527 $83,995 $324,125 $324,125 $288,376 $212,843 $226,270
============ ============ ============= ============ ============= ============ ============
Ratio of earnings to fixed
charges 1.87 2.37 2.30 2.13 1.69 2.32 2.76
============ ============ ============= ============ ============= ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-END> May-31-1998
<CASH> 24,805
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 382,706
<DEPRECIATION> 142,622
<TOTAL-ASSETS> 13,621,695
<CURRENT-LIABILITIES> 0
<BONDS> 4,684,500
0
0
<COMMON> 5,530
<OTHER-SE> 2,205,946
<TOTAL-LIABILITY-AND-EQUITY> 13,621,695
<SALES> 0
<TOTAL-REVENUES> 450,265
<CGS> 0
<TOTAL-COSTS> 301,488
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 148,777
<INCOME-TAX> 58,023
<INCOME-CONTINUING> 90,754
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,754
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0.78
</TABLE>
