S-4/A

As filed with the Securities and Exchange Commission on August 18, 2004

Registration No. 333-117322

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

to

Form S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Countrywide Financial Corporation	Countrywide Home Loans, Inc.
(Exact name of registrant as specified in its charter)	(Exact name of registrant as specified in its charter)

Delaware	New York
(State or other jurisdiction of incorporation or organization)	(State or other jurisdiction of incorporation or organization)
13-2641992	13-2631719
(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)

4500 Park Granada

Calabasas, CA 91302

(818) 225-3000

(Address, including zip code, and telephone number, including area code, of registrants’ principal executive offices)

Sandor E. Samuels

Senior Managing Director and Chief Legal Officer

Countrywide Financial Corporation and Countrywide Home Loans, Inc.

4500 Park Granada

Calabasas, CA 91302

(818) 225-3000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Judith T. Kitano

Munger, Tolles & Olson LLP

355 South Grand Avenue, 35th Floor

Los Angeles, CA 90071

(213) 683-9100

         Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

         If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

         If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         The Registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated August 18, 2004

PROSPECTUS

Countrywide Financial Corporation

OFFER TO EXCHANGE

Convertible Securities due 2031

and an Exchange Fee

for all our outstanding

Liquid Yield Option ^TM Notes due 2031

Subject to the Terms and Conditions described in this Prospectus

The Exchange Offer

We are offering to exchange, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, our Convertible Securities due 2031 and an exchange fee for all of our Liquid Yield Option^TM Notes due 2031. We refer to this offer as the “exchange offer.” We refer to our Liquid Yield Option^TM Notes due 2031 as the “Old Securities” and to our Convertible Securities due 2031 as the “New Securities.” The CUSIP number of the Old Securities is 222372 AD 6 and the CUSIP number of the New Securities is 222372 AE 4.

•  Upon our completion of the exchange offer, each $1,000 principal amount at maturity of Old Securities that are validly tendered and not validly withdrawn will be exchanged for $1,000 principal amount at maturity of New Securities and an exchange fee of $2.50.

•  Tenders of Old Securities may be withdrawn at any time before 5:00 p.m. on the expiration date of the exchange offer.

•  As explained more fully in this prospectus, the exchange offer is subject to customary conditions, which we may waive.

•  The exchange offer expires at 5:00 p.m., New York City time, on September     , 2004, which date we refer to as the expiration date, unless extended.

The New Securities

•  Comparison: The terms of the New Securities differ from the terms of the outstanding Old Securities in the following ways:

—  The New Securities are convertible into cash and shares of our common stock having a combined aggregate value equal to 46.2820 shares of our common stock (which reflects the effect of our August 30, 2004 stock dividend), subject to adjustment under the circumstances and during the periods described herein;

—  The conversion rate for the New Securities will be adjusted, subject to certain limitations, for quarterly cash dividends on shares of our common stock above $0.10 per share;

—  The amount of contingent interest, if any, payable per New Security will be equal to the greater of 0.125% of the average market price of a New Security or a fixed amount multiplied by the conversion rate on the accrual date for each contingent interest payment date; and

—  The purchase price of any New Securities that a holder may require us to purchase must be satisfied in cash.

•  Maturity: The New Securities will mature on February 8, 2031.

•  Interest Payments: We will not pay interest on the New Securities prior to maturity unless contingent interest becomes payable.

•  Guarantee: The New Securities will be fully and unconditionally guaranteed by our mortgage-lending subsidiary, Countrywide Homes Loans, Inc.

•  Ranking: The New Securities are unsecured and unsubordinated indebtedness of Countrywide Financial Corporation and will rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness.

•  Optional Redemption: We may redeem the New Securities, in whole or in part at any time on or after February 8, 2006, at the prices set forth in this prospectus.

SEE “RISK FACTORS” BEGINNING ON PAGE 12 FOR A DISCUSSION OF ISSUES THAT YOU SHOULD CONSIDER WITH RESPECT TO THE EXCHANGE OFFER.

None of our Board of Directors, Countrywide Financial Corporation, Countrywide Home Loans, Inc., the exchange agent, the information agent, the dealer manager or any other person is making any recommendation as to whether you should choose to exchange your Old Securities for New Securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or this transaction, passed upon the merits or fairness of this transaction, or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

LEHMAN BROTHERS

Dealer Manager

August       , 2004

Liquid Yield Option^TM is a trademark of Merrill Lynch & Co., Inc.

TABLE OF CONTENTS

	Page
Where You Can Find More Information		ii
Summary		1
Risk Factors		12
Forward-Looking Information		18
Ratio of Earnings to Fixed Charges		19
Price Range and Dividend History of our Common Stock		20
Description of Capital Stock		21
The Exchange Offer		23
Description of the New Securities		30
Certain United States Federal Income Tax Consequences		48
Legal Matters		55
Experts		55
Documents Incorporated by Reference		56

      You should rely only on the information contained or incorporated by reference in this prospectus. Neither we nor the dealer manager has authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus is accurate as of the date appearing on the front cover of this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date.

WHERE YOU CAN FIND MORE INFORMATION

      We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any public offering document we file without charge at any of the SEC’s Public Reference Section’s following locations:

Public Reference Room
450 Fifth Street, N.W
Room 1024
Washington, D.C. 20549 Northeast Regional Office
233 Broadway
New York, New York 10007 Midwest Regional Office
500 West Madison Street
Suite 1400
Chicago, Illinois 60661

      You can also request copies of all, or any portion, of these documents by writing the Public Reference Section and paying certain prescribed fees. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Section. Additionally, these documents are available to the public from the SEC’s web site at http://www.sec.gov. You can also inspect reports, proxy statements and other information about us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

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SUMMARY

      The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information included elsewhere or incorporated by reference in this prospectus and the information contained in documents incorporated by reference in the registration statement of which this forms a part. Because this is a summary, it may not contain all the information that may be important to you. You should read the entire prospectus, as well as the information incorporated by reference, before making an investment decision.

Countrywide Financial Corporation

      Countrywide Financial Corporation (“CFC”) is a holding company, which through its subsidiaries is engaged primarily in the residential mortgage banking business, as well as in other financial services that are in large part related to the residential mortgage market. As described herein, the Company’s activities are grouped into five distinct business segments.

      Mortgage Banking Segment. Primarily through its principal subsidiary, Countrywide Home Loans, Inc. (“CHL”), CFC engages in the residential mortgage banking business, which entails the origination, purchase, sale (typically through securitization) and servicing of residential mortgage loans. The residential mortgage loans offered by CFC include prime and subprime credit mortgage loans secured by single-(one-to-four) family residences and prime home equity lines of credit. The Mortgage Banking Segment serves consumers and institutions, nationwide.

      Capital Markets Segment. CFC operates an institutional broker-dealer that specializes in the mortgage-backed securities market. CFC’s activities therein consist primarily of trading and underwriting mortgage-backed securities.

      Insurance Segment. CFC offers property and casualty insurance (homeowners’ and auto), as well as life and disability insurance, both as an underwriter and as an independent agent. CFC specializes in underwriting lender-placed property and casualty insurance. CFC also provides reinsurance coverage to primary mortgage insurance carriers.

      Banking Segment. CFC operates a nationally-chartered bank that primarily invests in residential mortgage loans and prime home equity lines of credit sourced through CFC’s mortgage banking operation. CFC also provides short-term secured (mortgage warehouse) financing to other mortgage lenders.

      Global Segment. Through a majority-owned joint venture with the Barclays PLC, CFC offers residential mortgage loan application processing and servicing on behalf of financial institutions in the United Kingdom.

      CFC is a Delaware corporation. Our common stock is traded on the New York Stock Exchange and the Nasdaq Stock Market under the symbol “CFC.” Our principal executive offices are located at 4500 Park Granada, Calabasas, California 91302 and our telephone number is (818) 225-3000.

Countrywide Home Loans, Inc.

      CHL engages in the residential mortgage banking business, which entails the origination, purchase, sale (typically through securitization) and servicing of residential mortgage loans. The residential mortgage loans offered by CHL include prime and subprime credit mortgage loans secured by single-(one-to-four) family residences and prime home equity lines of credit. CHL serves consumers and institutions, nationwide.

      CHL is a New York corporation. CHL’s principal executive offices are located at 4500 Park Granada, Calabasas, California 91302 and CHL’s telephone number is (818) 225-3000.

RECENT DEVELOPMENTS

      On August 17, 2004, the stockholders of CFC approved an amendment to the Restated Certificate of Incorporation of CFC to increase the number of authorized shares of CFC common stock from 500,000,000 to 1,000,000,000.

      CFC’s Board of Directors has declared a two-for-one stock split of CFC common stock in the form of a stock dividend of one share of CFC common stock for each outstanding share of such common stock. The dividend is payable on August 30, 2004 to holders of record of CFC common stock on August 25, 2004, and therefore will be paid prior to the expiration date of our exchange offer.

      References in this prospectus to the conversion rate for the New Securities, the conversion trigger price, the dividend threshold amount for conversion rate adjustments, the historical sales prices for and dividends paid on CFC common stock and dividends declared thereon, and other similar figures have been adjusted to reflect the effect of the August 30, 2004 stock dividend.

THE EXCHANGE OFFER

Purpose of the Exchange Offer	The purpose of this exchange offer is to change certain of the terms of the Old Securities. For a more detailed description of these changes, see “Material Differences Between the Old Securities and New Securities.”
The Exchange Offer	CFC is offering to exchange $1,000 principal amount at maturity of New Securities and an exchange fee of $2.50 for each $1,000 principal amount at maturity of Old Securities accepted for exchange.
Conditions to Exchange Offer	The exchange offer is subject to certain customary conditions, including that the registration statement and any post-effective amendment to the registration statement covering the New Securities be effective under the Securities Act of 1933, as amended. See “The Exchange Offer — Conditions to the Exchange Offer.”
Expiration Date	The exchange offer will expire at 5:00 p.m., New York City time, on September      , 2004, which date we refer to as the expiration date, unless extended or earlier terminated by us. We may extend the expiration date for any reason. If we decide to extend it, we will announce any extensions by press release or other permitted means no later than 9:00 a.m. on the business day after the scheduled expiration of the exchange offer.
Withdrawal of Tenders	Tenders of Old Securities may be withdrawn in writing at any time prior to 5:00 p.m., New York City time, on the expiration date.
Procedures for Exchange	In order to exchange Old Securities, you must tender the Old Securities together with a properly completed letter of transmittal and the other agreements and documents described in the letter of transmittal. If you own Old Securities held through a broker or other third party, or in “street name,” you will need to follow the instructions in the letter of transmittal on how to instruct them to tender the Old Securities on your behalf, as well as submit a letter of transmittal and the other agreements and documents described in this document. We will determine in our reasonable discretion whether any Old Securities have been validly tendered. Old Securities may be tendered by electronic transmission of accept-

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	ance through The Depository Trust Company’s, or DTC’s, Automated Tender Offer Program, or ATOP, procedures for transfer or by delivery of a signed letter of transmittal pursuant to the instructions described therein. Custodial entities that are participants in DTC must tender Old Securities through DTC’s ATOP, by which the custodial entity and the beneficial owner on whose behalf the custodial entity is acting agree to be bound by the letter of transmittal. A letter of transmittal need not accompany tenders effected through ATOP. Please carefully follow the instructions contained in this document on how to tender your securities.
	If you decide to tender Old Securities in the exchange offer, you may withdraw them at any time prior to the expiration of the exchange offer.
	If we decide for any reason not to accept any Old Securities for exchange, they will be returned without expense promptly after the expiration or termination of the exchange offer.
	Please see pages 23 through 29 for instructions on how to exchange your Old Securities.
Acceptance of Old Securities	We will accept all Old Securities validly tendered and not withdrawn as of the expiration of the exchange offer and will issue the New Securities promptly after expiration of the exchange offer, upon the terms and subject to the conditions in this prospectus and the letter of transmittal. We will accept Old Securities for exchange after the exchange agent has received a timely book-entry confirmation of transfer of Old Securities into the exchange agent’s DTC account and a properly completed and executed letter of transmittal. Our oral or written notice of acceptance to the exchange agent will be considered our acceptance of the exchange offer.
Amendment of the Exchange Offer	We reserve the right not to accept any of the Old Securities tendered, and to otherwise interpret or modify the terms of this exchange offer, provided that we will comply with applicable laws that require us to extend the period during which securities may be tendered or withdrawn as a result of changes in the terms of or information relating to the exchange offer.
Use of Proceeds	We will not receive any cash proceeds from this exchange offer. Old Securities that are validly tendered and exchanged pursuant to the exchange offer will be retired and canceled. Accordingly, our issuance of New Securities will not result in any cash proceeds to us.
Fees and Expenses of the Exchange Offer	We estimate that the approximate total cost of the exchange offer, including payment of the exchange fee, assuming all of the Old Securities are exchanged for New Securities, will be $4.0 million.
Taxation	The U.S. federal income tax consequences of the exchange offer and of the ownership and disposition of the New Securities are unclear. We intend to take the position that the modifications to the Old Securities resulting from the exchange of Old Securities

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	for New Securities and payment of an exchange fee will not constitute a significant modification of the Old Securities for tax purposes. Consistent with our position, the New Securities will be treated as a continuation of the Old Securities and, apart from the receipt of the exchange fee, there will be no U.S. federal income tax consequences to a holder who exchanges Old Securities for New Securities pursuant to the exchange offer. If, contrary to our position, the exchange constitutes a significant modification, the tax consequences to you could materially differ.
	Please see “Certain United States Federal Income Tax Consequences” beginning on page 48.
Old Securities Not Tendered or Accepted for Exchange	Any Old Securities not accepted for exchange for any reason will be returned without expense to you as promptly as practicable after the expiration or termination of this exchange offer. If you do not exchange your Old Securities in this exchange offer, or if your Old Securities are not accepted for exchange, you will continue to hold your Old Securities and will be entitled to all the rights and subject to all the limitations applicable to the Old Securities.
Dealer Manager	Lehman Brothers Inc. is the dealer manager for this exchange offer. Its address and telephone numbers are located on the back cover of this prospectus.
Exchange Agent	The Bank of New York is the exchange agent for this exchange offer. Its address and telephone numbers are located in the section “The Exchange Offer — Exchange Agent” and on the back cover of this prospectus.
Information Agent	D.F. King & Co., Inc. is the information agent for this exchange offer. Its address and telephone numbers are located in the section “The Exchange Offer — Information Agent” and on the back cover of this prospectus.

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MATERIAL DIFFERENCES BETWEEN THE OLD SECURITIES AND NEW SECURITIES

      The material differences between the Old Securities and New Securities are illustrated in the table below. The table below is qualified in its entirety by the information contained in this prospectus and the documents governing the Old Securities and the New Securities, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part. For a more detailed description of the New Securities, see “Description of the New Securities.”

	Old Securities	New Securities
Notes Offered	$675,000,000 aggregate principal amount at maturity of Old Securities.	Up to $675,000,000 aggregate principal amount at maturity of New Securities.
	On February 8, 2001, each Old Security was issued at a price of $741.37 per Old Security and a principal amount at maturity of $1,000.	The initial accreted principal amount per New Security will be deemed to equal the accreted principal amount per Old Security on the date the New Securities are issued (the “exchange date”).
Settlement Upon Conversion	Upon conversion of Old Securities, we will deliver shares of our common stock.	Upon conversion of New Securities, we will deliver, for each $1,000 principal amount at maturity of New Securities:
		• cash (the “cash amount”) in an amount equal to the lesser of (a) the accreted principal amount of the New Securities and (b) the product of the conversion rate (46.2820 after giving effect to our August 30, 2004 stock dividend, but subject to adjustment) multiplied by the average of the closing price of our common stock (on the New York Stock Exchange or such other national or regional securities exchange or market as described herein) for each day of the 20-day cash settlement averaging period (the “stock price”); and
		• a number of shares of our common stock equal to (a)(i) the conversion rate multiplied by the stock price, minus (ii) the cash amount, all divided by (b) the stock price.

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	Old Securities	New Securities
Conversion Rate Adjustments for Cash Dividends	None, except for extraordinary cash dividends.	The conversion rate will be adjusted, subject to certain limitations, for cash distributions to all holders of shares of our common stock, excluding (a) any dividend or distribution in connection with our liquidation, dissolution or winding up or (b) any quarterly cash dividend on our common stock to the extent that such quarterly cash dividend does not exceed the dividend threshold amount; the “dividend threshold amount” means $0.10 per share and is subject to adjustment on the same basis as the conversion rate, provided that no adjustment will be made to the dividend threshold amount for any adjustment made to the conversion rate pursuant to this provision; in the event of a dividend or distribution to which this provision applies, the conversion rate will be adjusted by multiplying the conversion rate in effect immediately prior to such adjustment by a fraction: • the numerator of which will be the current market price of our common stock; and • the denominator of which will be the current market price of our common stock minus the amount per share of such dividend or distribution (or a portion of such dividend or distribution, as determined below). If an adjustment is required to be made as a result of a quarterly cash dividend, the adjustment will be based upon the amount by which the distribution exceeds the dividend threshold amount. If an adjustment is required to be made under this clause as a result of a cash distribution that is not a quarterly cash dividend, the adjustment will be based upon the full amount of the distribution.
Contingent Interest	The amount of contingent interest payable per Old Security in respect of any applicable six-month period will be equal to the greater of:	The amount of contingent interest payable per New Security in respect of any applicable six-month period will be equal to the greater of:
	• 0.125% of the average market price of an Old Security for the five trading day period ending on the second trading day immediately preceding the first day of the applicable six-month period; or	• 0.125% of the average market price of a New Security for the five trading day period ending on the second trading day immediately preceding the first day of the applicable six-month period; or

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	Old Securities	New Securities
	• the sum of all regular cash dividends paid by us per share on our common stock during that six-month period multiplied by the number of shares of common stock issuable upon conversion of an Old Security on each such payment date.	• a fixed amount multiplied by the conversion rate in effect on the accrual date for such contingent interest payment. The “fixed amount” will be equal to $0.20 and will be adjusted on the same basis as the conversion rate.
Purchase of New Securities by CFC at the Option of the Holder	We have the option to satisfy all or a portion of the purchase price of Old Securities that the holders require us to purchase (other than purchases in connection with a change in control) with our common stock, with the number of shares to be delivered being equal to (a) the amount of cash to which the holders are otherwise entitled to receive (or, if less, the portion of such amount that we have elected to settle with common stock), divided by (b) the market price of our common stock.	We must satisfy all of the purchase price of New Securities that holders require us to purchase in cash.

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THE NEW SECURITIES

New Securities	Up to $675,000,000 aggregate principal amount at maturity of New Securities due 2031. We will not pay interest on the New Securities prior to maturity unless contingent interest becomes payable. At maturity we will pay $1,000 per New Security. The initial accreted principal amount of a New Security will be deemed to equal the accreted principal amount of an Old Security on the exchange date.
Maturity of New Securities	February 8, 2031.
Yield to Maturity of New Securities	1.00% per year (computed on a semi-annual bond equivalent basis), excluding any contingent interest.
Conversion Rate	For each New Security surrendered for conversion, if the conditions are satisfied, a holder will receive an amount in cash and shares of our common stock having a combined aggregate value equal to 46.2820 (after giving effect to our August 30, 2004 stock dividend described above under “Recent Developments”) shares of our common stock (the “conversion rate”). The conversion rate may be adjusted for certain reasons specified in the indenture, but will not be adjusted for accrued issue discount. See “Description of the New Securities — Conversion Rights — Conversion Rate Adjustments.”
Conversion Rights	Holders may surrender New Securities for conversion prior to the close of business on the business day immediately preceding February 8, 2031, under any of the following circumstances:
	• during any calendar quarter (and only during such calendar quarter) if, as of the last day of the preceding calendar quarter, the closing sale price of our common stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of such preceding quarter is more than a specified percentage, beginning at 132.27% and declining 0.21% per quarter thereafter, of the accreted conversion price per share of common stock on the last trading day of such preceding calendar quarter (which is the case for the calendar quarter ending September 30, 2004). The accreted conversion price per share as of any day will equal the accreted principal amount of the New Securities divided by the conversion rate; or
	• during any period in which the credit rating assigned to the New Securities by either Moody’s or Standard & Poor’s falls below an investment grade rating level.
	New Securities in integral multiples of $1,000 principal amount at maturity called for redemption may be surrendered for conversion until the close of business on the second business day prior to the redemption date. In addition, if we make a significant distribution to our shareholders or if we are or CHL is a party to certain consolidations, mergers or binding share exchanges, New Securities may be surrendered for conversion as provided in “Description of the New Securities — Conversion Rights.” The ability to surrender New Securities for conversion will expire at the close of business on the business day immediately preceding February 8, 2031, unless they have previously been called for redemption or

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	repurchase. See “Description of the New Securities — Conversion Rights — Conversion Upon Notice of Redemption.”
	Upon conversion of a New Security, we will deliver for each $1,000 principal amount at maturity of New Securities:
	• cash (the “cash amount”) in an amount equal to the lesser of (a) the accreted principal amount of the New Securities and (b) the product of the conversion rate (46.2820 after giving effect to our August 30, 2004 stock dividend, but subject to adjustment as described herein) multiplied by the average of the closing prices of our common stock (on the New York Stock Exchange or such other national or regional securities exchange or market as described herein) for each day of the 20-day cash settlement averaging period (the “stock price”); and
	• a number of shares of our common stock equal to (a)(i) the conversion rate multiplied by the stock price, minus (ii) the cash amount, all divided by (b) the stock price.
	In addition, we will pay cash for all fractional shares of common stock.
	Upon conversion of a New Security, a holder will not receive any additional payment representing accrued issue discount (as described below). Instead, accrued issue discount will be deemed paid by the cash and shares of common stock received by the holder on conversion.
	The accreted principal amount on any date will be equal to the sum of the initial accreted principal amount and accrued issue discount on that date.
Issue Discount	We are issuing each New Security at an initial accreted principal amount equal to the amount of the accreted principal amount of an Old Security on the exchange date and significantly below the principal amount of a New Security at maturity. The difference between the initial accreted principal amount and the principal amount at maturity of a New Security is referred to as issue discount. This issue discount accrues daily at a rate of 1.00% per year beginning on the exchange date, calculated on a semi-annual bond equivalent basis, using a 360-day year comprised of twelve 30-day months. We intend to take the position that the exchange of Old Securities for New Securities does not constitute a significant modification of the Old Securities. Accordingly, because the Old Securities are subject to special rules applicable to contingent payment debt obligations, the accrual of interest income based on a comparable yield, also referred to as “original issue discount,” as calculated for United States federal income tax purposes, will significantly exceed the accrued issue discount. See “Certain United States Federal Income Tax Consequences — Classification and Treatment of the New Securities.”
Contingent Interest	We will pay contingent interest to the holders of New Securities during any six-month period from February 8 to August 7 and from August 8 to February 7, with the initial six-month period

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	commencing February 8, 2006, if the average market price of a New Security for the five trading days ending on the second trading day immediately preceding the first day of the applicable six-month period equals 120% or more of the accreted principal amount of such New Securities on the day immediately preceding the first day of the applicable six-month period.
	The amount of contingent interest payable per New Security in respect of any six-month period will be equal to the greater of:
	• 0.125% of the average market price of a New Security for the five trading day period referred to above; or
	• a fixed amount multiplied by the conversion rate in effect on the accrual date for such contingent interest payment.
	The “fixed amount” will be equal to $0.20 and shall be adjusted on the same basis as the conversion rate.
	The issue discount will continue to accrue at the yield to maturity whether or not contingent interest is paid.
Guarantee	CHL fully and unconditionally guarantees our obligations to make cash payments on the New Securities to the extent described in this prospectus.
Ranking	The New Securities are unsecured and unsubordinated indebtedness of CFC and rank equally with our other existing and future unsecured and unsubordinated indebtedness (if any). CHL’s guarantee of the New Securities ranks equally with CHL’s other existing and future unsecured and unsubordinated indebtedness.
U.S. Federal Income Tax Consequences	The U.S. federal income tax consequences of the ownership and disposition of the New Securities are unclear. We intend to take the position that the exchange of Old Securities for New Securities does not constitute a significant modification of the Old Securities. Consistent with our position, the New Securities will be treated as a continuation of the Old Securities and will continue to be subject to the same rules governing the treatment of contingent payment debt instruments as were applicable to the Old Securities. Pursuant to those rules, a holder of the New Securities is required to accrue interest income on the New Securities for each year, in the amounts described in the registration statement relating to the Old Securities, regardless of whether the holder uses the cash or accrual method of tax accounting, and in excess of the accruals on the New Securities for non-tax purposes and any contingent interest payments actually received in that year. If, contrary to our position, the exchange constitutes a significant modification, the tax consequences to you could materially differ. See “Certain United States Federal Income Tax Consequences — Classification and Treatment of the New Securities” for more information.
Sinking Fund	None.

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Redemption of New Securities at the Option of CFC	We may redeem all or a portion of the New Securities for cash at any time on or after February 8, 2006 at the redemption prices set forth in “Description of the New Securities — Redemption of New Securities at the Option of CFC.”
Purchase of New Securities by CFC at the Option of the Holder	Holders may require us to purchase for cash all or a portion of their New Securities on February 8, 2006 for a price equal to $779.28 per New Security, on February 8, 2011 for a price equal to $819.14 per New Security, on February 8, 2016 for a price equal to $861.03 per New Security, on February 8, 2021 for a price equal to $905.06 per New Security, and on February 8, 2026 for a price equal to $951.35 per New Security.
Change in Control	Upon a change in control of CFC or CHL occurring on or before February 8, 2006, each holder may require us to repurchase all or a portion of such holder’s New Securities for cash at a price equal to 100% of the initial accreted principal amount for such New Securities plus accrued issue discount to the date of repurchase. See “Description of the New Securities — Change in Control Permits Purchase of New Securities by CFC at the Option of the Holder.”
Optional Conversion to Semi-Annual Coupon Securities Upon Tax Event	After the occurrence of a Tax Event, as defined in “Description of the New Securities — Optional Conversion to Semi-Annual Coupon Securities Upon Tax Event,” we will have the option to convert the New Securities to securities on which we will pay interest in cash on a semi-annual bond equivalent basis. In such cases, interest will accrue at a rate of 1.00% per year on a restated principal amount equal to the initial accreted principal amount of the New Securities plus accrued issue discount to the option exercise date. Interest will be computed on the basis of a 360-day year of twelve 30-day months and will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the option exercise date. In such event, each of the redemption price, purchase price and change in control purchase price will be adjusted, and contingent interest will cease to accrue on the New Securities. Exercise of this option by us will not affect a holder’s conversion rights.
DTC Eligibility	The New Securities have been issued in book-entry form and are represented by permanent global certificates without coupons deposited with a custodian for and registered in the name of a nominee of DTC in New York, New York. Beneficial interests in any such securities are shown on, and transfers are effected only through, records maintained by DTC and its direct and indirect participants, and any such interest may not be exchanged for certificated securities, except in limited circumstances. See “Description of the New Securities — Book-Entry System.”
Symbol for our Common Stock	Our common stock is traded on the New York Stock Exchange and the Nasdaq Stock Market under the symbol “CFC.”

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RISK FACTORS

      Prospective investors should carefully consider the following information with the other information contained or incorporated by reference in this prospectus before exchanging Old Securities for New Securities.

Risks Relating to New Securities

An active trading market for New Securities may not develop.

      We cannot assure you that an active trading market for the New Securities will develop and, if developed, the liquidity or sustainability of any such market. Moreover, we cannot assure you that you will be able to sell New Securities or, if sold, the price you would receive. Future trading prices of the New Securities will depend on many factors, including, among other things, prevailing interest rates, our operating results, the market price of our common stock and the market for similar securities. The liquidity of the trading market for the New Securities will depend in part on the level of participation of the holders of Old Securities in the exchange offer. A higher level of participation will result in greater liquidity of the trading market for the New Securities and lesser liquidity of the trading market for the Old Securities that are not tendered in the exchange offer. If an active market for New Securities fails to develop or be sustained, the trading price and liquidity of the New Securities could be materially adversely affected.

We may not have the ability to raise the funds necessary to finance the purchase of New Securities at the option of the holders or in a change in control purchase.

      We may be required, at the option of the holders, to purchase New Securities for cash prior to their stated maturity upon the occurrence of certain events, including:

•  the occurrence of specific kinds of change in control events on or before February 8, 2006; and

•  on February 8, 2006, 2011, 2016, 2021 and 2026.

However, it is possible that we will not have sufficient funds at that time to make the required purchases of New Securities for cash or that restrictions in our indebtedness will not allow those purchases for cash. Our ability to purchase the New Securities in those events also may be limited by law, by the indenture governing the New Securities, by the terms of other agreements relating to our current indebtedness and by indebtedness and agreements that we may enter into in the future which may replace, supplement or amend our existing or future indebtedness. If a change in control occurs at a time when we are prohibited from purchasing the New Securities, we could seek the consent of lenders to purchase the New Securities or could attempt to refinance the borrowings that contain this prohibition. If we do not obtain a consent or refinance these borrowings, we could remain prohibited from purchasing the New Securities. Our failure to purchase the New Securities would constitute an event of default under the indenture under which we will issue the New Securities, which might constitute a default under the terms of our indebtedness at that time. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a “change in control” under the indenture. See “Description of the New Securities — Purchase of New Securities at the Option of the Holder” and “Description of the New Securities — Change in Control Permits Purchase of New Securities by CFC at the Option of the Holder.”

You should consider the United States federal income tax consequences of owning New Securities.

      We intend to take the position that the exchange of Old Securities for New Securities does not constitute a significant modification of the Old Securities for U.S. federal income tax purposes, and that the New Securities will be treated as a continuation of the Old Securities and will continue to be subject to the same rules governing the treatment of contingent payment debt instruments as were applicable to the Old Securities. Among other things, pursuant to those rules, a holder of the New Securities is required to accrue interest income on the New Securities for each year, in the amounts described in the registration statement relating to the Old Securities, regardless of whether the holder uses the cash or accrual method of tax accounting, and in excess of the accruals on the New Securities for non-tax purposes and any contingent

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interest payments actually received in that year. If, contrary to our position, the exchange constitutes a significant modification, the tax consequences to you could materially differ. For example, a holder could be required to include in income each year amounts substantially in excess or substantially less than amounts required to be accrued with respect to the Old Securities. See “Certain United States Federal Income Tax Consequences — Classification and Treatment of the New Securities” for more information.

      Without regard to whether the exchange of Old Securities for New Securities constitutes a significant modification, if at any time we make a distribution of property to our stockholders that would be taxable to the stockholders as a dividend for U.S. federal income tax purposes and, in accordance with the anti-dilution provisions of the New Securities, the conversion rate of the New Securities is increased, such increase may be deemed to be the payment of a taxable dividend to holders of the New Securities. See “Certain United States Federal Income Tax Consequences — Classification and Treatment of the New Securities” for more information.

The New Securities will not contain certain restrictive covenants, and there is limited protection in the event of a change of control.

      The indenture under which the New Securities will be issued will not contain restrictive covenants that would protect you from several kinds of transactions that may adversely affect you. In particular, the indenture will not contain covenants that will limit our ability to pay dividends or make distributions on or redeem our capital stock or limit our ability to incur additional indebtedness and, therefore, protect you in the event of a highly leveraged transaction or other similar transaction. In addition, the requirement that we offer to repurchase the New Securities upon a change of control is limited to the transactions specified in the definition of a “change of control” under “Description of the New Securities — Change in Control Permits Purchase of New Securities by CFC at the Option of the Holder.” Accordingly, we could enter into certain transactions, such as acquisitions, refinancings or a recapitalization, that could affect our capital structure and the value of our common stock but would not constitute a change of control.

Changes in our common stock price, credit ratings or the financial and credit markets could adversely affect the market price of the New Securities.

      The market price of the New Securities will be based on a number of factors, including:

•  the market price of our common stock;

•  our ratings with major credit rating agencies; and

•  the overall condition of the financial and credit markets.

      Because the New Securities will be convertible upon issuance, the market price of the New Securities will be closely related to the market price of our common stock. In addition, credit rating agencies continually revise their ratings for companies that they follow, including us. The credit rating agencies also evaluate the companies in our industry as a whole and may change their credit rating for us based on their overall view of our industry. We cannot assure you that credit rating agencies will rate the New Securities, or if they do rate the New Securities, that they will maintain their ratings on the New Securities. A negative change in our credit rating or the rating of the New Securities, if any, could have an adverse effect on the market price of the New Securities. The condition of the financial and credit markets have fluctuated in the past and are likely to fluctuate in the future. Fluctuations in these factors could have an adverse effect on the price of the New Securities.

Risks Relating to the Exchange Offer

The United States federal income tax consequences of the exchange of the Old Securities for the New Securities are unclear.

      The U.S. federal income tax consequences of the exchange offer are unclear. We intend to take the position that the modifications to the Old Securities resulting from the exchange of Old Securities for New

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Securities and payment of the exchange fee will not constitute a significant modification of the Old Securities for tax purposes. That position, however, is subject to considerable uncertainty and could be challenged by the IRS. Consistent with our position, the New Securities will be treated as a continuation of the Old Securities and, apart from the receipt of the exchange fee, there will be no U.S. federal income tax consequences to a holder who exchanges Old Securities for New Securities pursuant to the exchange offer. If, contrary to our position, the exchange constitutes a significant modification, the tax consequences to you could materially differ. For example, under one possible alternative characterization, a holder could be required to recognize ordinary income in an amount equal to the excess of the fair market value of the New Securities received in the exchange over the holder’s adjusted tax basis in the Old Securities (which excess is likely to be substantial in the case of a holder who purchased the Old Securities in the initial offering). See “Certain United States Federal Income Tax Consequences — Exchange of Old Securities for New Securities” for more information.

      We intend to treat payment of the exchange fee as ordinary income to holders participating in the exchange offer and to report such payments to holders and the IRS for information purposes in accordance with such treatment. Therefore, the receipt of the exchange fee by a Non-U.S. Holder (as defined in “Certain United States Federal Income Tax Consequences”) participating in the exchange offer may be subject to U.S. federal withholding tax. See “Certain United States Federal Income Tax Consequences — Exchange of Old Securities for New Securities” for more information.

If you do not exchange your Old Securities, the Old Securities you retain may become less liquid as a result of the exchange offer.

      If a significant number of Old Securities are exchanged in the exchange offer, the liquidity of the trading market for the Old Securities, if any, after the completion of the exchange offer may be substantially reduced. Any Old Securities exchanged will reduce the aggregate number of Old Securities outstanding. As a result, the Old Securities may trade at a discount to the price at which they would trade if the transactions contemplated by this prospectus were not consummated, subject to prevailing interest rates, the market for similar securities and other factors. We cannot assure you that an active market in the Old Securities will exist or be maintained and we cannot assure you as to the prices at which the Old Securities may be traded.

Our Board of Directors has not made a recommendation with regard to whether or not you should tender your Old Securities in the exchange offer and we have not obtained a third-party determination that the exchange offer is fair to holders of the Old Securities.

      We are not making a recommendation as to whether holders of the Old Securities should exchange them. We have not retained and do not intend to retain any unaffiliated representative to act solely on behalf of the holders of the Old Securities for purposes of negotiating the terms of the exchange offer and/ or preparing a report concerning the fairness of the exchange offer. We cannot assure holders of the Old Securities that the value of the New Securities received in the exchange offer will in the future equal or exceed the value of the Old Securities tendered and we do not take a position as to whether you ought to participate in the exchange offer.

Risks Related to Our Future Results

General business, economic and political conditions may significantly affect our earnings.

      Our business and earnings are sensitive to general business and economic conditions in the United States. These conditions include short-term and long-term interest rates, inflation, fluctuations in both debt and equity capital markets and the strength of the U.S. economy and the local economies in which we conduct business. If any of these conditions worsen, our business and earnings could be adversely affected. For example, business and economic conditions that negatively impact household incomes could decrease the demand for our home loans and increase the number of customers who become delinquent or default on their loans; or, a rising interest rate environment could decrease the demand for loans.

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      In addition, our business and earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies. We are particularly affected by the policies of the Federal Reserve Board, which regulates the supply of money and credit in the United States. The Federal Reserve Board’s policies influence the size of the mortgage origination market, which significantly impacts the earnings of our Loan Production Sector and the value of our investment in MSRs and other retained interests. The Federal Reserve Board’s policies also influence the yield on our interest-earning assets and the cost of our interest-bearing liabilities. Changes in those policies are beyond our control and difficult to predict and can have a material adverse effect on the Company’s business, results of operations and financial condition.

      Political conditions can also impact our earnings. Acts or threats of war or terrorism, as well as actions taken by the U.S. or other governments in response to such acts or threats, could impact business and economic conditions in the United States.

If we cannot effectively manage the volatility of our mortgage banking business, our earnings could be affected.

      The level and volatility of interest rates significantly affect the mortgage banking industry. For example, a decline in mortgage rates generally increases the demand for home loans as borrowers refinance, but also generally leads to accelerated payoffs in our mortgage servicing portfolio, which negatively impacts the value of our MSRs.

      We attempt to manage interest rate risk in our mortgage banking business primarily through the natural counterbalance of our loan production and servicing operations. In addition, we also use derivatives extensively in order to manage the interest rate, or price risk, inherent in our assets, liabilities, and loan commitments. Our main objective in managing interest rate risk is to moderate the impact of changes in interest rates on our earnings over time. Our interest rate risk management strategies may result in significant earnings volatility in the short term. The success of our interest rate risk management strategy is largely dependent on our ability to predict the earnings sensitivity of our loan servicing and loan production operations in various interest rate environments. The success of this strategy impacts our net income. This impact, which can be either positive or negative, can be material.

Our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain.

      Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.

      We have identified several accounting policies as being “critical” to the presentation of our financial condition and results of operations because they require management to make particularly subjective or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be recorded under different conditions or using different assumptions. These critical accounting policies relate to our gain from sale of loans and securities, valuation of retained interests and interest rate management activities. Because of the inherent uncertainty of the estimates associated with these critical accounting policies, we cannot provide any assurance that we will not make significant adjustments to the related amounts recorded at December 31, 2003. For more information, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” section included in our 2003 Annual Report on Form 10-K, incorporated into this prospectus by reference.

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The financial services industry is highly competitive.

      We operate in a highly competitive industry that could become even more competitive as a result of economic, legislative, regulatory and technological changes. Competition for mortgage loans comes primarily from large commercial banks and savings institutions. Many of our competitors have fewer regulatory constraints. For example, national banks and federal savings and loan institutions are not subject to certain state laws and regulations targeted at predatory lending practices and we could be at a competitive disadvantage with respect to fulfilling legitimate subprime credit opportunities. Another competitive consideration is that other companies have lower cost structures and others are less reliant on the secondary mortgage market for funding due to their greater portfolio lending capacity.

      We face competition in such areas as mortgage product offerings, rates and fees, and customer service, both at the retail and institutional level. In addition, technological advances and heightened e-commerce activities have increased consumers’ accessibility to products and services generally. This has intensified competition among banking as well as non-banking companies in offering financial products and services, with or without the need for a physical presence.

Changes in regulations could adversely affect our business.

      We are heavily regulated by banking, mortgage lending and insurance laws at the federal, state and local levels, and proposals for further regulation of the financial services industry are continually being introduced. We are subject to many other federal, state and local laws and regulations that affect our business, including those regarding taxation and privacy. Congress and state legislatures, as well as federal and state regulatory agencies, review such laws, regulations and policies and periodically propose changes that could affect us in substantial and unpredictable ways. Such changes could, for example, limit the types of financial services and products we offer, or increase our cost to offer such services and products. It is possible that one or more legislative proposals may be adopted or regulatory changes may be implemented that would have an adverse effect on our business. Our failure to comply with such laws or regulations, whether actual or alleged, could expose us to fines, penalties or potential litigation liabilities, including costs, settlements and judgments, any of which could adversely affect our earnings.

We depend on the accuracy and completeness of information about customers and counterparties.

      In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to institutional customers, we may assume that a customer’s audited financial statements conform with GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Our financial condition and results of operations could be negatively impacted to the extent we rely on financial statements that do not comply with GAAP or are materially misleading.

Other Factors.

      The above description of risk factors is not exhaustive. Other factors that could cause actual results to differ materially from historical results or those anticipated include, but are not limited to:

•  a general decline in U.S. housing prices or activity in the U.S. housing market;

•  a loss of investment-grade credit ratings, which may result in increased cost of debt or loss of access to corporate debt markets;

•  a reduction in the availability of secondary markets for our mortgage loan products;

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•  a reduction in government support of home ownership;

•  a change in our relationship with the housing-related government agencies and sponsored entities;

•  ineffectiveness of our hedging activities;

•  the level of competition in each of our business segments; and

•  the occurrence of natural disasters or other events or circumstances that could impact the level of claims in the Insurance segment.

      Other risk factors are described elsewhere herein as well as in other reports and documents that we file with or furnish to the SEC. Other factors that may not be described in any such report or document that could also cause results to differ from our expectations. Each of these factors could by itself, or together with one or more other factors, adversely affect our business, results of operations and/ or financial condition.

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FORWARD-LOOKING INFORMATION

      Some of the statements in this prospectus and any documents incorporated by reference constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements reflect our current views with respect to future events or our financial performance, and involve certain known and unknown risks, uncertainties and other factors, including those identified below, which may cause our or our industry’s actual or future results, levels of activity, performance or achievements to differ materially from those expressed or implied by any forward-looking statements or from historical results. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “believe,” “expect,” “plan,” “anticipate,” “intend,” “estimate,” “predict,” “potential” and other expressions which indicate future events and trends. We do not, nor does any other person, assume responsibility for the accuracy and completeness of any forward-looking statements. We have no duty to update or revise any forward-looking statements after the date of this prospectus or to conform them to actual results, new information, future events or otherwise. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in the section titled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our most recent Annual Report on Form 10-K and all of our Quarterly Reports on Form 10-Q filed subsequent thereto, which describe risks and factors that could cause results to differ materially from those projected in such forward looking statements.

      The following factors, among others, could cause our or our industry’s future results to differ materially from historical results or those anticipated:

•  the level of demand for mortgage credit, insurance and securities products;

•  the direction of interest rates;

•  the relationship between mortgage interest rates and the cost of funds;

•  federal and state regulation of our mortgage banking, closing services, capital markets, insurance operations and other businesses; and

•  competition within the mortgage banking industry, capital markets and insurance industries.

      We caution you that these risks may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. Our management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.

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RATIO OF EARNINGS TO FIXED CHARGES

      The following table sets forth the ratio of earnings to fixed charges of CFC for the six months ended June 30, 2004, the two years ended December 31, 2003 and 2002, the ten months ended December 31, 2001 and 2000, and for the two fiscal years ended February 28 (29), 2001 and 2000 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).

											Year Ended
	Six Months		Year				Ten Months		Ten Months		February 28
	Ended		Ended		Year Ended		Ended		Ended		(29)
	June 30,		December		December 31,		December 31,		December 31,
	2004		31, 2003		2002		2001		2000		2001		2000
	(Unaudited)								(Unaudited)
Ratio of earnings to fixed charges		3.03		2.95		1.90		1.53		1.39		1.43		1.68

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PRICE RANGE AND DIVIDEND HISTORY OF OUR COMMON STOCK

      Our common stock is traded on the New York Stock Exchange and the Nasdaq Stock Market under the symbol “CFC.” Set forth below are the high and low sales prices for CFC common stock, as reported on the New York Stock Exchange composite transaction reporting system, for each quarterly period for the fiscal quarters ending on September 30, 2004 (through August 16, 2004), June 30, 2004 and March 31, 2004 and the fiscal years ending on December 31, 2003 and 2002. Also set forth below are the cash dividends declared per share of CFC common stock during such periods. The historical high and low sales prices and cash dividends declared by CFC set forth below reflect adjustments resulting from stock dividends paid by CFC on December 17, 2003 and April 12, 2004 and from the stock dividend to be paid by CFC on August 30, 2004 described above under “Summary — Recent Developments.”

					Cash Dividends
	High		Low		Declared
Year Ending on December 31, 2004
3rd Quarter (through August 16, 2004)	$	36.59	$	33.03		(1)
2nd Quarter	$	35.75	$	27.60		$0.100
1st Quarter	$	32.19	$	23.44		$0.075
Year Ending on December 31, 2003
4th Quarter	$	27.27	$	19.39		$0.075
3rd Quarter	$	19.83	$	15.88		$0.055
2nd Quarter	$	19.69	$	14.43		$0.050
1st Quarter	$	14.68	$	12.63		$0.045
Year Ending on December 31, 2002
4th Quarter	$	13.25	$	10.59		$0.045
3rd Quarter	$	13.75	$	9.88		$0.040
2nd Quarter	$	12.58	$	11.03		$0.050
1st Quarter	$	11.37	$	9.40		$0.000

(1)  To be determined after the end of the third quarter.

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DESCRIPTION OF CAPITAL STOCK

      The following description of our capital stock is not complete and is qualified in its entirety by reference to our restated certificate of incorporation and to any certificate of designations in the event we offer preferred stock.

Common Stock

      We have authorized under our restated certificate of incorporation 1,000,000,000 shares of common stock, par value $.05 per share. As of June 30, 2004, 562,388,330 shares of our common stock were issued and outstanding (with an additional 66,358 shares held in treasury) (on a pro forma basis giving effect to our August 30, 2004 stock dividend described above under “Summary — Recent Developments”) and were held by 1,949 record holders. Each record holder of our common stock is entitled to cast one vote per share on all matters submitted to a vote of our stockholders. We may pay dividends to the record holders of our common stock only when, as and if declared by our board of directors, out of funds legally available for those dividends. Each share of our common stock shares equally in those dividends and in other distributions to holders of our common stock, including distributions made if we liquidate, dissolve or wind up our affairs. Our common stock carries no preemptive, conversion, subscription, redemption, sinking fund or cumulative voting rights.

Preferred Stock Purchase Rights

      On February 10, 1988, our board of directors declared a dividend distribution of one preferred stock purchase right for each outstanding share of our common stock. On November 15, 2001, our board of directors adopted certain amendments to the terms of these stock purchase rights. As of the date hereof, there is associated with each outstanding share of our common stock one preferred stock purchase right which, except as set forth below, when exercisable, entitles the registered holder to purchase from us one two-thousandth of a share of a series of preferred stock, designated as Series A Participating Preferred Stock, par value $.05 per share, at a price of $175 per one two-thousandth of a share (the “Purchase Price”), subject to adjustment.

      These stock purchase rights are evidenced by our common stock certificates and may not be exercised or transferred apart from our common stock until the earlier of the date (the “Distribution Date”) of a public announcement that a person or group without our prior consent has acquired 15% or more of our common stock (an “Acquiring Person”) or the date that is ten days (subject to extension by our board of directors) after a tender offer for our common stock is commenced without our prior consent.

      If any person becomes an Acquiring Person, each stock purchase right (except those owned by the Acquiring Person) will allow its holder to purchase, at the then current exercise price of the stock purchase right, the number of shares of our common stock, or their equivalent, that, at the time of the transaction, would have a market value of two times the exercise price of the stock purchase right. Our board of directors may delay the ability to exercise the stock purchase rights during the period in which they are exercisable only for our Series A Participating Preferred Stock (and not our common stock).

      If after a person has become an Acquiring Person we are acquired in a merger or other business combination, each stock purchase right (except those held by the Acquiring Person) will entitle its holder to purchase, at the then current exercise price of the stock purchase right, the number of shares of our common stock, or their equivalent, of the other party (or its publicly traded parent company) to the merger or business combination that at the time of the transaction would have a market value of two times the exercise price of the stock purchase right. The stock purchase rights expire on the earliest of February 28, 2012, the date certain merger transactions close or the date we elect to redeem the stock purchase rights before any person becomes an Acquiring Person.

Preferred Stock

      We have authorized under our restated certificate of incorporation 1,500,000 shares of preferred stock, par value $.05 per share. Our board of directors is authorized to provide for the issuance of preferred stock in

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one or more series with such distinctive designations as may be stated in the resolution or resolutions providing for the issuance of that preferred stock. At the time that it authorizes any series of preferred stock, our board of directors will determine the number of shares constituting that series and its designation and fix the dividend rights, any conversion rights, any voting rights, redemption provisions, liquidation preferences and any other rights, preferences, privileges and restrictions of that series.

      At this time, our board of directors has authorized only two series of preferred stock for issuance: one of these series has been designated as Series A Participating Preferred Stock which is issuable upon the exercise of our preferred stock purchase rights. See “— Preferred Stock Purchase Rights” above. The other series has been designated as Series B Cumulative Preferred Stock. Our board of directors could, without stockholder approval, cause us to issue preferred stock that has voting, conversion and other rights that could adversely affect the holders of our common stock or make it more difficult to cause a change in control of our company. The preferred stock could be used to dilute the stock ownership of persons seeking to obtain control of our company and thereby hinder a possible takeover attempt which, if stockholders were offered a premium over the market value of their shares, might be viewed as being beneficial to our stockholders. In addition, the preferred stock could be issued with voting, conversion and other rights and preferences that would adversely affect the voting power and other rights of holders of our common stock.

Other Provisions of Our Restated Certificate of Incorporation and Our Bylaws

      In addition to the preferred stock purchase rights described above under “— Preferred Stock Purchase Rights” and the terms of any preferred stock that we may determine to issue as described above under “— Preferred Stock,” other provisions of our restated certificate of incorporation and our bylaws may make it more difficult for a third party to acquire, or may discourage a third party from attempting to acquire, control of our company. Our restated certificate of incorporation includes the following provisions:

      (1) It provides for a three-year staggered board of directors, vacancies on which may be filled by the board of directors and whose members may be removed only for cause and only by the vote of the holders of two-thirds of the outstanding shares of our common stock.

      (2) It limits our power to purchase shares of our voting stock from a five percent (or greater) holder at a price exceeding its fair market value, unless the purchase is approved by holders of a majority of those voting shares (unless applicable law requires a greater vote) without the vote of that holder. Voting stock is defined as capital stock that has the right to vote generally on matters relating to our company and any security that is convertible into that stock.

      (3) It prohibits action by written consent of our stockholders.

      (4) It provides that our bylaws may be amended by our board of directors or, with some exceptions, by a vote of two-thirds of our voting shares and further provides that a two-thirds vote of all of our voting shares is required to amend the provisions of our restated certificate of incorporation that are described in this section, unless the amendment has been approved by two-thirds of our board of directors and a majority of our continuing directors. Continuing directors are directors who became members of our board of directors before any stockholder who beneficially owns ten percent of the outstanding shares first became a ten percent stockholder.

      Our bylaws provide that special meetings of the stockholders may be called only by our directors and limit the business that may be transacted at those meetings to those matters set forth in the request of the proposed meeting.

Transfer Agent and Registrar

      The transfer agent and registrar for our common stock is The Bank of New York.

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THE EXCHANGE OFFER

Securities Subject to the Exchange Offer

      We are offering, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, to exchange $1,000 principal amount at maturity of New Securities and an exchange fee of $2.50 for each $1,000 principal amount at maturity of validly tendered and accepted Old Securities. We are offering to exchange all of the Old Securities. However, the exchange offer is subject to the conditions described in this prospectus.

Conditions to the Exchange Offer

      Notwithstanding any other provisions of this exchange offer, we will not be required to accept for exchange any Old Securities tendered, and we may terminate or amend this offer if any of the following conditions precedent to the exchange offer is not satisfied, or is reasonably determined by us not to be satisfied, and, in our reasonable judgment and regardless of the circumstances giving rise to the failure of the condition, the failure of the condition makes it inadvisable to proceed with the offer or with the acceptance for exchange or exchange and issuance of the New Securities:

      (i) No action or event shall have occurred, failed to occur or been threatened, no action shall have been taken, and no statute, rule, regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered, enforced or deemed applicable to the exchange offer, by or before any court or governmental, regulatory or administrative agency, authority or tribunal, which either:

•  challenges the making of the exchange offer or the exchange of Old Securities under the exchange offer or might, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or might otherwise adversely affect in any material manner, the exchange offer or the exchange of Old Securities under the exchange offer, or

•  in the reasonable judgment of CFC, could materially adversely affect the business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects of CFC and its subsidiaries, taken as a whole, or would be material to holders of Old Securities in deciding whether to accept the exchange offer.

      (ii) (a) Trading generally shall not have been suspended or materially limited on or by, as the case may be, either of the NYSE or the National Association of Securities Dealers, Inc.; (b) there shall not have been any suspension or limitation of trading of any securities of CFC on any exchange or in the over-the-counter market; (c) no general banking moratorium shall have been declared by Federal or New York authorities; or (d) there shall not have occurred any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if the effect of any such outbreak, escalation, declaration, calamity or emergency has a reasonable likelihood to make it impractical or inadvisable to proceed with completion of the exchange offer.

      (iii) The Trustee with respect to the Old Securities shall not have objected in any respect to, or taken any action that could in our reasonable judgment adversely affect the consummation of the exchange offer, the exchange of Old Securities under the exchange offer, nor shall the Trustee or any holder of Old Securities have taken any action that challenges the validity or effectiveness of the procedures used by us in making the exchange offer or the exchange of the Old Securities under the exchange offer.

      (iv) The registration statement and any post-effective amendment to the registration statement covering the New Securities is effective under the Securities Act of 1933, as amended.

      All of the foregoing conditions are for the sole benefit of us and may be waived by us, in whole or in part, in our sole discretion. Any determination that we make concerning an event, development or circumstance described or referred to above shall be conclusive and binding.

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      If any of the foregoing conditions are not satisfied, we may, at any time before the expiration of the exchange offer:

      (a) terminate the exchange offer and return all tendered Old Securities to the holders thereof;

      (b) modify, extend or otherwise amend the exchange offer and retain all tendered Old Securities until the expiration date, as may be extended, subject, however, to the withdrawal rights of holders (see “— Expiration Date; Extensions; Amendments” and “—Proper Execution and Delivery of Letter of Transmittal — Withdrawal of Tenders” below); or

      (c) waive the unsatisfied conditions and accept all Old Securities tendered and not previously withdrawn.

      Except for the requirements of applicable U.S. federal and state securities laws, we know of no federal or state regulatory requirements to be complied with or approvals to be obtained by us in connection with the exchange offer which, if not complied with or obtained, would have a material adverse effect on us.

Expiration Date; Extensions; Amendments

      For purposes of the exchange offer, the term “expiration date” shall mean 5:00 p.m., New York City time, on September      , 2004, subject to our right to extend such date and time for the exchange offer in our sole discretion, in which case, the expiration date shall mean the latest date and time to which the exchange offer is extended.

      We reserve the right, in our sole discretion, to (1) extend the exchange offer, (2) terminate the exchange offer upon failure to satisfy any of the conditions listed above or (3) amend the exchange offer, by giving oral (promptly confirmed in writing) or written notice of such delay, extension, termination or amendment to the exchange agent. Any such extension, termination or amendment will be followed promptly by a public announcement thereof which, in the case of an extension, will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

      If we amend the exchange offer in a manner that we determine constitutes a material or significant change, we will extend the exchange offer for a period of five to twenty business days, depending upon the significance of the amendment, if the exchange offer would otherwise have expired during such five to twenty business day period. Any change in the consideration offered to holders of Old Securities in the exchange offer shall be paid to all holders whose Old Securities have previously been tendered pursuant to the exchange offer.

      Without limiting the manner in which we may choose to make a public announcement of any delay, extension, amendment or termination of the exchange offer, we will comply with applicable securities laws by disclosing any such amendment by means of a prospectus supplement that we distribute to the holders of the Old Securities. We will have no other obligation to publish, advertise or otherwise communicate any such public announcement other than by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Service.

Effect of Tender

      Any valid tender by a holder of Old Securities that is not validly withdrawn prior to the expiration date of the exchange offer will constitute a binding agreement between that holder and us upon the terms and subject to the conditions of the exchange offer and the letter of transmittal. The acceptance of the exchange offer by a tendering holder of Old Securities will constitute the agreement by that holder to deliver good and marketable title to the tendered Old Securities, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind.

Absence of Dissenters’ Rights

      Holders of the Old Securities do not have any appraisal or dissenters’ rights under applicable law in connection with the exchange offer.

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Acceptance of Old Securities for Exchange

      The New Securities will be delivered in book-entry form on the settlement date which we anticipate will be promptly following the expiration date of the exchange offer, after giving effect to any extensions.

      We will be deemed to have accepted validly tendered Old Securities when, and if, we have given oral (promptly confirmed in writing) or written notice thereof to the exchange agent. Subject to the terms and conditions of the exchange offer, the issuance of New Securities will be recorded in book-entry form by the exchange agent on the exchange date upon receipt of such notice. The exchange agent will act as agent for tendering holders of the Old Securities for the purpose of receiving book-entry transfers of Old Securities in the exchange agent’s account at DTC. If any validly tendered Old Securities are not accepted for any reason set forth in the terms and conditions of the exchange offer, including if Old Securities are validly withdrawn, such withdrawn Old Securities will be returned without expense to the tendering holder or such Old Securities will be credited to an account maintained at DTC designated by the DTC participant who so delivered such Old Securities, in either case, promptly after the expiration or termination of the exchange offer.

Procedures for Exchange

      If you hold Old Securities and wish to have such securities exchanged for New Securities, you must validly tender, or cause the valid tender of, your Old Securities using the procedures described in this prospectus and in the accompanying letter of transmittal.

      Only registered holders of Old Securities are authorized to tender the Old Securities. The procedures by which you may tender or cause to be tendered Old Securities will depend upon the manner in which the Old Securities are held, as described below.

Tender of Old Securities Held Through a Nominee

      If you are a beneficial owner of Old Securities that are held of record by a custodian bank, depositary, broker, trust company or other nominee, and you wish to tender Old Securities in the exchange offer, you should contact the record holder promptly and instruct the record holder to tender the Old Securities on your behalf using one of the procedures described below.

Tender of Old Securities Through DTC

      Pursuant to authority granted by DTC, if you are a DTC participant that has Old Securities credited to your DTC account and thereby held of record by DTC’s nominee, you may directly tender your Old Securities as if you were the record holder. Because of this, references herein to registered or record holders include DTC participants with Old Securities credited to their accounts. If you are not a DTC participant, you may tender your Old Securities by book-entry transfer by contacting your broker or opening an account with a DTC participant. Within two business days after the date of this prospectus, the exchange agent will establish accounts with respect to the Old Securities at DTC for purposes of the exchange offer.

      Any participant in DTC may tender Old Securities by:

      (a) effecting a book-entry transfer of the Old Securities to be tendered in the exchange offer into the account of the exchange agent at DTC by electronically transmitting its acceptance of the exchange offer through DTC’s Automated Tender Offer Program, or ATOP, procedures for transfer; if ATOP procedures are followed, DTC will then verify the acceptance, execute a book-entry delivery to the exchange agent’s account at DTC and send an agent’s message to the exchange agent. An “agent’s message” is a message, transmitted by DTC to and received by the exchange agent and forming part of a book-entry confirmation, which states that DTC has received an express acknowledgment from a DTC participant tendering Old Securities that the participant has received and agrees to be bound by the terms of the letter of transmittal and that CFC may enforce the agreement against the participant. DTC participants following this procedure should allow sufficient time for completion of the ATOP procedures prior to the expiration date of the exchange offer; or

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      (b) completing and signing the letter of transmittal according to the instructions and delivering it, together with any signature guarantees and other required documents, to the exchange agent at its address on the back cover page of this prospectus.

      With respect to option (a) above, the exchange agent and DTC have confirmed that the exchange offer is eligible for ATOP.

      The letter of transmittal (or facsimile thereof), with any required signature guarantees and other required documents, or (in the case of book-entry transfer) an agent’s message in lieu of the letter of transmittal, must be transmitted to and received by the exchange agent prior to the expiration date of the exchange offer at one of its addresses set forth on the back cover page of this prospectus. Delivery of such documents to DTC does not constitute delivery to the exchange agent.

Letter of Transmittal

      Subject to and effective upon the acceptance for exchange and exchange of New Securities for Old Securities tendered by a letter of transmittal, by executing and delivering a letter of transmittal (or agreeing to the terms of a letter of transmittal pursuant to an agent’s message), a tendering holder of Old Securities:

•  irrevocably sells, assigns and transfers to or upon the order of CFC all right, title and interest in and to, and all claims in respect of or arising or having arisen as a result of the holder’s status as a holder of the Old Securities tendered thereby;

•  waives any and all rights with respect to the Old Securities;

•  releases and discharges CFC, CHL and the Trustee with respect to the Old Securities from any and all claims such holder may have, now or in the future, arising out of or related to the Old Securities, including, without limitation, any claims that such holder is entitled to participate in any redemption of the Old Securities;

•  represents and warrants that the Old Securities tendered were owned as of the date of tender, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind;

•  designates an account number of a DTC participant in which the New Securities are to be credited; and

•  irrevocably appoints the exchange agent the true and lawful agent and attorney-in-fact of the holder with respect to any tendered Old Securities, with full powers of substitution and revocation (such power of attorney being deemed to be an irrevocable power coupled with an interest) to cause the Old Securities tendered to be assigned, transferred and exchanged in the exchange offer.

Proper Execution and Delivery of Letter of Transmittal

      If you wish to participate in the exchange offer, delivery of your Old Securities, signature guarantees and other required documents is your responsibility. Delivery is not complete until the required items are actually received by the exchange agent. If you mail these items, we recommend that you (1) use registered mail with return receipt requested, properly insured, and (2) mail the required items sufficiently in advance of the expiration date with respect to the exchange offer to allow sufficient time to ensure timely delivery.

      Except as otherwise provided below, all signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by a recognized participant in the Securities Transfer Agents Medallion Program, the NYSE Medallion Signature Program or the Stock Exchange Medallion Program. Signatures on a letter of transmittal need not be guaranteed if:

•  the letter of transmittal is signed by a participant in DTC whose name appears on a security position listing of DTC as the owner of the Old Securities and the holder(s) has not completed the portion entitled “Special Issuance and Payment Instructions” on the letter of transmittal; or

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•  the Old Securities are tendered for the account of an Eligible Guarantor Institution. See Instruction 3 in the letter of transmittal.

Withdrawal of Tenders

      Tenders of Old Securities in connection with the exchange offer may be withdrawn at any time prior to the expiration date of the exchange offer, but you must withdraw all of your Old Securities previously tendered. Tenders of Old Securities may not be withdrawn at any time after such date unless the exchange offer is extended, in which case tenders of Old Securities may be withdrawn at any time prior to the expiration date, as extended.

      Beneficial owners desiring to withdraw Old Securities previously tendered should contact the DTC participant through which such beneficial owners hold their Old Securities. In order to withdraw Old Securities previously tendered, a DTC participant may, prior to the expiration date of the exchange offer, withdraw its instruction previously transmitted through ATOP by (1) withdrawing its acceptance through ATOP or (2) delivering to the exchange agent by mail, hand delivery or facsimile transmission, notice of withdrawal of such instruction. The notice of withdrawal must contain the name and number of the DTC participant. The method of notification is at the risk and election of the holder and must be timely received by the exchange agent. Withdrawal of a prior instruction will be effective upon receipt of the notice of withdrawal by the exchange agent. All signatures on a notice of withdrawal must be guaranteed by a recognized participant in the Securities Transfer Agents Medallion Program, the NYSE Medallion Signature Program or the Stock Exchange Medallion Program. However, signatures on the notice of withdrawal need not be guaranteed if the Old Securities being withdrawn are held for the account of an Eligible Guarantor Institution. A withdrawal of an instruction must be executed by a DTC participant in the same manner as such DTC participant’s name appears on its transmission through ATOP to which such withdrawal relates. A DTC participant may withdraw a tender only if such withdrawal complies with the provisions described in this paragraph.

      Withdrawals of tenders of Old Securities may not be rescinded and any Old Securities withdrawn will thereafter be deemed not validly tendered for purposes of the exchange offer. Properly withdrawn Old Securities, however, may be retendered by following the procedures described above at any time prior to the expiration date of the exchange offer.

Miscellaneous

      All questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of Old Securities in connection with the exchange offer will be determined by us, in our sole discretion, and our determination will be final and binding. We reserve the absolute right to reject any and all tenders not in proper form or the acceptance for exchange of which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any defect or irregularity in the tender of any Old Securities in the exchange offer, and the interpretation by us of the terms and conditions of the exchange offer (including the instructions in the letter of transmittal) will be final and binding on all parties, provided that we will not waive any condition to the offer with respect to an individual holder of Old Securities unless we waive that condition for all such holders. None of CFC, CHL, the exchange agent, the information agent, the dealer manager or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification.

      Tenders of Old Securities involving any irregularities will not be deemed to have been made until such irregularities have been cured or waived. Old Securities received by the exchange agent in connection with the exchange offer that are not validly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the DTC participant who delivered such Old Securities by crediting an account maintained at DTC designated by such DTC participant promptly after the expiration date of the exchange offer or the withdrawal or termination of the exchange offer.

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Transfer Taxes

      We will pay all transfer taxes, if any, applicable to the transfer and exchange of Old Securities to us in the exchange offer. If transfer taxes are imposed for any other reason, the amount of those transfer taxes, whether imposed on the registered holder or any other persons, will be payable by the tendering holder. Other reasons transfer taxes could be imposed include:

•  if New Securities in book-entry form are to be registered in the name of any person other than the person signing the letter of transmittal; or

•  if tendered Old Securities are registered in the name of any person other than the person signing the letter of transmittal.

      If satisfactory evidence of payment of or exemption from those transfer taxes is not submitted with the letter of transmittal, the amount of those transfer taxes will be billed directly to the tendering holder and/or withheld from any payments due with respect to the Old Securities tendered by such holder.

Exchange Agent

      The Bank of New York has been appointed the exchange agent for the exchange offer. Letters of transmittal, notices of guaranteed delivery and all correspondence in connection with the exchange offer should be sent or delivered by each holder of Old Securities, or a beneficial owner’s custodian bank, depositary, broker, trust company or other nominee, to the exchange agent at the address set forth on the back cover page of this prospectus. We will pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable, out-of-pocket expenses in connection therewith.

      The Bank of New York and its affiliates maintain banking relationships with us.

Information Agent

      D.F. King & Co., Inc. has been appointed as the information agent for the exchange offer, and will receive customary compensation for its services. Questions concerning tender procedures and requests for additional copies of this prospectus or the letter of transmittal should be directed to the information agent at the address set forth on the back cover page of this prospectus. Holders of Old Securities may also contact their custodian bank, depositary, broker, trust company or other nominee for assistance concerning the exchange offer.

Dealer Manager

      We have retained Lehman Brothers Inc. to act as dealer manager in connection with the exchange offer.

      We will pay the dealer manager customary fees for its services in connection with the exchange offer and will also reimburse the dealer manager for certain out-of-pocket expenses, including the fees and expenses of its legal counsel incurred in connection with the exchange offer. The obligations of the dealer manager are subject to certain conditions. We have agreed to indemnify the dealer manager against certain liabilities, including liabilities under the federal securities laws, or to contribute to payments that the dealer manager may be required to make in respect thereof. Questions regarding the terms of the exchange offer may be directed to the dealer manager at the address set forth on the back cover page of this prospectus.

      From time to time, the dealer manager and its affiliates have provided investment banking and other services to us for customary compensation. The dealer manager, in the ordinary course of business, also makes markets in our securities, including the Old Securities. As a result, from time to time, Lehman Brothers may own certain of our securities, including the Old Securities.

Other Fees and Expenses

      Tendering holders of Old Securities will not be required to pay any expenses of soliciting tenders in the exchange offer, including any fee or commission to the dealer manager. However, if a tendering holder

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handles the transaction through its broker, dealer, commercial bank, trust company or other institution, such holder may be required to pay brokerage fees or commissions.

      The principal solicitation is being made by mail. However, additional solicitations may be made by telegraph, facsimile transmission, telephone or in person by the dealer manager and the information agent, as well as by officers and other employees of CFC and its affiliates.

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DESCRIPTION OF THE NEW SECURITIES

      We will issue the New Securities under an indenture to be dated as of the exchange date, among us, CHL and The Bank of New York, as trustee. The following summarizes the material provisions of the New Securities and the indenture. The following summary is not complete and is subject to, and qualified by reference to, all of the provisions of the New Securities and the indenture. We refer you to the form of indenture, which contains a form of the New Securities and the guarantee, which is included as an exhibit to the registration statement of which this prospectus is a part and is incorporated by reference herein.

      As used in this description, the words “we,” “us,” “our” or “CFC” do not include any current or future subsidiary of CFC. As used in this description, the words “CHL” or “the Guarantor” do not include any current or future subsidiary of CHL.

General

      We will issue up to $675,000,000 aggregate principal amount at maturity of New Securities in exchange for the Old Securities in the exchange offer. The New Securities will mature on February 8, 2031 and the principal amount due at maturity of each New Security will be $1,000 or an integral multiple thereof. Subject to our rights described under “— Optional Conversion to Semi-Annual Coupon Securities Upon Tax Event,” we will not pay interest on the New Securities unless “contingent interest” becomes payable (described below under “— Contingent Interest”). The New Securities will be payable at the office of the paying agent, which initially will be an office or agency of the trustee, or an office or agency maintained by us for such purpose, in the Borough of Manhattan, The City of New York.

      The initial accreted principal amount of the New Securities will be deemed to equal the accreted principal amount of the Old Securities for which they are being exchanged on the exchange date. The accreted principal amount on any date will be equal to the sum of the initial accreted principal amount and accrued issue discount through that date. Except as described below, we will not make periodic payments of interest on the New Securities. However, the New Securities will accrue issue discount while they remain outstanding. Issue discount is the difference between the initial accreted principal amount and the principal amount at maturity of a New Security. We will calculate the accrual of issue discount at a rate of 1.00% per annum on a semi-annual bond equivalent basis, using a 360-day year composed of twelve 30-day months. The issue discount will begin to accrue on the New Securities on the exchange date.

      We intend to take the position that the exchange of Old Securities for New Securities does not constitute a significant modification of the Old Securities for U.S. federal income tax purposes, and that the New Securities will be treated as a continuation of the Old Securities and will continue to be subject to the same rules governing the treatment of contingent payment debt instruments as were applicable to the Old Securities. Among other things, pursuant to those rules, a holder of the New Securities is required to accrue interest income on the New Securities for each year, in the amounts described in the registration statement relating to the Old Securities, regardless of whether the holder uses the cash or accrual method of tax accounting, and in excess of the accruals of issue discount (as described above) on the New Securities and any contingent interest payments actually received in that year. If, contrary to our position, the exchange constitutes a significant modification, the tax consequences to you could materially differ. See “Certain United States Federal Income Tax Consequences — Classification and Treatment of the New Securities” for more information.

      CHL will fully and unconditionally guarantee our obligations to make cash payments on the New Securities to the extent described below under “— Guarantee.”

      Conversion, purchase by us at the option of a holder or redemption of a New Security will cause issue discount and interest, if any, to cease to accrue on such New Security. We may not reissue a New Security that has matured or been converted, purchased by us at the option of a holder, redeemed or otherwise cancelled, except for registration of transfer, exchange or replacement of such New Security.

      New Securities may be presented for conversion at the office of the conversion agent, and for exchange or registration of transfer at the office of the registrar, each such agent initially being the trustee.

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Guarantee

      CHL will fully and unconditionally guarantee CFC’s obligations to make cash payments on the New Securities when due and payable, without duplication, whether at maturity or upon redemption, purchase or otherwise, regardless of any defense, right of set-off or counterclaim which CFC may have or assert, other than the defense of payment. CHL’s obligations under the guarantee will be several and independent of the obligations of CFC with respect to the New Securities.

      The obligations of CHL under the guarantee will be unconditional regardless of the enforceability of the New Securities or the indenture and may not be discharged until all obligations under those New Securities and the indenture are satisfied. Holders of the New Securities may proceed directly against CHL if an event of default affecting the New Securities occurs without first proceeding against CFC.

Ranking

      The New Securities will be our unsecured and unsubordinated obligations. The New Securities will rank equally in right of payment to all of our future unsecured and unsubordinated indebtedness. However, we are a holding company, and the New Securities will be effectively subordinated to all existing and future obligations of our subsidiaries, other than CHL. As of June 30, 2004, we had approximately $42.2 billion of total indebtedness outstanding through our subsidiaries. As of June 30, 2004, our subsidiaries, other than CHL, had approximately $18.1 billion of outstanding indebtedness.

      CHL’s guarantee of the New Securities will be an unsecured and unsubordinated obligation of CHL. The guarantee will rank equally in right of payment to all of CHL’s existing and future unsecured and unsubordinated indebtedness. However, CHL is also a holding company, and the guarantee is effectively subordinated to all existing and future obligations of its subsidiaries. As of June 30, 2004, CHL had approximately $24.0 billion of total indebtedness outstanding.

      This structural subordination of the New Securities and the guarantee could affect your ability to receive cash payments made on the New Securities.

Conversion Rights

     General

      For each New Security surrendered for conversion, if any of the conditions summarized below are satisfied, a holder will receive an amount in cash and stock with a combined aggregate value equal to 46.2820 shares of our common stock (which reflects the effect of our August 30, 2004 stock dividend described above under “Summary — Recent Developments”) (the “conversion rate”). The conversion rate may be adjusted as summarized below under “— Conversion Rate Adjustments,” but will not be adjusted for accrued issue discount or any contingent interest. Upon conversion, a holder will not receive any additional cash payment representing accrued issue discount. Instead, accrued issue discount will be deemed paid by the cash and shares of common stock received by the holder on conversion.

      Holders may surrender New Securities for conversion prior to the stated maturity if any of the following the following conditions are satisfied:

•  during any calendar quarter (and only during such calendar quarter) if, as of the last day of the preceding calendar quarter, the closing sale price of our common stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of such preceding quarter is more than a specified percentage, beginning at 132.27% and declining 0.21% per quarter thereafter, of the accreted conversion price per share of common stock on the last trading day of such preceding calendar quarter (the “conversion trigger price”) (which is the case for the calendar quarter ending September 30, 2004);

•  during any period in which the credit rating assigned to the New Securities by either Moody’s or by Standard & Poor’s falls below an investment grade rating level;

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•  at any time prior to the close of business on the second business day immediately preceding the redemption date, if such New Securities have been called for redemption; or

•  upon the occurrence of certain corporate transactions described below under “— Conversion Rights Upon Specified Corporate Transactions”; or

•  upon the declaration of certain dividends and distributions described below under “— Conversion Rights Upon Certain Distributions to Our Shareholders.”

“Accreted conversion price” means, as of any day, the accreted principal amount of a New Security divided by the conversion rate.

      If you have exercised your right to require us to repurchase your New Securities as described under “— Purchase of New Securities at the Option of the Holder” or “Change in Control Permits Purchase of New Securities by CFC at the Option of the Holder,” you may surrender your New Securities for conversion only if you withdraw your purchase notice or change in control purchase notice and convert your New Securities as described below prior to the close of business on the business day immediately preceding the applicable repurchase date in accordance with the indenture.

     Conversion Rights Based on Common Stock Price

      Holders may surrender New Securities for conversion in any calendar quarter (and only during such calendar quarter) if, as of the last day of the preceding calendar quarter, the closing sale price of our common stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of such preceding calendar quarter exceeds the conversion trigger price.

      “Trading day” means a day during which trading in securities generally occurs on the New York Stock Exchange or, if our common stock is not listed on the New York Stock Exchange, on the principal other national or regional securities exchange on which our common stock is then listed or, if our common stock is not listed on a national or regional securities exchange, on the Nasdaq Stock Market or, if our common stock is not quoted on the Nasdaq Stock Market, on the principal other market on which our common stock is then traded.

      The table below shows the conversion trigger price per share of our common stock in respect of each of the first 20 calendar quarters. These prices reflect the accreted conversion price per share of common stock multiplied by the applicable percentage for the respective calendar quarter. Thereafter, the accreted conversion price per share of common stock increases each calendar quarter by the accreted issue discount for the quarter and the applicable percentage declines by 0.21% per quarter. The conversion trigger price (subject to adjustment) for the calendar quarter beginning January 1, 2031 is $23.73.

		Accreted				Conversion
		Conversion		Applicable		Trigger
	Quarter*	Price(1)		Percentage(2)		Price(1)×(2)
2004	Third Quarter	$	16.57		132.27	$	21.92
	Fourth Quarter	$	16.61		132.06	$	21.94
2005	First Quarter	$	16.65		131.85	$	21.96
	Second Quarter	$	16.69		131.64	$	21.98
	Third Quarter	$	16.74		131.43	$	22.00
	Fourth Quarter	$	16.78		131.22	$	22.02
2006	First Quarter	$	16.82		131.01	$	22.04
	Second Quarter	$	16.86		130.80	$	22.06
	Third Quarter	$	16.90		130.59	$	22.08
	Fourth Quarter	$	16.95		130.38	$	22.10

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		Accreted				Conversion
		Conversion		Applicable		Trigger
	Quarter*	Price(1)		Percentage(2)		Price(1)×(2)
2007	First Quarter	$	16.99		130.17	$	22.11
	Second Quarter	$	17.03		129.96	$	22.13
	Third Quarter	$	17.07		129.75	$	22.15
	Fourth Quarter	$	17.12		129.54	$	22.17
2008	First Quarter	$	17.16		129.33	$	22.19
	Second Quarter	$	17.20		129.12	$	22.21
	Third Quarter	$	17.25		128.91	$	22.23
	Fourth Quarter	$	17.29		128.70	$	22.25
2009	First Quarter	$	17.33		128.49	$	22.27
	Second Quarter	$	17.38		128.28	$	22.29

*  This table assumes no events have occurred that would require an adjustment to the conversion rate.

      As a result of this conversion trigger, the New Securities, when issued, will be convertible during the calendar quarter ending September 30, 2004.

     Conversion Rights Based on Credit Ratings Downgrade

      You may surrender New Securities for conversion during any period in which the credit rating assigned to the New Securities by either Moody’s or Standard & Poor’s (or any substitute rating agency) falls below an investment grade credit rating level (Baa, in the case of Moody’s, and BBB, in the case of Standard & Poor’s).

     Conversion Rights Upon Notice of Redemption

      You may surrender for conversion New Securities called for redemption pursuant to the terms of the indenture and the New Securities at any time prior to the close of business on the second business day immediately preceding the redemption date, even if it is not otherwise convertible at such time.

     Conversion Rights Upon Specified Corporate Transactions

      Corporate Transactions Involving CFC. If we are party to a consolidation, merger or binding share exchange pursuant to which our shares of common stock would be converted into cash, securities or other property, the New Securities may be surrendered for conversion at any time from and after the date which is 15 days prior to the anticipated effective date of the transaction until 15 days after the actual date of such transaction and, at the effective time of such transaction, the right to convert a New Security into shares of common stock will be changed into a right to convert it into the kind and amount of cash, securities or other property of CFC or another person that you would have received if you had converted your New Securities immediately prior to the transaction. If such transaction also constitutes a change in control, you will be able to require us to purchase all or a portion of your New Securities as described under “— Change in Control Permits Purchase of New Securities by CFC at the Option of the Holder.”

      Corporate Transactions Involving CHL. You may also surrender New Securities for conversion if CHL is a party to any transaction in which at least a majority of the total voting power in the aggregate of all classes of capital stock of CHL is owned by a party other than CFC, its majority-owned subsidiaries or their respective employee benefit plans; provided that a merger or consolidation of CFC with CHL shall not be deemed to be an event triggering conversion. Upon the occurrence of any such event, you may surrender their New Securities for conversion at any time from and after the date which is 15 days prior to the anticipated effective date of the transaction until 15 days after the actual date of such transaction. Such transaction would also constitute a change in control and as such, you will be able to require CFC to purchase all or a portion

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of your New Securities as described under “— Change in Control Permits Purchase of New Securities by CFC at the Option of the Holder.”

     Conversion Rights Upon Certain Distributions to Our Shareholders

      You may surrender New Securities for conversion if we elect to distribute to all or substantially all holders of our common stock, cash or other assets, debt securities or certain rights to purchase our securities, which distribution has a per share fair market value exceeding 15% of the trading price of our common stock on the business day immediately preceding the declaration date for the distribution.

     Payment

      Upon conversion of any New Securities, we will deliver, for each $1,000 principal amount at maturity of New Securities, cash (the “cash amount”) in an amount equal to the lesser of (a) the accreted principal amount of the New Securities and (b) the product of the conversion rate (46.2820 after giving effect to our August 30, 2004 stock dividend, but subject to adjustment) multiplied by the average of the closing price of our common stock (on the New York Stock Exchange or, if our common stock is not listed on the New York Stock Exchange, on the principal other national or regional securities exchange on which our common stock is then listed or, if our common stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if our common stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which our common stock is then traded) for each of the 20 consecutive trading days prior to the date of determination of such average (the “stock price”) and a number of shares equal to (a) (i) the conversion rate multiplied by the stock price, minus (ii) the cash amount, all divided by (b) the stock price (the “share amount”). In addition, we will pay cash in lieu of any fractional shares of common stock we would otherwise be required to deliver. Shares of our common stock and cash deliverable upon conversion will be delivered through the conversion agent as soon as practicable following the conversion date.

      Our delivery to the holder of the cash amount, the share amount and any cash payment for such holder’s fractional shares will be deemed:

•  to satisfy our obligation to pay the principal amount at maturity of the New Securities;

•  to satisfy our obligation to pay accrued issue discount attributable to the period from the issue date through the conversion date; and

•  to satisfy CHL’s obligations under the guarantee with respect to such New Securities.

      As a result, accrued issue discount is deemed to be paid in full rather than cancelled, extinguished or forfeited.

      If contingent or semi-annual interest is payable to holders of New Securities during any particular six-month period, and such New Securities are converted after the applicable accrual or record date and prior to the next succeeding interest payment date, holders of such New Securities at the close of business on the accrual or record date will receive the contingent or semi-annual interest payable on such New Securities on the corresponding interest payment date notwithstanding the conversion. Such New Securities, upon surrender for conversion, must be accompanied by funds equal to the amount of contingent or semi-annual interest payable on the principal amount of New Securities so converted, unless such New Securities have been called for redemption, in which case no such payment shall be required. The conversion rate will not be adjusted for accrued issue discount or any contingent interest.

      A certificate for the amount of cash and the number of full shares of common stock into which any New Securities are converted, together with any cash payment for fractional shares, will be delivered through the conversion agent as soon as practicable following the conversion date. For a discussion of the tax treatment of a holder receiving cash or shares of common stock upon conversion, see “Certain United States Federal Income Tax Consequences — Classification and Treatment of the New Securities.”

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      To convert a New Security, a holder must:

•  complete and manually sign the conversion notice on the back of the New Security or complete and manually sign a facsimile of the conversion notice and deliver the conversion notice to the conversion agent;

•  surrender the New Security to the conversion agent;

•  if required by the conversion agent, furnish appropriate endorsements and transfer documents; and

•  if required, pay all transfer or similar taxes.

      Pursuant to the indenture, the date on which all of the foregoing requirements have been satisfied is the conversion date.

     Conversion Rate Adjustments

      The conversion rate will be adjusted for:

      1. dividends or distributions on our shares of common stock payable in shares of our common stock or other capital stock;

      2. subdivisions, combinations or certain reclassifications of shares of our common stock;

      3. distributions to all holders of shares of our common stock of certain rights, warrants or options to purchase shares of our common stock for a period expiring within 60 days at less than the trading price at the time;

      4. distributions to all holders of shares of our common stock of shares of our capital stock (other than our common stock), evidences of our indebtedness or assets including securities, but excluding for purposes of this paragraph 4:

•  any dividends and distributions referred to in paragraphs 1 or 2 above;

•  the rights, warrants or options referred to in paragraph 3 above; or

•  any cash dividends or other cash distributions, including those referred to in paragraph 5 below; and

      5. distributions to all holders of shares of common stock of cash, excluding (a) any dividend or distribution in connection with our liquidation, dissolution or winding up or (b) any quarterly cash dividend on our common stock to the extent that such quarterly cash dividend per share does not exceed the dividend threshold amount. Adjustments to the conversion rate will be made pursuant to this paragraph 5 for quarterly cash dividends only to the extent that such adjustments do not result in a conversion rate in excess of 81.1688, which figure will be adjusted on the same basis as the conversion rate except that it will not be adjusted as a result of any adjustments to the conversion rate made solely for quarterly cash dividends pursuant to this paragraph 5. The “dividend threshold amount” means $0.10 per share and is subject to adjustment on the same basis as the conversion rate, provided that no adjustment will be made to the dividend threshold amount for any adjustment made to the conversion rate pursuant to this paragraph 5; in the event of a dividend or distribution to which this paragraph 5 applies, the conversion rate will be adjusted by multiplying the conversion rate in effect immediately prior to such adjustment by an adjustment factor equal to a fraction,

•  the numerator of which will be the current market price of our common stock; and

•  the denominator of which will be the current market price of our common stock minus the amount per share of such dividend or distribution (as determined below).

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      If an adjustment is required to be made under this paragraph 5 as a result of a distribution that is a quarterly dividend, the adjustment will be based upon the amount by which the distribution exceeds the dividend threshold amount. If an adjustment is required to be made under this clause as a result of a distribution that is not a quarterly dividend, the adjustment will be based upon the full amount of the distribution.

      In the event that we pay a dividend or make a distribution on shares of our common stock consisting of capital stock of, or similar equity interests in, a subsidiary or other business unit of ours, the conversion rate will be adjusted based on the market value of the securities so distributed relative to the market value of our common stock, in each case based on the average sale prices of those securities for the 10 trading days commencing on and including the fifth trading day after the date on which “ex-dividend trading” commences for such dividend or distribution on the principal national or regional exchange or market on which the securities are then listed or quoted or, if such securities are not so listed or quoted, based on a determination of fair market value made by our board of directors.

      No adjustment to the conversion rate or the ability of a holder of a New Security to convert will be made if we provide that holders of New Securities will participate in the transaction without conversion or in certain other cases.

      “Current market price” of our common stock on any day means the average of the closing price per share of our common stock for each of the 10 consecutive trading days ending on the earlier of the day in question and the day before the “ex-date” with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, “ex-date” means the first date on which the shares of our common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance or distribution.

      We will not be required to make an adjustment in the conversion rate unless the adjustment would require a change of at least 1% in the conversion rate; provided that we will carry forward any adjustments that are less than 1% of the conversion rate and make such carried forward adjustments within one year of the first such adjustment carried forward or upon notice of redemption, in either case, regardless of whether the aggregate adjustment is less than 1%. Except as described above in this section, we will not adjust the conversion rate for any issuance of our common stock or convertible or exchangeable securities or rights to purchase our common stock or convertible or exchangeable securities.

      If we:

•  reclassify or change our common stock (other than changes resulting from a subdivision or combination); or

•  consolidate or combine with or merge into any person or sell or convey to another person all or substantially all of our property and assets,

and the holders of our common stock receive stock, other securities or other property or assets (including cash or any combination thereof) with respect to or in exchange for their common stock, the holders of the New Securities may convert the New Securities into the consideration they would have received if they had converted their New Securities immediately prior to such reclassification, change, consolidation, combination, merger, sale or conveyance. We may not become a party to any such transaction unless its terms are consistent with the foregoing.

      In the event we elect to make a distribution described in paragraph 3, 4 or 5 above which has a per share value equal to more than 15% of the sale price of our shares of common stock on the day preceding the declaration date for such distribution, we will be required to give notice to the holders of New Securities at least 20 days prior to the ex-dividend date for such distribution and, upon the giving of such notice, the New Securities may be surrendered for conversion at any time until the close of business on the business day prior to the ex-dividend date or until we announce that such distribution will not take place. No adjustment to the conversion rate or the ability of a holder of New Securities to convert will be made if we provide that holders of New Securities will participate in the distribution without conversion or in certain other cases.

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      The indenture permits us to increase the conversion rate from time to time.

      In the event of

•  a taxable distribution to holders of shares of common stock which results in an adjustment of the conversion rate; or

•  an increase in the conversion rate at our discretion,

the holders of the New Securities may, in certain circumstances, be deemed to have received a distribution subject to federal income tax as a dividend. See “Certain United States Federal Income Tax Consequences — Classification and Treatment of the New Securities — Constructive Dividends.”

      Upon a determination that New Securities holders are or will be entitled to convert their New Securities into shares of common stock in accordance with the foregoing provisions, we will issue a press release and publish such information on our website.

Contingent Interest

      Subject to the accrual and record date provisions described below, we will pay contingent interest to the holders of New Securities during any six-month period from February 8 to August 7 and from August 8 to February 7, with the initial six-month period commencing February 8, 2006, if the average market price of a New Security for the five trading days ending on the second trading day immediately preceding the first day of the applicable six-month period equals 120% or more of the initial accreted principal amount for such New Security and the accrued issue discount thereon to the day immediately preceding the first day of the applicable six-month period. See “— Redemption of New Securities at the Option of CFC” for some of these values. Notwithstanding the above, if we declare a dividend for which the record date falls prior to the first day of a six-month period but the payment date falls within such six-month period, then the five trading day period for determining the average market price of a New Security will be the five trading days ending on the second trading day immediately preceding such record date.

      The amount of contingent interest payable per New Security in respect of any applicable six-month period will equal the greater of (1) 0.125% of the average market price of a New Security for the applicable five trading day period described above and (2) a fixed amount multiplied by the conversion rate in effect on the accrual date for such contingent interest payment. The “fixed amount” shall be equal to $0.20 and shall be adjusted on the same basis as the conversion rate. The accrued issue discount will continue to accrue at the yield to maturity whether or not contingent interest is paid.

      Contingent interest, if any, will accrue and be payable to holders of New Securities as of the 15th day preceding the last day of the relevant six-month period and will be paid on the last day of the relevant six-month period.

      “Average market price of a New Security” on any date of determination means the average of the secondary market bid quotations per New Security obtained by the bid solicitation agent for $10,000,000 principal amount at maturity of New Securities at approximately 3:30 p.m., New York City time, on such determination date from three unaffiliated nationally recognized securities dealers we select; provided that if:

•  at least three such bids are not obtained by the bid solicitation agent; or

•  in our reasonable judgment, the bid quotations are not indicative of the secondary market value of the New Securities on such determination date,

then the average market price of the New Securities will equal (a) the then applicable conversion rate of the New Securities multiplied by (b) the average sale price of our common stock on the five trading days ending on such determination date, appropriately adjusted for distributions and other events described in the indenture.

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      The bid solicitation agent will initially be The Bank of New York. We may change the bid solicitation agent, but the bid solicitation agent will not be our affiliate. The bid solicitation agent will solicit bids from securities dealers that are believed by us to be willing to bid for the New Securities.

      Upon determination that New Securities holders will be entitled to receive contingent interest which may become payable during a relevant six-month period, on or prior to the start of such six-month period, we will issue a press release and publish such information on our web site.

Redemption of New Securities at the Option of CFC

      No sinking fund will be provided for the New Securities. Prior to February 8, 2006, we cannot redeem the New Securities. Beginning on February 8, 2006, we may redeem the New Securities for cash as a whole at any time, or in part from time to time. We will give not less than 30 days nor more than 60 days notice of redemption by mail to holders of New Securities.

      The table below shows redemption prices of a New Security on February 8, 2006, at each February 8 thereafter prior to maturity and at the stated maturity of February 8, 2031. These prices reflect the initial accreted principal amount plus accrued issue discount to the redemption date. The redemption price of a New Security redeemed between such dates would include an additional amount reflecting the additional issue discount accrued since the preceding date in the table.

Redemption Date		Redemption Price
February 8,
	2006	$	779.28
	2007		787.10
	2008		794.99
	2009		802.96
	2010		811.01
	2011		819.14
	2012		827.35
	2013		835.64
	2014		844.02
	2015		852.48
	2016		861.03
	2017		869.66
	2018		878.38
	2019		887.18
	2020		896.08
	2021		905.06
	2022		914.14
	2023		923.30
	2024		932.56
	2025		941.90
	2026		951.35
	2027		960.88
	2028		970.52
	2029		980.25
	2030		990.07
	At stated maturity		1,000.00

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      If we convert the New Securities to semi-annual coupon securities following the occurrence of a Tax Event, the New Securities will be redeemable at the restated principal amount plus accrued and unpaid interest from the date on which we exercised the conversion option to the redemption date. See “— Optional Conversion to Semi-Annual Coupon Securities Upon Tax Event.”

      If we redeem less than all of the outstanding New Securities, the trustee will select the New Securities to be redeemed on a pro rata basis in principal amounts at maturity of $1,000 or integral multiples of $1,000 by lot, pro rata, based on the ownership thereof, or by any other method the trustee considers fair and appropriate. If a portion of a holder’s New Securities is selected for partial redemption and the holder converts a portion of the New Securities, the converted portion will be deemed to be the portion selected for redemption.

Purchase of New Securities at the Option of the Holder

      On February 8, 2006, February 8, 2011, February 8, 2016, February 8, 2021 and February 8, 2026, holders may require us to purchase for cash any outstanding New Security for which the holder has properly delivered and not withdrawn a written purchase notice, subject to certain additional conditions. Holders must submit their written purchase notice to the paying agent after the opening of business on the date that is 20 business days prior to the purchase date and prior to the close of business on the business day immediately preceding the purchase date.

      The purchase price of a New Security will be:

•  $779.28 per New Security on February 8, 2006;

•  $819.14 per New Security on February 8, 2011;

•  $861.03 per New Security on February 8, 2016;

•  $905.06 per New Security on February 8, 2021; and

•  $951.35 per New Security on February 8, 2026.

      The purchase prices shown above are equal to the initial accreted principal amount plus accrued issue discount to the purchase date. For a discussion of the tax treatment of a holder receiving cash, see “Certain United States Federal Income Tax Consequences — Classification and Treatment of the New Securities.”

      If, prior to a purchase date, we have converted the New Securities to semi-annual coupon securities following the occurrence of a Tax Event, the purchase price will be equal to the restated principal amount of the securities, plus accrued and unpaid interest from the date on which we exercised the conversion option to the purchase date. See “— Optional Conversion to Semi-Annual Coupon Securities Upon Tax Event.”

      We will be required to give notice on a date not less than 20 business days prior to the purchase date to all holders at their addresses shown in the register of the registrar, and to beneficial owners as required by applicable law, stating among other things the procedures that holders must follow to require us to purchase their New Securities.

      The purchase notice given by each holder electing to require us to purchase New Securities shall be given to the paying agent no later than the close of business on the business day immediately preceding the purchase date and must state:

•  the certificate numbers of the holder’s New Securities to be delivered for purchase;

•  the portion of the principal amount at maturity of New Securities to be purchased, which must be $1,000 or an integral multiple of $1,000; and

•  that the New Securities are to be purchased by us pursuant to the applicable provisions of the New Securities and the indenture.

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      A holder may withdraw any purchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the purchase date. The notice of withdrawal shall state:

•  the principal amount at maturity of the New Securities being withdrawn;

•  the certificate numbers of the New Securities being withdrawn; and

•  the principal amount at maturity, if any, of the New Securities that remain subject to the purchase notice.

      In connection with any purchase or purchase offer, we will to the extent applicable:

•  comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act which may then be applicable; and

•  file a Tender Offer Statement on Schedule TO or any other required schedule under the Exchange Act; and

•  otherwise comply with all applicable federal and state securities laws.

      Our obligation to pay the purchase price for a New Security for which a purchase notice has been delivered and not validly withdrawn is conditioned upon the holder delivering the New Securities, together with necessary endorsements, to the paying agent at any time after delivery of the purchase notice. We will cause the purchase price for the New Securities to be paid promptly following the later of the purchase date or the time of delivery of the New Securities.

      If the paying agent holds money sufficient to pay the purchase price of the New Securities on the business day following the purchase date in accordance with the terms of the indenture, then, immediately after the purchase date, the New Securities will cease to be outstanding and issue discount on such New Securities will cease to accrue, whether or not the New Securities are delivered to the paying agent. Thereafter, all other rights of the holder shall terminate, other than the right to receive the purchase price upon delivery of the New Securities.

      We may not purchase any New Securities for cash at the option of holders if an event of default with respect to the New Securities has occurred and is continuing, other than a default in the payment of the purchase price with respect to such New Securities.

Change in Control Permits Purchase of New Securities by CFC at the Option of the Holder

      In the event of a change in control (as defined below) occurring on or prior to February 8, 2006 with respect to CFC or CHL, you will have the right, at your option, subject to the terms and conditions of the indenture, to require us to purchase for cash all or any portion of the holder’s New Securities in integral multiples of $1,000 principal amount at maturity, at a price for each $1,000 principal amount at maturity of such New Securities equal to the initial accreted principal amount plus accrued issue discount to the purchase date. We will be required to purchase the New Securities no later than 35 business days after the occurrence of such change in control. We refer to this date in this prospectus as the “change in control purchase date.”

      If, prior to a change in control purchase date we have converted the New Securities to semi-annual coupon securities following the occurrence of a Tax Event, we will be required to purchase the securities at a price equal to the restated principal amount plus accrued and unpaid interest to the change in control purchase date.

      Within 15 business days after the occurrence of a change in control, we must mail to the trustee and to all holders of New Securities at their addresses shown in the register of the registrar (and to beneficial owners as required by applicable law) a notice regarding the change in control, which notice must state, among other things:

•  the events causing a change in control;

•  the date of such change in control;

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•  the last date on which a holder may exercise the purchase right;

•  the change in control purchase date;

•  the change in control purchase price (including — to the extent then known — the amount of contingent interest that will be accrued and payable);

•  the name and address of the paying agent and the conversion agent;

•  the conversion rate and any adjustments to the conversion rate;

•  that New Securities with respect to which a change in control purchase notice is given by the holder may be converted, if otherwise convertible, only if the change in control purchase notice has been withdrawn in accordance with the terms of the indenture; and

•  the procedures that holders must follow to exercise these rights.

      To exercise this right, the holder must deliver a written notice so as to be received by the paying agent no later than the close of business on the change in control purchase date. The required purchase notice upon a change in control must state:

•  the certificate numbers of the New Securities to be delivered by the holder;

•  the portion of the principal amount at maturity of New Securities to be purchased, which portion must be $1,000 or an integral multiple of $1,000; and

•  that we are to purchase such New Securities pursuant to the applicable provisions of the New Securities.

      A holder may withdraw any change in control purchase notice by delivering to the paying agent a written notice of withdrawal prior to the close of business on the change in control purchase date. The notice of withdrawal must state:

•  the principal amount at maturity of the New Securities being withdrawn;

•  the certificate numbers of the New Securities being withdrawn; and

•  the principal amount at maturity, if any, of the New Securities that remain subject to a change in control purchase notice.

      Our obligation to pay the change in control purchase price for a New Security for which a change in control purchase notice has been delivered and not validly withdrawn is conditioned upon delivery of the New Security, together with necessary endorsements, to the paying agent at any time after the delivery of such change in control purchase notice. We will cause the change in control purchase price for such New Security to be paid promptly following the later of the change in control purchase date or the time of delivery of such New Security.

      If the paying agent holds money sufficient to pay the change in control purchase price of the New Security on the change in control purchase date in accordance with the terms of the indenture, then, immediately after the change in control purchase date, issue discount on such New Security will cease to accrue, whether or not the New Security is delivered to the paying agent. Thereafter, all other rights of the holder shall terminate, other than the right to receive the change in control purchase price upon delivery of the New Security.

      Under the indenture, a “change in control” is deemed to have occurred at such time as:

•  any person, including its respective affiliates and associates, other than CFC, CHL or their respective subsidiaries or their employee benefit plans (or any plan participant), files a Schedule 13D or Schedule TO (or any successor schedule, form or report under the Exchange Act) disclosing that such person has become the beneficial owner of 50% or more of the voting power of our or CHL’s common stock or other capital stock into which our common stock or the common stock of CHL is reclassified or changed, with certain exceptions; or

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•  there shall be consummated any share exchange, consolidation or merger of CFC or CHL pursuant to which its respective shares of common stock would be converted into cash, securities or other property, in each case other than a share exchange, consolidation or merger in which the holders of such common stock immediately prior to the share exchange, consolidation or merger have, directly or indirectly, at least a majority of the total voting power in the aggregate of all classes of capital stock of the continuing or surviving corporation immediately after the share exchange, consolidation or merger.

      The indenture does not permit our board of directors to waive our obligation to purchase New Securities at the option of holders in the event of a change in control.

      In connection with any purchase or purchase offer in the event of a change in control, we will to the extent applicable:

•  comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act which may then be applicable;

•  file Schedule TO or any other required schedule under the Exchange Act; and

•  otherwise comply with all applicable federal and state securities laws.

      The change in control purchase feature of the New Securities may in certain circumstances make more difficult or discourage a takeover of CFC or sale of CHL. The change in control purchase feature, however, is not the result of our knowledge of any specific effort:

•  to accumulate shares of our common stock;

•  to obtain control of CFC or CHL by means of a merger, tender offer, solicitation or otherwise; or

•  part of a plan by management to adopt a series of anti-takeover provisions.

      Instead, the change in control purchase feature is a standard term contained in other New Securities offerings of similar securities that have been marketed by Lehman Brothers and is identical to the change in control purchase feature contained in the Old Securities.

      We could, in the future, enter into certain transactions, including certain recapitalizations, that would not constitute a change in control with respect to the change in control purchase feature of the New Securities but that would increase the amount of our (or our subsidiaries’) outstanding indebtedness.

      We may not purchase New Securities at the option of holders upon a change in control if there has occurred and is continuing an event of default with respect to the New Securities, other than a default in the payment of the change in control purchase price with respect to the New Securities.

Optional Conversion to Semi-Annual Coupon Securities Upon Tax Event

      From and after the date of the occurrence of a Tax Event, we will have the option to elect to pay interest in cash in lieu of future issue discount. Cash interest will be paid at a rate equal to 1.00% per year on a principal amount per New Security (the “restated principal amount”) equal to the initial accreted principal amount plus accrued issue discount to the date on which we exercise the option described herein (the “option exercise date”). Except as otherwise described in this section, the other terms of the New Securities will remain unchanged in all material respects.

      Such interest will be computed on the basis of a 360-day year comprised of twelve 30-day months, will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the option exercise date, and will be payable semi-annually on a bond equivalent basis on the interest payment dates of February 8 and August 8 of each year to holders of record at the close of business on the 15th calendar day immediately preceding the interest payment date. In the event that we exercise our option to pay interest in lieu of accrued issue discount, the redemption price, purchase price and change in control purchase price on the New Securities will be adjusted, and contingent interest will cease to accrue. However, there will be no change in the holder’s conversion rights.

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      A “Tax Event” means that we shall have received an opinion from independent tax counsel experienced in such matters to the effect that, on or after the date of this prospectus, as a result of:

•  any amendment or addition to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or

•  any amendment or addition to, or change in, an interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority,

in each case which amendment, addition or change is enacted, promulgated, issued or announced or which interpretation is issued or announced or which action is taken, on or after the date of this prospectus, there is more than an insubstantial risk that interest (including accrued original issue discount, accrued issue discount and contingent interest, if any) payable on the New Securities either:

•  would not be deductible on a current accrual basis; or

•  would not be deductible under any other method,

in either case in whole or in part, by us (by reason of deferral, disallowance, or otherwise) for United States federal income tax purposes.

      The modification of the terms of New Securities by us upon a Tax Event as described above could possibly alter the timing of income recognition by holders of the New Securities with respect to the semi-annual payments of interest due on the New Securities after the option exercise date. See “Certain United States Federal Income Tax Consequences — Tax Event.”

Events of Default

      The following will be events of default for the New Securities:

•  default in payment of any contingent interest or of interest which becomes payable after the New Securities have been converted by us into semi-annual coupon securities following the occurrence of a Tax Event, which default, in either case, continues for 30 days;

•  default in payment of the principal amount at maturity (or, if the New Securities have been converted to semi-annual coupon securities following a Tax Event, the restated principal amount), the initial accreted principal amount plus accrued issue discount, the redemption price, the purchase price or the change in control purchase price with respect to any New Security when such becomes due and payable;

•  failure by us or CHL to comply with any of the other agreements in the New Securities or the indenture upon receipt by us or CHL of notice of such default by the trustee or by holders of at least 25% in aggregate principal amount at maturity of the New Securities then outstanding and the failure to cure (or obtain a waiver of) such default within 60 days after receipt of such notice;

•  (A) failure by us or CHL to make any payment by the end of any applicable grace period after maturity of indebtedness, which term as used in the indenture means obligations (other than non-recourse obligations) of CFC or CHL, as the case may be, for borrowed money or evidenced by bonds, debentures, notes or similar instruments in an amount (taken together with amounts in (B)) in excess of $50 million and continuance of such failure, or (B) the acceleration of indebtedness in an amount (taken together with the amounts in (A)) in excess of $50 million because of a default with respect to such indebtedness without such indebtedness having been discharged or such acceleration having been cured, waived, rescinded or annulled, in the case of (A) or (B) above, for a period of 30 days after written notice to us by the trustee or to us and the trustee by the holders of not less than 25% in aggregate principal amount at maturity of the New Securities then outstanding. However, if any such failure or acceleration referred to in (A) or (B) above shall cease to exist or be cured,

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	waived, rescinded or annulled, then the event of default by reason thereof shall be deemed not to be continuing; or
•	certain events of bankruptcy or insolvency affecting CFC or CHL.

If an event of default shall have happened and be continuing (other than certain events of bankruptcy or insolvency affecting CFC or CHL referred to above), either the trustee or the holders of not less than 25% in aggregate principal amount at maturity of the New Securities then outstanding may declare the initial accreted principal amount of the New Securities plus the issue discount on the New Securities accrued through the date of such declaration, and any accrued and unpaid interest (including contingent interest) through the date of such declaration, to be immediately due and payable. In the case of certain events of bankruptcy or insolvency of CFC or CHL, the initial accreted principal amount of the New Securities plus the issue discount and any contingent interest accrued thereon through the occurrence of such event shall automatically become and be immediately due and payable. If the New Securities have been converted to semi-annual coupon securities following the occurrence of a Tax Event, the amount due on an acceleration will be the restated principal amount plus accrued and unpaid interest.

Backup Withholding Tax and Information Reporting

      Payments of interest (including original issue discount and a payment in cash or common stock pursuant to a conversion of the New Securities) or dividends, if any, made by us, or of the proceeds of the sale or other disposition or retirement of the New Securities or shares of common stock with respect to certain noncorporate holders, may be subject to information reporting, and U.S. federal backup withholding tax at the rate then in effect may apply if the recipient of such payment fails to supply an accurate taxpayer identification number or otherwise fails to comply with applicable U.S. information reporting or certification requirements. Any amounts so withheld will be allowed as a credit against the recipient’s U.S. federal income tax liability, provided that the required information is provided to the IRS.

Merger and Sales of Assets by CFC and CHL

      The indenture provides that CFC or CHL may not consolidate with or merge with or into any other person or convey, transfer or lease their respective properties and assets substantially as an entirety to another person, unless among other items:

•  CFC or CHL, as the case may be, is the surviving corporation or the resulting, surviving or transferee person is a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia; provided, that this condition will not apply if independent tax counsel experienced in such matters delivers an opinion to CFC or CHL stating that, under then existing laws, there would be no adverse tax consequences to the holders of the New Securities in the event this condition were not satisfied;

•  such person assumes all obligations of CFC or CHL, as the case may be, under the New Securities and the indenture; and

•  CFC, CHL or such successor person shall not immediately thereafter be in default under the indenture.

      Upon the assumption of CFC’s or CHL’s obligations by such a successor person in such circumstances, subject to certain exceptions, CFC or CHL, as the case may be, shall be discharged from all obligations under the New Securities and the indenture. Although such transactions are permitted under the indenture, certain of the foregoing transactions occurring on or prior to February 8, 2006 could constitute a change in control permitting each holder to require CFC to purchase the New Securities of such holder as described above.

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Modification

      We, CHL and the trustee may amend provisions of the indenture or the New Securities with the consent of the holders of at least a majority in principal amount at maturity of the New Securities then outstanding. However, without the consent of each holder, no such amendments may:

•  alter the manner of calculation or rate of accrual of issue discount or interest (including contingent interest) on any New Security or extend the time of payment;

•  make any New Security payable in money or securities other than that stated in the New Security;

•  extend the stated maturity of any New Security;

•  reduce the principal amount at maturity, accrued issue discount, restated principal amount, initial accreted principal amount, redemption price, purchase price or change in control purchase price with respect to any New Security;

•  make any change that adversely affects the right of a holder to convert any New Security;

•  make any change that adversely affects the right of a holder to require us to purchase a New Security;

•  make any change to the guarantee that adversely affects the rights of the holders of New Securities;

•  impair the right to institute suit for the enforcement of any payment with respect to, or conversion of, the New Securities;

•  reduce the thresholds required to waive a past default; or

•  change the provisions in the indenture that relate to modifying or amending the indenture.

      Without the consent of any holder of New Securities, we, CHL and the trustee may amend the indenture or the New Securities for any of the following purposes:

•  to evidence a successor to us or CHL and the assumption by that successor of our and/or CHL’s obligations under the indenture, the guarantee or the New Securities;

•  to add to our or CHL’s covenants for the benefit of the holders of the New Securities or to surrender any right or power conferred upon us or CHL;

•  to secure our obligations in respect of the New Securities and the indenture;

•  to make any changes or modifications to the indenture necessary in connection with the registration of the New Securities under the Securities Act and the qualification of the New Securities under the Trust Indenture Act;

•  to cure any ambiguity or inconsistency; and

•  to make any change that does not affect the rights of the holders of the New Securities in an adverse manner.

      The holders of a majority in principal amount at maturity of the outstanding New Securities may, on behalf of the holders of all New Securities waive any past default under the indenture and its consequences, except a default in the payment of the principal amount at maturity, initial accreted principal amount, accrued and unpaid interest, accrued and unpaid contingent interest, accrued issue discount, redemption price, purchase price or change in control purchase price or obligation to deliver cash and common stock upon conversion with respect to any New Security or in respect of any provision which under the indenture cannot be modified or amended without the consent of the holder of each outstanding New Security affected.

Discharge of the Indenture

      We may satisfy and discharge our obligations under the indenture and CHL’s obligations under the guarantee by delivering to the trustee for cancellation of all outstanding New Securities or by depositing with the trustee, the paying agent or the conversion agent, if applicable, after the New Securities have become due

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and payable, whether at stated maturity, or any redemption date, or any purchase date, or a change in control purchase date, or upon conversion or otherwise, cash and/or shares of common stock (as applicable under the terms of the indenture) sufficient to pay all of the outstanding New Securities and paying all other sums payable under the indenture.

Calculations in Respect of New Securities

      We will be responsible for making all calculations called for under the New Securities. These calculations will include, but are not limited to, determination of the average market prices of the New Securities and of our common stock and amounts of contingent interest payments, if any, payable on the New Securities. We will make all these calculations in good faith and, absent manifest error, our calculations will be final and binding on holders of New Securities. We will provide a schedule of our calculations to the trustee, and the trustee is entitled to rely upon the accuracy of our calculations without independent verification.

Limitations of Claims in Bankruptcy

      If a bankruptcy proceeding is commenced in respect of CFC or CHL, the claim of the holder of a New Security will be, under Title 11 of the United States Code, limited to the initial accreted principal amount of the New Security plus that portion of the issue discount that has accrued from the date of issue to the commencement of the proceeding.

Governing Law

      The indenture, the New Securities and the guarantee will be governed by, and will be construed in accordance with, the law of the State of New York.

Trustee

      The Bank of New York is the trustee, registrar, paying agent and conversion agent under the indenture for the New Securities.

Book-Entry System

      The New Securities will be issued only in the form of global securities held in book-entry form. DTC or its nominee will be the sole registered holder of the New Securities for all purposes under the indenture. Owners of beneficial interests in the New Securities represented by the global securities will hold their interests pursuant to the procedures and practices of DTC. As a result, beneficial interests in any such securities will be shown on, and transfers will be effected only through, records maintained by DTC and its direct and indirect participants and any such interest may not be exchanged for certificated securities, except in the limited circumstances described under “— Exchange of Global Securities.”

      Unless and until New Securities are exchanged for certificated securities as described in the next section (and then except to the extent they have been so exchanged), the procedures described in this prospectus, the New Securities, the indenture and other similar documents relating to the conversion of New Securities, the surrender of New Securities for repurchase or payment, identification of New Securities by certificate number and similar matters will be relevant only to DTC as the registered holder.

      Owners of beneficial interests will be required to follow such procedures as DTC (or its direct and indirect participants) may establish for exercising rights under or in respect of their interests, including conversion or repurchase rights. Beneficial owners will not be holders and will not be entitled to any direct rights provided to the holders of New Securities under the global securities or the indenture. CFC and the trustee, and any of their respective agents, will treat DTC as the sole holder and registered owner of the global securities.

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Exchange of Global Securities

      We will exchange New Securities represented by global securities for certificated securities with the same terms (and the holders thereof will then be required to follow the procedures established in the New Securities and the indenture for converting, requiring repurchase or otherwise dealing with the New Securities) only if:

•  DTC is unwilling or unable to continue as depositary or DTC ceases to be a clearing agency registered under the Securities Exchange Act of 1934 and a successor depositary is not appointed by us within 90 days;

•  we decide to discontinue use of the system of book-entry transfer through DTC (or any successor depositary); or

•  a default under the indenture occurs and is continuing.

      DTC has advised us as follows: DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

      DTC facilitates the settlement of transactions among its participants through electronic computerized book-entry changes in participants’ accounts, eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers, including Lehman Brothers, banks, trust companies, clearing corporations and other organizations, some of whom and/or their representatives own DTC. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly.

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

General

      This discussion describes certain U.S. federal income tax consequences of the exchange offer and of owning and disposing of the New Securities. This summary is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change (possibly with retroactive effect) or possible differing interpretations. The discussion below applies to you only if you own Old Securities and acquire New Securities pursuant to the exchange offer. In addition, the discussion below applies to you only if you hold your Old Securities and New Securities as capital assets and does not purport to deal with persons in special tax situations, such as financial institutions; insurance companies; regulated investment companies; dealers in securities or currencies; tax-exempt entities; persons holding Old Securities or New Securities in a tax-deferred or tax-advantaged account; shareholders in, or partners or beneficiaries of, an entity that is a holder of Old Securities or New Securities; persons whose functional currency is not the U.S. dollar; persons holding Old Securities or New Securities as a hedge against currency risks, as a position in a “straddle” or as part of a “hedging” or “conversion” transaction for tax purposes; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; or corporations that accumulate earnings to avoid federal income tax.

      We do not address all of the tax consequences that may be relevant to a holder. In particular, we do not address the U.S. federal estate, gift or alternative minimum tax consequences of the exchange offer or of the ownership or disposition of New Securities; any state, local or foreign tax consequences of the exchange offer or of the ownership or disposition of New Securities; or any federal, state, local or foreign tax consequences of owning or disposing of the common stock received upon a conversion of the New Securities.

      No statutory, administrative or judicial authority directly addresses the treatment of the exchange offer or of the ownership or disposition of the New Securities for U.S. federal income tax purposes. No rulings have been sought or are expected to be sought from the Internal Revenue Service (which we refer to as the IRS) with respect to any of the U.S. federal income tax consequences discussed below, and no assurance can be given that the IRS will not take contrary positions. As a result, no assurance can be given that the IRS will agree with the tax characterizations and the tax consequences described below. Due to the absence of authority, our counsel has given its opinion solely as to the description of U.S. federal income tax laws contained herein, and has not expressed any opinion with respect to the underlying issues discussed herein or the positions expected to be taken.

      WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO YOU OF THE EXCHANGE OFFER AND THE OWNERSHIP AND DISPOSITION OF THE NEW SECURITIES AND THE COMMON STOCK IN LIGHT OF YOUR OWN PARTICULAR CIRCUMSTANCES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.

      For purposes of the following discussion, a “U.S. Holder” is a beneficial owner of the Old Securities or New Securities who or which is a citizen or individual resident of the United States; a corporation, including any entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; an estate if its income is subject to U.S. federal income taxation regardless of its source; or a trust if (1) a U.S. court can exercise primary supervision over its administration and (2) one or more U.S. persons have the authority to control all of its substantial decisions. Notwithstanding the preceding sentence, certain trusts in existence on August 20, 1996, and treated as a U.S. Holder prior to such date, may also be treated as U.S. Holders. A “Non-U.S. Holder” is a holder of Old Securities or New Securities (other than a partnership) that is not a U.S. Holder.

Exchange of Old Securities for New Securities

      Characterization of the Exchange. Under current Treasury Regulations, the exchange of Old Securities for New Securities will be treated as an exchange for U.S. federal income tax purposes (which we will refer

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to as a Tax Exchange) only if, taking into account the differences between the terms of the Old Securities and the New Securities and the payment of the exchange fee, there is deemed to be a “significant” modification of the Old Securities.

      In general, the Treasury Regulations provide that a modification of a debt instrument is a significant modification only if, based on all of the facts and circumstances, the legal rights or obligations that are altered and the degree to which they are altered are “economically significant.” Because there is no authority interpreting the Treasury Regulations, their application to an exchange of Old Securities for New Securities is unclear. Nevertheless, we intend to take the position that the modifications to the Old Securities resulting from the exchange of Old Securities for New Securities and payment of the exchange fee will not constitute a significant modification of the Old Securities. That position, however, is subject to considerable uncertainty and could be challenged by the IRS.

      Treatment if No Tax Exchange. If, consistent with our position, the exchange of Old Securities for New Securities does not constitute a significant modification of the Old Securities, the exchange will not be treated as a Tax Exchange and the New Securities will be treated as a continuation of the Old Securities. In that case, apart from the receipt of the exchange fee (see discussion below), there will be no U.S. federal income tax consequences to a holder who exchanges Old Securities for New Securities pursuant to the exchange offer, and any such holder will have the same adjusted tax basis and holding period in the New Securities as it had in the Old Securities immediately before the exchange. In addition, such holders will continue to be subject to the same rules governing the treatment of contingent payment debt instruments (which we refer to as the CPDI Regulations) as were applicable to the Old Securities. Among other things, pursuant to those regulations, a U.S. Holder of the New Securities is required to accrue interest income on the New Securities, in the amounts described in the registration statement relating to the Old Securities, regardless of whether the U.S. Holder uses the cash or accrual method of tax accounting. Under that approach, U.S. Holders will be required to include interest in taxable income in each year in excess of the accruals on the New Securities for non-tax purposes (referred to elsewhere in this prospectus as “issue discount”) and in excess of any contingent interest payments actually received in that year. Pursuant to the terms of the New Indenture relating to the New Securities, you agree to treat the New Securities as debt subject to the CPDI Regulations, and to continue to accrue interest in the same manner and amounts as for the Old Securities.

      Treatment if Tax Exchange. There can be no assurance that the IRS will agree that the exchange does not constitute a significant modification of the terms of the Old Securities. If, contrary to our position, the exchange of the Old Securities for New Securities constitutes a significant modification of the Old Securities, the exchange will be treated as a Tax Exchange. Although not free from doubt, we intend to take the position that such a Tax Exchange would constitute a recapitalization for U.S. federal income tax purposes. If such a Tax Exchange were instead a recognition event, a holder could be required to recognize ordinary income in an amount equal to the excess of the fair market value of the New Securities received in the exchange over the holder’s adjusted tax basis in the Old Securities (which excess is likely to be substantial in the case of a holder who purchased the Old Securities in the initial offering).

      Whether such an exchange qualifies as a recapitalization depends on, among other things, whether the Old Securities and the New Securities constitute “stock” or “securities” for U.S. federal income tax purposes. The rules for determining whether debt instruments such as the Old Securities are securities are unclear. The term “security” is not defined in the Internal Revenue Code of 1986, as amended (the “Code”) or Treasury Regulations and has not been clearly defined by judicial decisions. The determination of whether a debt instrument is a security requires an overall evaluation of the nature of the debt instrument, with the term of the instrument usually regarded as one of the most significant factors. Although a debt instrument with a term of more than ten years is generally considered to be a security, no authority clearly addresses the impact on security treatment of put and call features of the type included in the Old Securities. Nevertheless, the Company believes that the Old Securities constitute securities for U.S. federal income tax purposes.

      The rules for determining whether instruments such as the New Securities are equity or debt for U.S. federal income tax purposes are complex, depending upon the terms of the instruments and all surrounding facts and circumstances. Although the application of those rules to the New Securities is unclear,

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if the exchange is treated as a Tax Exchange, the Company expects to take the position (based, in part, on the conversion feature of the New Securities and the degree by which the market value of the New Securities at the time of the exchange exceeds the principal amount thereof) that the New Securities constitute equity for U.S. federal income tax purposes and, consequently, stock for U.S. federal income tax purposes. If, on the other hand, the New Securities are characterized as debt instruments for U.S. federal income tax purposes, a determination would need to be made whether the New Securities constitute “securities” for U.S. federal income tax purposes. Although, as mentioned above, a debt instrument with a term of more than ten years is generally considered to be a security, no authority clearly addresses the impact on security treatment of put and call features of the type included in the New Securities. In either case, the Company believes that the New Securities constitute stock or securities for U.S. federal income tax purposes. If both the Old Securities and the New Securities constitute stock or securities for U.S. federal income tax purposes, any Tax Exchange of the Old Securities for New Securities should qualify as a recapitalization.

      The proper application of the recapitalization rules to a debt instrument subject to the CPDI Regulations is unclear. If the exchange of the Old Securities for New Securities is treated as a Tax Exchange, and if the Tax Exchange is treated as a recapitalization, the Company believes that a holder will nevertheless recognize gain on the exchange of Old Securities for New Securities to the extent of the lesser of (i) the excess of the issue price of the New Securities (generally, their fair market value as of the exchange date) over the holder’s adjusted tax basis in the Old Securities and (ii) the fair market value of the excess of the principal amount of the New Securities over the principal amount of the Old Securities. (If the New Securities are characterized as equity for U.S. federal income tax purposes, then a holder should not recognize any gain on such a recapitalization, although not free from doubt.) A holder’s adjusted tax basis in the Old Securities generally will be its initial purchase price for the Old Securities, increased by any interest income previously accrued by the holder with respect to the Old Securities (determined without regard to any positive or negative adjustments to such interest accruals under the CPDI Regulations), decreased by the amount of any projected payments actually made on the Old Securities, and increased or decreased by the amount of any positive or negative adjustments, respectively, that the holder was required to make as a result of having purchased the Old Securities at a price other than their adjusted issue price. Any gain recognized on the exchange will be treated as ordinary interest income. Any loss realized by a holder on the exchange of Old Securities for New Securities will not be recognized. A holder’s basis in any New Securities received in the exchange will equal its basis in the Old Securities, increased by the amount of any gain recognized on the exchange. A holder’s holding period for the New Securities will include its holding period for the Old Securities exchanged therefor. The IRS could, however, take positions contrary to the foregoing discussion, in which case the amount, timing and character of a holder’s income, gain or loss from such a recapitalization could differ materially from that described above.

      If the exchange of the Old Securities for New Securities is treated as a Tax Exchange, but contrary to our belief the Old Securities or the New Securities are not treated as stock or securities for U.S. federal income tax purposes, then the Tax Exchange will not qualify as a recapitalization, and an exchanging holder would be treated as having engaged in a taxable disposition of the Old Securities for property with a fair market value equal to the fair market value of the New Securities, with the U.S. federal income tax consequences described in the registration statement relating to the Old Securities, including, generally, the recognition of ordinary income or loss equal to the difference in a holder’s adjusted tax basis in the Old Securities and the fair market value of the New Securities.

      Exchange Fee. We intend to treat payment of the exchange fee as consideration to holders for participating in the exchange offer. In that case, such payment would result in ordinary income to holders participating in the exchange offer and we will report such payments to holders and the IRS for information purposes in accordance with such treatment. The receipt of the exchange fee by Non-U.S. Holders participating in the exchange offer may be subject to U.S. federal withholding tax.

Classification and Treatment of the New Securities

      Treatment if No Tax Exchange. As stated above, we intend to take the position that the exchange of the Old Securities for New Securities does not constitute a significant modification of the Old Securities and that

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the exchange is not treated as a Tax Exchange. In that case, holders will continue to be subject to the same rules governing the treatment of contingent payment debt instruments as were applicable to the Old Securities. Pursuant to the terms of the New Indenture relating to the New Securities, you agree to treat the New Securities as debt subject to the CPDI Regulations, and to continue to accrue interest in the same manner and amounts as for the Old Securities.

      Treatment as Equity if Tax Exchange. As stated above, the rules for determining whether instruments such as the New Securities are equity or debt for U.S. federal income tax purposes are complex, depending upon the terms of the instruments and all surrounding facts and circumstances. Although the application of those rules to the New Securities is unclear, if, contrary to our position, the exchange is treated as a Tax Exchange, the Company expects to take the position (based, in part, on the conversion feature of the New Securities and the degree by which the market value of the New Securities at the time of the exchange exceeds the principal amount thereof) that the New Securities constitute equity for U.S. federal income tax purposes. That position, if taken, would be subject to considerable uncertainty and could be challenged by the IRS.

      If the New Securities are treated as equity, then distributions to a holder with respect to the New Securities will generally be treated as a dividend to the extent payable out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes), then as a tax-free return of capital to the extent of the holder’s tax basis in the New Securities, and thereafter as gain from the sale or exchange of the New Securities. In the case of a U.S. Holder, any such dividends will be treated as ordinary income. Holders may not be able to satisfy certain holding period requirements for the dividends received deduction in the case of corporate U.S. Holders or special reduced rates for dividends in the case of individual U.S. Holders.

      The Company will generally not pay cash dividends on the New Securities. Instead, issue discount (as opposed to contingent interest or original issue discount) will accrete and be added to the redemption price for the New Securities. If the New Securities are treated as equity, then the accretion of issue discount on the New Securities may be treated as giving rise to constructive distributions that are required to be included in income on a current basis (or, in the case of a Non-U.S. Holder, subject to withholding), in advance of the receipt of cash. Holders should consult their own tax advisors with respect to the possible application of these rules.

      Upon the sale, exchange or other disposition of New Securities (other than by redemption or by conversion, which are discussed separately below), a holder will generally recognize capital gain or loss equal to the difference between (1) the amount of cash and the fair market value of any property received upon the sale, exchange or other disposition, and (2) the holder’s adjusted tax basis in its New Securities. This gain or loss will be long-term capital gain or loss if, at the time of disposition, the holder has held its New Securities for more than one year. The deductibility of capital losses is subject to limitations.

      A redemption of New Securities for cash will be a taxable event for U.S. Holders. A redemption of New Securities will be treated as a dividend to the extent of our current and accumulated earnings and profits, unless the redemption results in a complete termination of the holder’s stock interest in us, results in a substantially disproportionate redemption of stock with respect to the holder, or is “not essentially equivalent to a dividend” with respect to the holder. In determining whether the redemption is treated as a dividend, shares considered to be owned by the holder of New Securities by reason of certain attribution rules, as well as shares actually owned by the holder, must be taken into account. If the redemption does not satisfy any of these three tests, then the entire amount received will be taxable as a distribution, as described above. In that case, the holder’s tax basis in the redeemed New Securities will be allocated to the holder’s remaining New Securities or shares of our stock, if any. If the redemption satisfies any of these three tests, the redemption will be treated as a sale or exchange of the New Securities that results in capital gain or loss equal to the difference between the amount of cash received and the holder’s adjusted tax basis in the New Securities redeemed.

      A holder of New Securities that converts the New Securities into our common stock generally will not recognize gain or loss, except that the receipt of cash in the conversion will result in either (1) a holder

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recognizing any capital gain in an amount equal to the lesser of (a) the difference between the amount of cash and the fair market value of the common stock received on the one hand, and the holder’s adjusted tax basis in the New Securities converted on the other hand, and (b) the amount of cash received, or (2) a distribution taxable as a dividend, as determined under the rules described above. Generally, any gain recognized upon conversion of the New Securities will be long-term capital gain if the holder’s holding period for the New Securities is more than one year at the time of conversion.

      A holder’s tax basis in the common stock received upon the surrender of the New Securities for conversion will equal the holder’s tax basis in its New Securities as of the time of the conversion, increased by the amount of any gain recognized and reduced by the amount of cash received. A holder’s holding period in the common stock received upon conversion will generally include its holding period in respect of the converted New Securities.

      Treatment as Debt if Tax Exchange. If, contrary to our position, the exchange of the Old Securities for the New Securities is treated as a Tax Exchange, but the New Securities are characterized as debt for U.S. federal income tax purposes, then the Company would need to determine whether the New Securities constitute debt instruments that are subject to the CPDI Regulations. Whether the New Securities are subject to the CPDI Regulations depends, in part, on whether the contingency with respect to the payment of contingent interest is remote and whether the amount of such contingent interest is incidental. Holders are encouraged to consult their own tax advisors regarding the consequences to them of the ownership, sale, exchange, conversion or redemption of New Securities if the exchange is treated as a Tax Exchange and the New Securities are characterized as debt for U.S. federal income tax purposes. Note, in particular, that if the New Securities are treated as subject to the CPDI Regulations, then the Company would need to determine the comparable yield for the New Securities and provide the holders with a projected payment schedule for the New Securities, and the holders would be subject to such consequences with respect to the New Securities as are consistent with the description of the CPDI Regulations contained in the registration statement relating to the Old Securities, including, among other things, a requirement that a U.S. Holder accrue interest in taxable income in each year in excess of the accruals on the New Securities for non-tax purposes and in excess of any contingent interest payments actually received by it in that year, regardless of whether the holder uses the cash or accrual method of tax accounting. Such accrual would also be substantially in excess of the amounts required to be accrued under the Old Securities. The CPDI Regulations include special rules that are applicable to holders whose basis in a contingent payment debt instrument is different from the adjusted issue price of the debt instrument.

      Constructive Dividends. Without regard to whether a Tax Exchange of the Old Securities for New Securities is considered to have occurred, or whether the New Securities are treated as equity or debt for U.S. federal income tax purposes, if at any time we make a distribution of property to our stockholders that would be taxable to the stockholders as a dividend for U.S. federal income tax purposes and, in accordance with the anti-dilution provisions of the New Securities, the conversion rate of the New Securities is increased, such increase may be deemed to be the payment of a taxable dividend to holders of the New Securities. It is not clear whether a constructive dividend would be eligible for the dividends received deduction in the case of corporate U.S. Holders or for special reduced rates for dividends in the case of individual U.S. Holders.

Additional Considerations for Non-U.S. Holders

      Treatment if No Tax Exchange. If, consistent with our position, the exchange of Old Securities for New Securities is not treated as a Tax Exchange, then, as discussed above, the New Securities will be treated as a continuation of the Old Securities and, apart from the receipt of the exchange fee, there will be no U.S. federal income tax consequences to a holder who exchanges Old Securities for New Securities pursuant to the exchange offer. In that case, a Non-U.S. Holder generally should have the same U.S. tax consequences as would have arisen if it continued to hold the Old Securities, including the withholding and other consequences described in the registration statement relating to the Old Securities.

      Treatment if Tax Exchange. If, contrary to our position, the exchange of the Old Securities for New Securities constitutes a significant modification of the Old Securities, the exchange will be treated as a Tax

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Exchange. In that case, any gain realized by a Non-U.S. Holder on the Tax Exchange will be eligible for exemption from U.S. federal income or withholding tax to the same extent as described in the registration statement relating to the Old Securities for any other sale or exchange of the Old Securities.

      In addition, in the case of a Tax Exchange, the following consequences would apply to the ownership, sale, exchange, conversion or redemption of the New Securities by a Non-U.S. Holder: Payments of dividends, if applicable, as well as any constructive distributions or constructive dividends, made to Non-U.S. Holders will be subject to withholding at a rate of 30%, subject to reduction by an applicable treaty or upon the receipt of a Form W-8ECI from a Non-U.S. Holder claiming that the payments are effectively connected with the conduct of a U.S. trade or business. A Non-U.S. Holder that is subject to the withholding tax should consult its tax advisors as to whether it can obtain a refund for a portion of the withholding tax.

      All other payments on the New Securities made to a Non-U.S. Holder, including a payment in cash or common stock pursuant to a conversion, and any gain realized on a sale or exchange of the New Securities, will be exempt from U.S. income or withholding tax, provided that: (i) such Non-U.S. Holder does not own, actually or constructively, 10 percent or more of the total combined voting power of all classes of our stock entitled to vote, is not a controlled foreign corporation related, directly or indirectly, to us through stock ownership, and is not a bank receiving interest described in section 881(c)(3)(A) of the Code; (ii) the statement requirement set forth in section 871(h) or section 881(c) of the Code has been fulfilled with respect to the beneficial owner, as discussed below; (iii) such Non-U.S. Holder is not an individual who is present in the United States for 183 days or more in the taxable year of disposition, or such individual does not have a “tax home” (as defined in section 911(d)(3) of the Code) or an office or other fixed place of business in the United States; (iv) such payments and gain are not effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United States; (v) our common stock continues to be actively traded within the meaning of section 871(h)(4)(C)(v)(I) of the Code (which, for these purposes and subject to certain exceptions, includes trading on the NYSE); and (vi) we are not and have not been a United States real property holding corporation.

      The statement requirement referred to in the preceding paragraph will be fulfilled if the beneficial owner of New Securities certifies on IRS Form W-8BEN, under penalties of perjury, that it is not a United States person and provides its name, address and such other information as the form may require.

      If a Non-U.S. Holder of New Securities is engaged in a trade or business in the United States, and if dividends or interest (as applicable) on the New Securities is effectively connected with the conduct of such trade or business, the Non-U.S. Holder, although exempt from the withholding tax discussed in the preceding paragraphs, will generally be subject to regular U.S. federal income tax on such dividends or interest and on any gain realized on the sale or exchange of the New Securities in the same manner as if it were a U.S. Holder. In lieu of the certificate described in the preceding paragraph, such a Non-U.S. Holder will be required to provide to the withholding agent a properly executed IRS Form W-8ECI (or successor form) in order to claim an exemption from withholding tax. In addition, if such a Non-U.S. Holder is a foreign corporation, such Non-U.S. Holder may be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments.

Information Reporting and Backup Withholding

      Payments of interest (including original issue discount and a payment in cash or common stock pursuant to a conversion of the New Securities) or dividends, if any, made by us, or of the proceeds of the sale or other disposition or retirement of the New Securities or shares of common stock with respect to certain noncorporate holders, may be subject to information reporting, and U.S. federal backup withholding tax at the rate then in effect may apply if the recipient of such payment fails to supply an accurate taxpayer identification number or otherwise fails to comply with applicable U.S. information reporting or certification requirements. Any amounts so withheld will be allowed as a credit against the recipient’s U.S. federal income tax liability, provided that the required information is provided to the IRS.

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Tax Event

      The modification of the terms of the New Securities by us upon a Tax Event as described in “Description of New Notes — Optional Conversion to Semi-Annual Coupon Notes Upon Tax Event,” could possibly alter the timing of income recognition by the holders.

54

LEGAL MATTERS

      The validity of the New Securities, the shares of common stock issuable upon conversion of the New Securities, the guarantee of CHL and certain legal matters are being passed upon for CFC and CHL by Munger, Tolles & Olson LLP, Los Angeles, California.

EXPERTS

      The consolidated financial statements of CFC for the fiscal years ended December 31, 2003 and 2002, and the ten months ended December 31, 2001, have been audited by Grant Thornton LLP, independent registered public accounting firm. The financial statements and the reports of the independent registered public accounting firm, included in CFC’s Annual Report on Form 10-K for the year ended December 31, 2003 and Current Report on Form 8-K filed on February 27, 2004, are incorporated by reference in this document in reliance on said reports given on the authority of such firm as experts in accounting and auditing.

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DOCUMENTS INCORPORATED BY REFERENCE

      We are “incorporating by reference” into this prospectus certain information that we file with the SEC. This means that we are disclosing important information to you by referring to those documents. The information incorporated by reference herein is considered to be part of this prospectus, except for any information superceded by information contained directly in this prospectus. Information that we file later with the SEC will automatically update information in this prospectus. In all cases, you should rely on the later information over different information included in this prospectus. We incorporate by reference the documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, from the date of this prospectus to the expiration date:

•  Current Report on Form 8-K/ A filed on March 23, 2004;

•  Current Reports on Form 8-K filed on February 27, 2004 and January 12, 2004;

•  Quarterly Reports on Form 10-Q for the quarters ended June 30, 2004 and March 31, 2004;

•  Annual Report on Form 10-K for the year ended December 31, 2003;

•  Registration Statement on Form 8-A/ A filed on December 10, 2001; and

•  Registration Statement on Form 8-A filed on February 11, 1998.

      You may request a copy of these filings, or any other documents or other information referred to in, or incorporated by reference into, this prospectus, at no cost, by writing or calling us at the following address or telephone number:

Countrywide Financial Corporation

4500 Park Granada

Calabasas, California 91302

(818) 225-3000

      Exhibits to the documents incorporated by reference will not be sent, however, unless those exhibits have been specifically referenced in this prospectus.

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The exchange agent for the exchange offer is:

The Bank of New York

By Facsimile (Eligible Institutions only):
(212) 298-1915
By Telephone:
(212) 815-5788 By Mail, Hand or Overnight Delivery:
The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street — Floor 7E
New York, NY 10286
Attention: William Buckley

Questions, requests for assistance and requests for additional copies of this prospectus

and related letter of transmittal may be directed to the information agent

or the dealer manager at each of their addresses set forth below:

The information agent for the exchange offer is:

D.F. King & Co., Inc.

48 Wall Street, 22^nd Floor

New York, New York 10005

Banks and Brokerage Firms, Please Call: (212) 269-5550

All Others, Call: (800) 758-5378

The dealer manager for the exchange offer is:

LEHMAN BROTHERS

745 Seventh Avenue, 3^rd Floor

New York, NY 10019

Attention: Convertible Origination Group

(800) 438-3242 (U.S. toll-free)

(212) 526-7343 (collect)

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 20. Indemnification of Directors and Officers

      Section 145 of the Delaware General Corporation Law provides, in substance, that Delaware corporations shall have the power, under specified circumstances, to indemnify their directors, officers, employees and agents in connection with actions, suits or proceedings brought against them by a third party or in the right of the corporation, by reason of the fact that they were or are such directors, officers, employees or agents, against expenses incurred in any such action, suit or proceeding. The Delaware General Corporation Law also provides that Delaware corporations may purchase insurance on behalf of any such director, officer, employee or agent. Sections 722, 723, 725 and 726 of the New York Business Corporation Law are substantively equivalent to Section 145 of the Delaware General Corporation Law.

      Article SIXTH of the Certificate of Incorporation of CFC provides that CFC may indemnify its directors and officers to the full extent permitted by the laws of the State of Delaware. Article VIII of CFC’s Bylaws provides that CFC shall indemnify its directors and officers, and persons serving as directors and officers of CHL at the request of CFC, against any threatened, pending or completed action, suit or proceeding or investigation brought against such directors and officers by reason of the fact that such persons were such directors or officers, provided that such persons acted in good faith and in a manner that they reasonably believed to be in or not opposed to the best interests of CFC; except that in the case of actions brought by or in the right of CFC to procure a judgment in its favor, no indemnification is permitted in respect to any claim, issue or matter as to which any such director or officer shall have been adjudged to be liable to CFC unless the court in which the action was brought determines that such person is entitled to indemnification. CFC’s Bylaws further contemplate that the indemnification provisions permitted thereunder are not exclusive of any other rights to which such directors and officers are otherwise entitled by means of Bylaw provisions, agreements, vote of stockholders or disinterested directors or otherwise. CFC has entered into indemnity agreements with certain of its directors and executive officers (including the directors and executive officers of CHL), whereby such individuals are indemnified by CFC up to an aggregate limit of $5,000,000 for any claims made against such individual based on any act, omission or breach of duty committed while acting as a director or officer, except, among other things, cases involving dishonesty or improper personal benefit. CFC also maintains an insurance policy pursuant to which its directors and officers (including the directors and executive officers of CHL) are insured against certain liabilities that might arise out of their relationship with CFC as directors and officers.

      Article SEVENTH of the Certificate of Incorporation of CFC provides that a director of CFC shall have no personal liability to CFC or its stockholders for monetary damages for breach of his fiduciary duty of care as a director to the full extent permitted by the Delaware General Corporation Law, as it may be amended from time to time.

Item 21. Exhibits and Financial Statement Schedules

1	.1	Form of Dealer Manager Agreement (incorporated by reference to Exhibit 1.1 to CFC’s Registration Statement on Form S-4 (No. 333-117322)).
4	.1	Specimen Certificate of CFC’s Common Stock (incorporated by reference to Exhibit 4.2 to CFC’s Current Report on Form 8-K dated February 6, 1987).
4	.2	Restated Certificate of Incorporation of CFC (incorporated by reference to Exhibit 4.2 to CFC’s Quarterly Report on Form 10-Q dated August 31, 1987).
4	.2.1	Certificate of Amendment of Restated Certificate of Incorporation of CFC (incorporated by reference to Exhibit 4.1 to CFC’s Quarterly Report on Form 10-Q dated August 31, 1987).
4	.2.2	Form of Certificate of Amendment of Restated Certificate of Incorporation of CFC to be filed by CFC (incorporated by reference to Appendix A to CFC’s Proxy Statement on Schedule 14A dated July 16, 2004).

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4	.3	Bylaws of CFC, as amended and restated (incorporated by reference to CFC’s Current Report on Form 8-K dated February 10, 1988).
4	.3.1	Amendment to Bylaws of CFC dated January 28, 1998 (incorporated by reference to Exhibit 3.3.1 to CFC’s Annual Report on Form 10-K dated February 28, 1998).
4	.3.2	Amendment to Bylaws of CFC dated February 3, 1998 (incorporated by reference to Exhibit 3.3.1 to CFC’s Annual Report on Form 10-K dated February 28, 1998).
4	.3.3	Amendment to Bylaws of CFC dated March 24, 2000 (incorporated by reference to Exhibit 3.3.3 to CFC’s Annual Report on Form 10-K dated February 29, 2000).
4	.3.4	Amendment to Bylaws of CFC dated September 28, 2000 (incorporated by reference to Exhibit 3.3.4 to CFC’s Quarterly Report on Form 10-Q dated August 31, 2000).
4	.4	Rights Agreement, dated as of February 10, 1988, between CFC and Bank of America NT & SA, as Rights Agent (incorporated by reference to Exhibit 4 to CFC’s Form 8-A filed on February 12, 1988).
4	.4.1	Amendment No. 1 to Rights Agreement, dated as of March 24, 1992, between CFC and Bank of America NT & SA, as Rights Agent (incorporated by reference to Exhibit 1 to CFC’s Form 8 filed on March 27, 1992).
4	.5	Form of Indenture among CFC, CHL and The Bank of New York, as trustee.
4	.6	Form of Convertible Security Due 2031 (included in Exhibit 4.5).
5	.1	Opinion of Munger, Tolles & Olson LLP, counsel to CFC and CHL, as to the validity of the securities being offered and as to certain tax matters (incorporated by reference to Exhibit 5.1 to CFC’s Registration Statement on Form S-4 (No. 333-117322)).
8	.1	Opinion of Munger, Tolles & Olson LLP, counsel to CFC and CHL, as to certain tax matters (included in Exhibit 5.1).
12	.1	Statement regarding computation of ratio of earnings to fixed charges incorporated by reference to Exhibit 12.1 to CFC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.
23	.1	Consent of Grant Thornton LLP.
23	.2	Consent of Grant Thornton LLP.
23	.3	Consent of Munger, Tolles & Olson LLP (included in Exhibit 5.1).
24	.1	Powers of Attorney for CFC and CHL relating to subsequent amendments (incorporated by reference to Exhibit 24.1 to CFC’s Registration Statement on Form S-4 (No. 333-117322)).
25	.1	Form T-1 Statement of Eligibility Under Trust Indenture Act of 1939 of The Bank of New York relating to Indenture (incorporated by reference to Exhibit 25.1 to CFC’s Registration Statement on Form S-4 (No. 333-117322)).
99	.1	Form of Letter of Transmittal.
99	.2	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees.
99	.3	Form of Letter to Clients.

Item 22. Undertakings

      (a) The undersigned registrants (the “Registrants”) hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of CFC’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in

II-2

connection with the securities being registered, the Registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

      (c) The undersigned Registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4 within one business day of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of this Registration Statement through the date of responding to the request.

      (d) The undersigned Registrants hereby undertake to supply by means of a post-effective amendment all information concerning this transaction that was not the subject of and included in this Registration Statement when it became effective.

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SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, Countrywide Financial Corporation certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4/A and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Calabasas, State of California, on the 18^th day of August, 2004.

COUNTRYWIDE FINANCIAL CORPORATION

By:  /s/ STANFORD L. KURLAND

Stanford L. Kurland

President and Chief Operating Officer

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
* Angelo R. Mozilo	Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer); Director	August 18, 2004
* Thomas K. McLaughlin	Executive Managing Director and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	August 18, 2004
* Henry G. Cisneros	Director	August 18, 2004
* Jeffrey M. Cunningham	Director	August 18, 2004
* Robert J. Donato	Director	August 18, 2004
* Michael E. Dougherty	Director	August 18, 2004
* Ben M. Enis	Director	August 18, 2004
* Edwin Heller	Director	August 18, 2004
Gwendolyn Stewart King	Director	August   , 2004
/s/ STANFORD L. KURLAND Stanford L. Kurland	President and Chief Operating Officer; Director	August 18, 2004

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Signature		Title	Date
* Martin R. Melone		Director	August 18, 2004
* Keith P. Russell		Director	August 18, 2004
Oscar P. Robertson		Director	August   , 2004
* Harley W. Snyder		Director	August 18, 2004
*By:	/s/ STANFORD L. KURLAND Stanford L. Kurland Attorney-in-Fact		August 18, 2004

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SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, Countrywide Home Loans, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4/A and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Calabasas, State of California, on the 18^th day of August, 2004.

COUNTRYWIDE HOME LOANS, INC.

By:  /s/ STANFORD L. KURLAND

Stanford L. Kurland

Chairman of the Board of Directors and

Chief Executive Officer

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature		Title	Date
/s/ STANFORD L. KURLAND Stanford L. Kurland		Chairman of the Board of Directors and Chief Executive Officer; Director (Principal Executive Officer)	August 18, 2004
* Thomas K. McLaughlin		Senior Managing Director and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	August 18, 2004
Carlos M. Garcia		Director	August   , 2004
* Angelo R. Mozilo		Director	August 18, 2004
* David Sambol		Director	August 18, 2004
*By:	/s/ STANFORD L. KURLAND Stanford L. Kurland Attorney-in-Fact		August 18, 2004

II-6 EX-4.5 2 v00210a1exv4w5.txt FORM OF INDENTURE EXHIBIT 4.5 COUNTRYWIDE FINANCIAL CORPORATION AND COUNTRYWIDE HOME LOANS, INC. CONVERTIBLE SECURITIES DUE 2031 ------------------------------------------------------- INDENTURE DATED AS OF SEPTEMBER __, 2004 ----------------------------------------- THE BANK OF NEW YORK AS TRUSTEE ----------------------------------------- CROSS REFERENCE TABLE*

TIA Section Indenture Section 310(a)(1)................................................ 7.10 (a)(2)................................................... 7.10 (a)(3)................................................... N/A (a)(4)................................................... N/A (b) ..................................................... 7.08; 7.10 (c)...................................................... N/A 311(a)................................................... 7.11 (b) ..................................................... 7.11 (c) ..................................................... N/A 312(a)................................................... 2.05 (b) ..................................................... 14.03 (c) ..................................................... 14.03 313(a)................................................... 7.06 (b)(1)................................................... N/A (b)(2)................................................... 7.06 (c) ..................................................... 14.02 (d) ..................................................... 7.06 314(a) .................................................. 4.02; 4.03; 14.02 (b) ..................................................... N/A (c)(1)................................................... 14.04 (c)(2) .................................................. 14.04 (c)(3)................................................... N/A (d) ..................................................... N/A (e) ..................................................... 14.05 (f) ..................................................... N/A 315(a)................................................... 7.01 (b) ..................................................... 7.05; 14.02; 7.01 (c) ..................................................... 7.01 (d) ..................................................... 7.01 (e) ..................................................... 6.11 316(a) (last sentence) .................................. 2.08 (a)(1)(A)................................................ 6.05 (a)(1)(B)................................................ 6.04 (a)(2)................................................... N/A (b) ..................................................... 6.07 317(a)(1)................................................ 6.08 (a)(2)................................................... 6.09 (b) ..................................................... 2.04 318(a) .................................................. 14.01

*Note: This Cross Reference Table shall not, for any purpose, be deemed to be part of the Indenture. TABLE OF CONTENTS

PAGE ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions.............................................. 1 SECTION 1.02. Other Definitions........................................ 6 SECTION 1.03. Incorporation by Reference of Trust Indenture Act........ 7 SECTION 1.04. Rules of Construction.................................... 7 SECTION 1.05. Acts of Holders.......................................... 8 ARTICLE 2 THE SECURITIES SECTION 2.01. Form and Dating.......................................... 9 SECTION 2.02. Execution and Authentication............................. 10 SECTION 2.03. Registrar, Paying Agent, Conversion Agent and Bid Solicitation Agent....................................... 10 SECTION 2.04. Paying Agent to Hold Money and Securities in Trust....... 11 SECTION 2.05. Securityholder Lists..................................... 11 SECTION 2.06. Transfer and Exchange.................................... 11 SECTION 2.07. Replacement Securities................................... 12 SECTION 2.08. Outstanding Securities; Determinations of Holders' Action 13 SECTION 2.09. Temporary Securities..................................... 14 SECTION 2.10. Cancellation............................................. 14 SECTION 2.11. Persons Deemed Owners.................................... 14 SECTION 2.12. Global Securities........................................ 15 SECTION 2.13. CUSIP Numbers............................................ 16 ARTICLE 3 REDEMPTION AND PURCHASES SECTION 3.01. Right to Redeem; Notices to Trustee...................... 16

SECTION 3.02. Selection of Securities to Be Redeemed................... 16 SECTION 3.03. Notice of Redemption..................................... 17 SECTION 3.04. Effect of Notice of Redemption........................... 18 SECTION 3.05. Deposit of Redemption Price.............................. 18 SECTION 3.06. Securities Redeemed in Part.............................. 18 SECTION 3.07. Conversion Arrangement on Call for Redemption............ 18 SECTION 3.08. Purchase of Securities at Option of the Holder........... 19 SECTION 3.09. Purchase of Securities at Option of the Holder upon Change in Control........................................ 21 SECTION 3.10. Effect of Purchase Notice or Change in Control Purchase Notice................................................... 24 SECTION 3.11. Deposit of Purchase Price or Change in Control Purchase Price.................................................... 25 SECTION 3.12. Securities Purchased in Part............................. 25 SECTION 3.13. Covenant to Comply With Securities Laws Upon Purchase of Securities............................................... 25 SECTION 3.14. Repayment to the Company................................. 26 ARTICLE 4 COVENANTS SECTION 4.01. Payment of Securities.................................... 26 SECTION 4.02. SEC and Other Reports.................................... 26 SECTION 4.03. Compliance Certificate................................... 27 SECTION 4.04. Further Instruments and Acts............................. 27 SECTION 4.05. Maintenance of Office or Agency.......................... 27 SECTION 4.06. Delivery of Certain Information.......................... 27 SECTION 4.07. Tax Treatment............................................ 28 ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.01. When Company May Merge or Transfer Assets................ 28 SECTION 5.02. When Guarantor May Merge or Transfer Assets.............. 29 SECTION 5.03. Assumption by Guarantor.................................. 30 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default........................................ 31 SECTION 6.02. Acceleration............................................. 32 SECTION 6.03. Other Remedies........................................... 33 SECTION 6.04. Waiver of Past Defaults.................................. 33 SECTION 6.05. Control by Majority...................................... 33 SECTION 6.06. Limitation on Suits...................................... 33 SECTION 6.07. Rights of Holders to Receive Payment..................... 34 SECTION 6.08. Collection Suit by Trustee............................... 34 SECTION 6.09. Trustee May File Proofs of Claim......................... 34 SECTION 6.10. Priorities............................................... 35 SECTION 6.11. Undertaking for Costs.................................... 35 SECTION 6.12. Waiver of Stay, Extension or Usury Laws.................. 35 ARTICLE 7 TRUSTEE SECTION SECTION 7.01. Duties of Trustee........................................ 36 SECTION 7.02. Rights of Trustee........................................ 37 SECTION 7.03. Individual Rights of Trustee............................. 38 SECTION 7.04. Trustee's Disclaimer..................................... 39 SECTION 7.05. Notice of Defaults....................................... 39 SECTION 7.06. Reports by Trustee to Holders............................ 39 SECTION 7.07. Compensation and Indemnity............................... 39 SECTION 7.08. Replacement of Trustee................................... 40 SECTION 7.09. Successor Trustee by Merger.............................. 41 SECTION 7.10. Eligibility; Disqualification............................ 41 SECTION 7.11. Preferential Collection of Claims Against Company and Guarantor................................................ 41 ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.01. Discharge of Liability on Securities..................... 41 SECTION 8.02. Repayment to the Company................................. 41 ARTICLE 9 AMENDMENTS SECTION 9.01. Without Consent of Holders............................... 42 SECTION 9.02. With Consent of Holders.................................. 42 SECTION 9.03. Compliance with Trust Indenture Act...................... 43 SECTION 9.04. Revocation and Effect of Consents, Waivers and Actions... 43 SECTION 9.05. Notation on or Exchange of Securities.................... 43 SECTION 9.06. Trustee to Sign Supplemental Indentures.................. 43 SECTION 9.07. Effect of Supplemental Indentures........................ 43 ARTICLE 10 SPECIAL TAX EVENT CONVERSION SECTION 10.01. Optional Conversion to Semi-Annual Coupon Note Upon Tax Event.................................................... 44 ARTICLE 11 CONVERSION SECTION 11.01. Conversion Privilege..................................... 44 SECTION 11.02. Conversion Procedure..................................... 45 SECTION 11.03. Fractional Shares........................................ 46 SECTION 11.04. Taxes on Conversion...................................... 46 SECTION 11.05. Company to Provide Stock................................. 47 SECTION 11.06. Adjustment for Change In Capital Stock................... 47 SECTION 11.07. Adjustment for Rights Issue.............................. 48 SECTION 11.08. Adjustment for Asset Distributions....................... 49 SECTION 11.09. Adjustment for Certain Cash Distributions................ 50 SECTION 11.10. When Adjustment May Be Deferred.......................... 51 SECTION 11.11. When No Adjustment Required.............................. 51 SECTION 11.12. Notice of Adjustment..................................... 52 SECTION 11.13. Voluntary Increase....................................... 52 SECTION 11.14. Notice of Certain Transactions........................... 52 SECTION 11.15. Reorganization of Company; Special Distributions......... 52 SECTION 11.16. Company Determination Final.............................. 53 SECTION 11.17. Trustee's Adjustment Disclaimer.......................... 53 SECTION 11.18. Simultaneous Adjustments................................. 53 SECTION 11.19. Successive Adjustments................................... 54 SECTION 11.20. Rights Issued in Respect of Common Stock Issued Upon Conversion............................................... 54 ARTICLE 12 PAYMENT OF INTEREST SECTION 12.01. Interest Payments........................................ 54 SECTION 12.02. Defaulted Interest....................................... 54 SECTION 12.03. Interest Rights Preserved................................ 55 ARTICLE 13 GUARANTEE OF SECURITIES SECTION 13.01. Unconditional Guarantee.................................. 55 SECTION 13.02. Execution, Authentication and Delivery................... 56 ARTICLE 14 MISCELLANEOUS SECTION 14.01. Trust Indenture Act Controls............................. 57 SECTION 14.02. Notices.................................................. 57 SECTION 14.03. Communication by Holders with Other Holders.............. 58 SECTION 14.04. Certificate and Opinion as to Conditions Precedent....... 58 SECTION 14.05. Statements Required in Certificate or opinion............ 58 SECTION 14.06. Separability Clause...................................... 59 SECTION 14.07. Rules by Trustee, Paying Agent, Conversion Agent and Registrar................................................ 59 SECTION 14.08. Calculations............................................. 59 SECTION 14.09. Legal Holidays........................................... 59 SECTION 14.10. GOVERNING LAW............................................ 59 SECTION 14.11. No Recourse Against Others............................... 59 SECTION 14.12. Successors............................................... 59 SECTION 14.13. Multiple Originals....................................... 60 INDENTURE dated as of September __, 2004, among COUNTRYWIDE FINANCIAL CORPORATION, a Delaware corporation ("Company"), COUNTRYWIDE HOME LOANS, INC., a New York corporation ("Guarantor"), and THE BANK OF NEW YORK, a New York banking corporation ("Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's Securities: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. "Affiliate" of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" when used with respect to any specified person means the power to direct or cause the direction of the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Board of Directors" means either the board of directors of the Company or the Guarantor, as the case may be, or any duly authorized committee of such board. "Business Day" means each day of the year other than a Saturday or a Sunday or other day on which banking institutions in The City of New York are required or authorized to close. "Capital Stock" for any corporation means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that corporation. "Common Stock" shall mean the shares of Common Stock, $0.05 par value, of the Company as it exists on the date of this Indenture or any other shares of Capital Stock of the Company into which the Common Stock shall be reclassified or changed. "Company" means the party named as the "Company" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor. The foregoing sentence shall likewise apply to any subsequent such successor or successors. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by any two Officers. "Corporate Trust Office" means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 101 Barclay Street, New York, New York 10286, Attention: Corporate Trust Administration, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as a successor Trustee may designate from time to time by notice to the Holders and the Company). 1 "Debt" means with respect to either the Company or the Guarantor, at any date, without duplication, obligations (other than nonrecourse obligations) for borrowed money or evidenced by bonds, debentures, notes or similar instruments. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Global Securities" means Securities that are substantially in the form of the Securities attached hereto as Exhibit A-1. "Guarantee" means the full and unconditional guarantee of the Securities by the Guarantor to the extent set forth in Article 13 hereof. "Guarantor" means the Person named as the "Guarantor" in the first paragraph of this instrument until a successor Person replaces it pursuant to the applicable provisions of this instrument, and thereafter shall mean such successor Person. The foregoing sentence shall likewise apply to any subsequent such successor or successors. "Guarantor Request" or "Guarantor Order" means a written request or order executed in the name of the Guarantor by any two Officers. "Guarantor's Officers' Certificate" means a written certificate containing the information specified in Sections 14.04 and 14.05, executed in the name of the Guarantor by any two Officers, and delivered to the Trustee. A Guarantor's Officers' Certificate given pursuant to Section 4.03 shall be signed by an authorized financial or accounting Officer of the Guarantor but need not contain the information specified in Sections 14.04 and 14.05. "Holder" or "Securityholder" means a person in whose name a Security is registered on the Registrar's books. "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof, including the provisions of the TIA that are deemed to be a part hereof. "Initial Accreted Principal Amount" of any Security means, in connection with the initial issuance of such Security, the accreted principal amount of such Security as of its initial issuance, as set forth on the face of the Security. "Issue Date" of any Security means the date on which the Security was initially issued or deemed issued as set forth on the face of the Security. "Issue Discount" of any Security means the difference between the Initial Accreted Principal Amount and the Principal Amount at Maturity of such Security as set forth on the face of such Security. "Maximum Conversion Rate" means 81.1688 shares of Common Stock; provided, that if the Conversion Rate is adjusted pursuant to Article 11, the Maximum Conversion Rate shall be adjusted on the same basis as the Conversion Rate except that the Maximum Conversion Rate shall not be adjusted as a result of any adjustments to the Conversion Rate made solely for quarterly cash dividends pursuant to Section 11.09. "Officer" means the Chairman of the Board, the President or any Executive Managing Director, Senior Managing Director, Managing Director, the Treasurer or the Secretary of the Company or the Guarantor, as the case may be, that complies with the requirements of Section 314(e) of the TIA and is delivered to the Trustee. 2 "Officers' Certificate" means a written certificate containing the information specified in Sections 14.04 and 14.05, signed in the name of the Company by any two Officers, and delivered to the Trustee. An Officers' Certificate given pursuant to Section 4.03 shall be signed by an authorized financial or accounting Officer of the Company but need not contain the information specified in Sections 14.04 and 14.05. "Opinion of Counsel" means a written opinion containing the information specified in Sections 14.04 and 14.05, from legal counsel who is acceptable to the Trustee. The counsel may be an employee of, or counsel to, the Company, the Guarantor or the Trustee. "Original Issue Discount" means original issue discount, as determined for United States federal income tax purposes, attributable to the Securities. "Person" or "person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. "Principal Amount at Maturity" of a Security means the Principal Amount at Maturity as set forth on the face of such Security. "Redemption Date" or "redemption date" means the date specified for redemption of the Securities in accordance with the terms of the Securities and this Indenture. "Redemption Price" or "redemption price" shall have the meaning set forth in paragraph 6 of the form of Security set forth in Exhibit A-1 of this Indenture. "Responsible Officer" means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. "Sale Price" of Common Stock on any date means the closing per share sale price (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on such date as reported in the composite transactions for the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, on the principal other national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded. In the absence of such quotation, the Company shall be entitled to determine the Sale Price on the basis of such quotations as it considers appropriate. "SEC" means the Securities and Exchange Commission or any successor thereto. 3 "Securities" means any of the Company's Convertible Securities due 2031, as amended or supplemented from time to time, issued under this Indenture, the terms of which shall be substantially in the form of Security set forth in Exhibit A-1 of this Indenture. "Securityholder" or "Holder" means a person in whose name a Security is registered on the Registrar's books. "Special Record Date" means for the payment of any Defaulted Interest, the date fixed by the Trustee pursuant to Section 12.02. "Stated Maturity", when used with respect to any Security or any installment of semi-annual or contingent interest thereon, means the date specified in such Security as the fixed date on which an amount equal to the Principal Amount at Maturity of such Security or such installment of semi-annual or contingent interest is due and payable. "Subsidiary" means (i) a corporation, a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is, at the date of determination, directly or indirectly owned by the Company or the Guarantor, as the case may be, by one or more Subsidiaries of the Company or the Guarantor, as the case may be, or by the Company or the Guarantor, as the case may be, and one or more Subsidiaries of the Company or the Guarantor, as the case may be, (ii) a partnership in which the Company or the Guarantor, as the case may be, or a Subsidiary of the Company or the Guarantor, as the case may be, holds a majority interest in the equity capital or profits of such partnership, or (iii) any other person (other than a corporation) in which the Company or the Guarantor, as the case may be, a Subsidiary of the Company or the Guarantor, as the case may be, or the Company or the Guarantor, as the case may be, and one or more Subsidiaries of the Company or the Guarantor, as the case may be, directly or indirectly, at the date of determination, has (x) at least a majority ownership interest or (y) the power to elect or direct the election of a majority of the directors or other governing body of such person. "Tax Event" means that the Company shall have received an opinion from independent tax counsel experienced in such matters to the effect that, on or after September __, 2004, as a result of (a) any amendment or addition to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment or addition to, or change in, an interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority, in each case which amendment, addition or change is enacted, promulgated, issued or announced or which interpretation is issued or announced or which action is taken, on or after September __, 2004, there is more than an insubstantial risk that interest (including accrued Original Issue Discount, accrued Issue Discount and contingent interest, if any) payable on the Securities either (i) would not be deductible on a current accrual basis or (ii) would not be deductible under any other method, in either case in whole or in part, by the Company (by reason of deferral, disallowance, or otherwise) for United States federal income tax purposes. "TIA" means the Trust Indenture Act of 1939 as in effect on the date of this Indenture, provided, however, that in the event the TIA is amended after such date, TIA means, to the extent required by any such amendment, the TIA as so amended. "trading day" means a day during which trading in securities generally occurs on the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, on the 4 principal other national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded. "Trustee" means the party named as the "Trustee" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor. The foregoing sentence shall likewise apply to any subsequent such successor or successors. 5 SECTION 1.02. Other Definitions.

TERM DEFINED IN SECTION - ---- ------------------ "Act" 1.05(a) "Agent Members" 2.12(b) "Associate" 3.09(a) "Average Sale Price" 11.01 "Bankruptcy Law" 6.01 "beneficial owner" 3.09(a) "Bid Solicitation Agent" 2.03 "cash" 3.08(a) "Change In Control" 3.09(a) "Change In Control Purchase Date" 3.09(a) "Change in Control Purchase Notice" 3.09(c) "Change in Control Purchase Price" 3.09(a) "Company Notice" 3.08(c) "Company Notice Date" 3.08(b) "Contingent Debt Regulations" 4.07 "Conversion Agent" 2.03 "Conversion Date" 11.02 "Conversion Rate" 11.01 "Conversion Trigger Price" 11.06 "Custodian" 6.01 "Defaulted Interest" 12.02 "Depositary" 2.01(b) "DTC" 2.01(b) "Event of Default" 6.01 "Exchange Act" 2.12(b)(1) "Ex-Dividend Date" 11.08(a) "Ex-Dividend Time" 11.01 "Fixed Amount" Exhibit A-1 "Interest Payment Date" 10.01 "Legal Holiday" 14.09 "noncontingent bond method" 4.07 "Notice of Default" 6.01 "Option Exercise Date" 10.01 "Paying Agent" 2.03 "Purchase Date" 3.08(a) "Purchase Notice" 3.08(a) "Purchase Price" 3.08(a) "Registrar" 2.03 "Regular Record Date" 10.01 "Restated Principal Amount" 10.01 "Rights" 11.20 "Rights Agreement" 11.20 "Rule 144A Information" 4.06 "Securities Act" 4.06 "Securities Market Price" Exhibit A-1

6

TERM DEFINED IN SECTION - ---- ------------------ "Tax Event Date" 10.01 "Time of Determination" 11.01

SECTION 1.03. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the Securities means the Company. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. SECTION 1.04. Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time; (c) "or" is not exclusive; (d) "including" means including, without limitation; and (e) words in the singular include the plural, and words in the plural include the singular. 7 SECTION 1.05. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company or the Guarantor. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee, the Company and the Guarantor, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such officer the execution thereof. Where such execution is by a signer acting in a capacity other than such signer's individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer's authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership of Securities shall be proved by the register maintained by the Registrar. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company or the Guarantor in reliance thereon, whether or not notation of such action is made upon such Security. (e) If the Company or the Guarantor shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company or the Guarantor, as the case may be, may, at its option, by or pursuant to a resolution of the Board of Directors of the Company or the Guarantor, as the case may be, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but neither the Company nor the Guarantor, shall have any obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. 8 ARTICLE 2 THE SECURITIES SECTION 2.01. Form and Dating. The Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 which is a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage; provided that any such notation, legend or endorsement required by usage is in a form acceptable to the Company and the Guarantor and as are not inconsistent with the provisions of this Indenture. The Company and the Guarantor shall provide any such notations, legends or endorsements to the Trustee in writing. Each Security shall be dated the date of its authentication. (a) Certificated Securities. Except as provided in Section 2.12, owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of Securities in definitive form. (b) Global Securities in General. Each Global Security shall represent such of the outstanding Securities as shall be specified therein and each shall provide that it shall represent the aggregate Principal Amount at Maturity of outstanding Securities from time to time endorsed thereon and that the aggregate Principal Amount at Maturity of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions and conversions. Any adjustment of the aggregate Principal Amount at Maturity of a Global Security to reflect the amount of any increase or decrease in the Principal Amount at Maturity of outstanding Securities represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the Trustee and the Depository Trust Company ("DTC") or the nominee thereof (such depositary, or any successor thereto, and any such nominee being hereinafter referred to as the "Depositary"). (c) Book-Entry Provisions. This Section 2.01(c) shall apply only to Global Securities deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with this Section 2.01(c), authenticate and deliver initially one or more Global Securities, with the Guarantee endorsed thereon by the Guarantor, that (1) shall be registered in the name of the Depositary, (2) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instructions and (3) shall bear legends substantially to the following effect: "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY 9 OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF." SECTION 2.02. Execution and Authentication. The Securities shall be executed on behalf of the Company by any Officer of the Company, with the Guarantee endorsed thereon on behalf of the Guarantor by any Officer of the Guarantor. The signature of the Officer of the Company on the Securities and the endorsement of the Guarantee by the Officer of the Guarantor on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of an individual who was at the time of the execution of the Securities the proper Officer of the Company or the Guarantor, as the case may be, shall bind the Company or the Guarantor, as the case may be, notwithstanding that such individual has ceased to hold such office prior to the authentication and delivery of such Securities or did not hold such office at the date of authentication of such Securities. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. The Trustee shall authenticate and deliver Securities for original issue in an aggregate Principal Amount at Maturity of up to $675,000,000 upon a Company and Guarantor Order without any further action by the Company or the Guarantor. The aggregate Principal Amount at Maturity of Securities outstanding at any time may not exceed the amount set forth in the foregoing sentence, except as provided in Section 2.07. The Securities shall be issued only in registered form without coupons and only in denominations of $1,000 of Principal Amount at Maturity and any integral multiple thereof. SECTION 2.03. Registrar, Paying Agent, Conversion Agent and Bid Solicitation Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange ("Registrar"), an office or agency where Securities may be presented for purchase or payment ("Paying Agent") and an office or agency where Securities may be presented for conversion ("Conversion Agent"). The Company shall also appoint a bid solicitation agent (the "Bid Solicitation Agent") to act pursuant to paragraph 5 of the Securities. The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars, one or more additional paying agents and one or more additional conversion agents. The term Paying Agent includes any additional paying agent, including any named pursuant to Section 4.05. The term Conversion Agent includes any additional conversion agent, including any named pursuant to Section 4.05. 10 The Company shall enter into an appropriate agency agreement with any Registrar or co-registrar, Paying Agent, Conversion Agent or Bid Solicitation Agent (other than the Trustee). The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or Bid Solicitation Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar, Conversion Agent or co-registrar. None of the Company or any Subsidiary of the Company, or the Guarantor, or any Subsidiary of the Guarantor, or any Affiliate of any of them may act as Bid Solicitation Agent. The Company initially appoints the Trustee as Registrar, Conversion Agent, Paying Agent and Bid Solicitation Agent in connection with the Securities. SECTION 2.04. Paying Agent to Hold Money and Securities in Trust. Except as otherwise provided herein, on or prior to each due date of payments in respect of any Security, the Company shall deposit with the Paying Agent a sum of money (in immediately available funds if deposited on the due date) or Common Stock sufficient to make such payments when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money and Common Stock held by the Paying Agent for the making of payments in respect of the Securities and shall notify the Trustee of any default by the Company in making any such payment. At any time during the continuance of any such default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and Common Stock so held in trust. If the Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall segregate the money and Common Stock held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money and Common Stock held by it to the Trustee and to account for any funds and Common Stock disbursed by it. Upon doing so, the Paying Agent shall have no further liability for the money or Common Stock. This Section 2.04 shall also apply to the Guarantor in respect of any amounts payable by it under the Guarantee. SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee at least semi-annually on May 1 and November 1 a listing of Securityholders dated within 15 days of the date on which the list is furnished and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.06. Transfer and Exchange. Subject to Section 2.12 hereof, upon surrender for registration of transfer of any Security, together with a written instrument of transfer satisfactory to the Registrar duly executed by the securityholder or such Securityholder's attorney duly authorized in writing, at the office or agency of the Company designated as Registrar or co-registrar pursuant to Section 2.03, the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities (having the Guarantee endorsed thereon by the Guarantor) of any authorized denomination or denominations, of a like aggregate Principal Amount at Maturity. The Company shall not charge a service charge for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to pay all taxes, 11 assessments or other governmental charges that may be imposed in connection with the transfer or exchange of the Securities from the Securityholder requesting such transfer or exchange. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denomination or denominations, of a like aggregate Principal Amount at Maturity, upon surrender of the Securities to be exchanged, together with a written instrument of transfer satisfactory to the Registrar duly executed by the Securityholder or such Securityholder's attorney duly authorized in writing, at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, the Securities (having the Guarantee endorsed thereon by the Guarantor) which the Holder making the exchange is entitled to receive. The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) or any Securities in respect of which a Purchase Notice or Change in Control Purchase Notice has been given and not withdrawn by the Holder thereof in accordance with the terms of this Indenture (except, in the case of Securities to be purchased in part, the portion thereof not to be purchased) or any Securities for a period of 15 days before the mailing of a notice of redemption of Securities to be redeemed. (b) Notwithstanding any provision to the contrary herein, so long as a Global Security remains outstanding and is held by or on behalf of the Depositary, transfers of a Global Security, in whole or in part, shall be made only in accordance with Section 2.12 and this Section 2.06(b). Transfers of a Global Security shall be limited to transfers of such Global Security in whole, or in part, to nominees of the Depositary or to a successor of the Depositary or such successor's nominee. (c) Successive registrations and registrations of transfers and exchanges as aforesaid may be made from time to time as desired, and each such registration shall be noted on the register for the Securities. (d) Any Registrar appointed pursuant to Section 2.03 hereof shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Securities upon transfer or exchange of Securities. (e) No Registrar shall be required to make registrations of transfer or exchange of Securities during any periods designated in the text of the Securities or in this Indenture as periods during which such registration of transfers and exchanges need not be made. SECTION 2.07. Replacement Securities. If (a) any mutilated Security is surrendered to the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security (having the Guarantee endorsed thereon by the Guarantor) of like tenor and Principal Amount at Maturity, bearing a number not contemporaneously outstanding. 12 In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased by the Company pursuant to Article 3 hereof, the Company in its discretion may, instead of issuing a new Security, pay or purchase such Security, as the case may be. Upon the issuance of any new Securities under this Section, the Company or the Guarantor may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company and the Guarantor, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.08. Outstanding Securities; Determinations of Holders' Action. Securities outstanding at any time are all the Securities authenticated by the Trustee except for those cancelled by it, those delivered to it pursuant to Section 2.07 for cancellation and those described in this Section 2.08 as not outstanding. A Security does not cease to be outstanding because the Company or the Guarantor or an Affiliate of the Company or the Guarantor holds the Security; provided, however, that in determining whether the Holders of the requisite Principal Amount at Maturity of Securities have given or concurred in any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or the Guarantor or any other obligor upon the Securities or any Affiliate of the Company or the Guarantor or such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Subject to the foregoing, only Securities outstanding at the time of such determination shall be considered in any such determination (including, without limitation, determinations pursuant to Articles 6 and 9). If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, or on the Business Day following the Purchase Date or a Change in Control Purchase Date, or on Stated Maturity, money or securities, if permitted hereunder, sufficient to pay Securities payable on that date, then immediately after such Redemption Date, Purchase Date, Change in Control Purchase Date or Stated Maturity, as the case may be, such Securities shall cease to be outstanding and Issue Discount and interest (including contingent interest), if any, on such Securities shall cease to accrue; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture. 13 If a Security is converted in accordance with Article 11, then from and after the time of conversion on the Conversion Date, such Security shall cease to be outstanding and Issue Discount and interest (including contingent interest), if any, shall cease to accrue on such Security, whether or not the Security is delivered to the Paying Agent. SECTION 2.09. Temporary Securities. Subject to Section 2.12 hereof, pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company or the Guarantor designated for such purpose pursuant to Section 2.03, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and upon Company Order the Trustee shall authenticate and deliver in exchange therefor a like Principal Amount at Maturity of definitive Securities (having the Guarantee endorsed thereon) of authorized denominations. Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 2.10. Cancellation. All Securities surrendered for payment, purchase by the Company pursuant to Article 3, conversion, redemption or registration of transfer or exchange shall, if surrendered to any person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company or the Guarantor may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company or the Guarantor, as the case may be, may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. The Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation or that any Holder has converted pursuant to Article 11. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of by the Trustee in accordance with the Trustee's customary procedure. SECTION 2.11. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of the Security or the payment of any Redemption Price, Purchase Price or Change in Control Purchase Price in respect thereof, and interest (including contingent interest, if any) thereon, for the purpose of conversion and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary. 14 SECTION 2.12. Global Securities. (a) Transfer of Global Security. Notwithstanding any other provisions of this Indenture or the Securities, transfers of a Global Security, in whole or in part, shall be made only in accordance with Section 2.06 and Section 2.12(a). A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person may be registered; provided that this clause (a) shall not prohibit any transfer of a Security that is issued in exchange for a Global Security but is not itself a Global Security. No transfer of a Security to any Person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such Person. As used in this paragraph, the term "transfer" encompasses any sale, pledge, transfer, hypothecation or other disposition of any Security. (b) The provisions of clauses (1), (2), (3) and (4) below shall apply only to Global Securities: (1) Notwithstanding any other provisions of this Indenture or the Securities, except as provided in Section 2.12(a), a Global Security shall not be exchanged in whole or in part for a Security registered in the name of any Person other than the Depositary or one or more nominees thereof, provided that a Global Security may be exchanged for Securities registered in the names of any person designated by the depositary in the event that (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or such Depositary has ceased to be a "clearing agency" registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and a successor Depositary is not appointed by the Company within 90 days, (ii) the Company decides to discontinue the use of the system of book-entry transfer through the Depositary (or any successor Depositary) or (iii) an Event of Default has occurred and is continuing with respect to the Securities. Any Global Security exchanged pursuant to clause (i) above shall be so exchanged in whole and not in part, and any Global Security exchanged pursuant to clause (iii) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Security. (2) Securities issued in exchange for a Global Security or any portion thereof shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate Principal Amount at Maturity equal to that of such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein. Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar. With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the Principal Amount at Maturity thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof. (3) Subject to the provisions of clause (5) below, the registered Holder may grant proxies and otherwise authorize any Person, including Agent Members (as defined below) 15 and persons that may hold interests through Agent Members, to take any action which a holder is entitled to take under this Indenture or the Securities. (4) In the event of the occurrence of any of the events specified in clause (1) above, the Company will promptly make available to the Trustee a reasonable supply of Certificated Securities in definitive, fully registered form, without interest coupons. (5) Neither any members of, or participants in, the Depositary (collectively, the "Agent Members") nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Security registered in the name of the Depositary or any nominee thereof, or under any such Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee as the absolute owner and holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantor or the Trustee or any agent of the Company, the Guarantor or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Security. SECTION 2.13. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE 3 REDEMPTION AND PURCHASES SECTION 3.01. Right to Redeem; Notices to Trustee. The Company, at its option, may redeem the Securities in accordance with the provisions of paragraphs 6 and 8 of the Securities. If the Company elects to redeem Securities pursuant to paragraph 6 of the Securities, it shall notify the Trustee in writing of the Redemption Date, the Principal Amount at Maturity of Securities to be redeemed, the Redemption Price and the amount of contingent interest, if any, payable on the Redemption Date. The Company shall give the notice to the Trustee provided for in this Section 3.01 by a Company Order at least 20 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee). SECTION 3.02. Selection of Securities to Be Redeemed. 16 If less than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata based on ownership thereof or by lot or by any other method the Trustee considers fair and appropriate (so long as such method is not prohibited by the rules of any stock exchange on which the Securities are then listed). The Trustee shall make the selection at least 15 days but not more than 60 days before the Redemption Date from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the Principal Amount at Maturity of Securities that have denominations larger than $1,000. Securities and any portions thereof that the Trustee selects shall be in Principal Amounts at Maturity of $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection. SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail, postage prepaid, to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (a) the Redemption Date; (b) the Redemption Price and, to the extent known at the time of such notice, the amount of contingent interest, if any, payable on the Redemption Date; (c) the Conversion Rate; (d) the name and address of the Paying Agent and Conversion Agent; (e) that Securities called for redemption may be converted at any time before the close of business on the second Business Day immediately preceding the Redemption Date; (f) that Holders who want to convert Securities must satisfy the requirements set forth in paragraph 9 of the Securities; (g) that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price and contingent interest, if any; (h) if fewer than all the outstanding Securities are to be redeemed, the certificate number and Principal Amounts at Maturity of the particular Securities to be redeemed; 17 (i) that, unless the Company defaults in making payment of such Redemption Price and contingent interest, if any, Issue Discount and interest (including contingent interest), if any, on Securities called for redemption will cease to accrue on and after the Redemption Date; and (j) the CUSIP number of the Securities. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense, provided that the Company makes such request at least 15 days (unless a shorter period shall be acceptable to the Trustee) prior to the date such notice of redemption must be mailed. SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is given, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price (together with accrued contingent interest, if any) stated in the notice except for Securities which are converted in accordance with the terms of this Indenture. Upon surrender to the Paying Agent, such Securities shall be paid at the Redemption Price (together with accrued contingent interest, if any) stated in the notice. SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. (New York City time) on the Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary of the Company, or the Guarantor or a Subsidiary of the Guarantor, or an Affiliate of any of them is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the Redemption Price of, and any accrued and unpaid contingent interest with respect to, all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which on or prior thereto have been delivered by the Company to the Trustee for cancellation or have been converted. The Paying Agent shall as promptly as practicable return to the Company any money, not required for that purpose because of conversion of Securities pursuant to Article 11. If such money is then held by the Company in trust and is not required for such purpose it shall be discharged from such trust. SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Security (having the Guarantee endorsed thereon by the Guarantor) in an authorized denomination equal in Principal Amount at Maturity to the unredeemed portion of the Security surrendered. SECTION 3.07. Conversion Arrangement on Call for Redemption. In connection with any redemption of Securities, the Company may arrange for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Trustee in trust for the Securityholders, on or prior to 10:00 a.m. New York City time on the Redemption Date, an amount that, together with any amounts deposited with the Trustee by the Company for the redemption of such Securities, is not less than the Redemption Price of, and any accrued and unpaid contingent interest with respect to, such Securities. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the Redemption Prices of such Securities shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article 11) surrendered by 18 such purchasers for conversion, all as of immediately prior to the close of business on the Business Day prior to the Redemption Date, subject to payment of the above amount as aforesaid. The Trustee shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it for purchase and conversion in the same manner as it would moneys deposited with it by the Company for the redemption of Securities. Without the Trustee's prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture. SECTION 3.08. Purchase of Securities at Option of the Holder. (a) General. Securities shall be purchased by the Company in U.S. legal tender ("cash") pursuant to paragraph 7 of the Securities as of February 8, 2006, February 8, 2011, February 8, 2016, February 8, 2021, and February 8, 2026 (each, a "Purchase Date"), at the purchase price of $779.28 per $1,000 of Principal Amount at Maturity as of February 8, 2006, of $819.14 per $1,000 of Principal Amount at Maturity as of February 8, 2011, of $861.03 per $1,000 Principal Amount at Maturity as of February 8, 2016, of $905.06 per $1,000 Principal Amount at Maturity as of February 8, 2021, and of $951.35 per $1,000 Principal Amount at Maturity as of February 8, 2026 (each, a "Purchase Price", as applicable), at the option of the Holder thereof, upon: (1) delivery to the Paying Agent, by the Holder of a written notice of purchase (a "Purchase Notice") at any time from the opening of business on the date that is at least 20 Business Days prior to a Purchase Date until the close of business on the Business Day immediately preceding such Purchase Date stating: (A) the certificate number of the Security which the Holder will deliver to be purchased, (B) the portion of the Principal Amount at Maturity of the Security which the Holder will deliver to be purchased, which portion must be a Principal Amount at Maturity of $1,000 or an integral multiple thereof, and (C) that such Security shall be purchased as of the Purchase Date pursuant to the terms and conditions specified in (i) paragraph 7 of the Securities and (ii) this Indenture; and (2) delivery of such Security to the Paying Agent prior to, on or after the Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent, such delivery being a condition to receipt by the Holder of the Purchase Price therefor; provided, however, that such Purchase Price shall be so paid pursuant to this Section 3.08 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Purchase Notice, as determined by the Company. 19 The Company shall purchase from the Holder thereof, pursuant to this Section 3.08, a portion of a Security if the Principal Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply to the purchase of such portion of such Security. Any purchase by the Company contemplated pursuant to the provisions of this Section 3.08 shall be consummated by the delivery of the consideration to be received by the Holder (together with accrued and unpaid contingent interest, if any) promptly following the later of the Purchase Date and the time of delivery of the Security. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Purchase Notice contemplated by this Section 3.08(a) shall have the right to withdraw such Purchase Notice at any time prior to the close of business on the Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.10. The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice or written notice of withdrawal thereof. (b) Purchase with Cash. On each Purchase Date, the Purchase Price of Securities in respect of which a Purchase Notice pursuant to Section 3.08(a) has been given, or a specified percentage thereof, shall be paid by the Company with cash equal to the aggregate Purchase Price of such Securities. The Company Notice, as provided in Section 3.08(c), shall be sent to Holders (and to beneficial owners as required by applicable law) not less than 20 Business Days prior to such Purchase Date (the "Company Notice Date"). (c) Company Notice. The Company's notice shall be sent to the Holders (and to beneficial owners as required by applicable law) in the manner provided in Section 14.02 at the time specified in Section 3.08(b) (the "Company Notice"). Such Company Notice shall include a form of Purchase Notice to be completed by a Securityholder and shall state: (1) the Purchase Price, the Conversion Rate and, to the extent known at the time of such notice, the amount of contingent interest, if any, that will be accrued and payable with respect to the Securities as of the Purchase Date; (2) the name and address of the Paying Agent and the Conversion Agent; (3) that Securities as to which a Purchase Notice has been given may be converted pursuant to Article 11 hereof only if the applicable Purchase Notice has been withdrawn in accordance with the terms of this Indenture; (4) that Securities must be surrendered to the Paying Agent to collect payment of the Purchase Price and contingent interest, if any; (5) that the Purchase Price for any Security as to which a Purchase Notice has been given and not withdrawn, together with any accrued contingent interest payable with respect thereto, will be paid promptly following the later of the Purchase Date and the time of surrender of such Security as described in (4); (6) the procedures the Holder must follow to exercise rights under Section 3.08 and a brief description of those rights; 20 (7) briefly, the conversion rights of the Securities; (8) the procedures for withdrawing a Purchase Notice (including, without limitation, for a conditional withdrawal pursuant to the terms of Section 3.10); (9) that, unless the Company defaults in making payment of such Purchase Price and contingent interest, if any, Issue Discount and interest (including contingent interest), if any, on Securities surrendered for purchase will cease to accrue on and after the Purchase Date; and (10) the CUSIP number of the Securities. At the Company's request, the Trustee shall give such Company Notice in the Company's name and at the Company's expense, provided that the Company makes such request at least 15 days (unless a shorter period shall be acceptable to the Trustee) prior to the date such Company Notice must be mailed; and provided, further, that, in all cases, the text of such Company Notice shall be prepared by the Company. (d) Procedure upon Purchase. The Company shall deposit cash at the time and in the manner as provided in Section 3.11, sufficient to pay the aggregate Purchase Price of, and any accrued and unpaid contingent interest with respect to, all Securities to be purchased pursuant to this Section 3.08. SECTION 3.09. Purchase of Securities at Option of the Holder upon Change in Control. (a) If on or prior to February 8, 2006 there shall have occurred a Change in Control, Securities shall be purchased by the Company, at the option of the Holder thereof, at a purchase price specified in paragraph 7 of the Securities (the "Change in Control Purchase Price"), as of the date that is 35 Business Days after the occurrence of the Change in Control (the "Change in Control Purchase Date"), subject to satisfaction by or on behalf of the Holder of the requirements set forth in Section 3.09(c). A "Change in Control" shall be deemed to have occurred at such time as either of the following events shall occur: (1) There is a report filed on Schedule 13D or Schedule TO (or any successor schedule, form or report) pursuant to the Exchange Act, disclosing that any person including its Affiliates or Associates (for the purposes of this Section 3.09 only, as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of 50% or more of the voting power of the (x) voting common stock of the Company or the Guarantor then outstanding or (y) other Capital Stock into which the Common Stock or the Guarantor's common stock is reclassified or changed; provided, however, that a person shall not be deemed beneficial owner of, or to own beneficially, (A) any securities tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange thereunder, or (B) any securities if such beneficial ownership (1) arises solely as a result of a revocable proxy delivered in 21 response to a proxy or consent solicitation made pursuant to the applicable rules and regulations under the Exchange Act, and (2) is not also then reportable on Schedule 13D (or any successor schedule) under the Exchange Act; or (2) There shall be consummated any share exchange, consolidation or merger of the Company or the Guarantor pursuant to which its respective voting common stock would be converted into cash, securities or other property, in each case other than a share exchange, consolidation or merger of the Company or the Guarantor, as the case may be, in which the holders of such voting common stock immediately prior to the share exchange, consolidation or merger have, directly or indirectly, at least a majority of the total voting power in the aggregate of all classes of Capital Stock of the continuing or surviving corporation immediately after the share exchange, consolidation or merger. Notwithstanding the foregoing provisions of this Section 3.09, a Change in Control shall not be deemed to have occurred by virtue of the Company, the Guarantor, any Subsidiary, any employee stock ownership plan or any other employee benefit plan of the Company, the Guarantor or any Subsidiary, or any person holding its respective voting common stock for or pursuant to the terms of any such employee benefit plan, filing or becoming obligated to file a report under or in response to Schedule 13D or Schedule TO (or any successor schedule, form or report) under the Exchange Act disclosing beneficial ownership by it of shares of such Capital Stock, whether in excess of 50% or otherwise. "Associate" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date hereof. (b) Within 15 Business Days after the occurrence of a Change in Control, the Company shall mail a written notice of Change in Control by first-class mail to the Trustee and to each Holder (and to beneficial owners as required by applicable law). The notice shall include a form of Change in Control Purchase Notice to be completed by the Securityholder and shall state: (1) briefly, the events causing a Change in Control and the date of such Change in Control; (2) the date by which the Change in Control Purchase Notice pursuant to this Section 3.09 must be given; (3) the Change in Control Purchase Date; (4) the Change in Control Purchase Price and, to the extent known at the time of such notice, the amount of contingent interest, if any, that will be accrued and payable with respect to the Securities as of the change in Control Purchase Date; (5) the name and address of the Paying Agent and the Conversion Agent; (6) the Conversion Rate and any adjustments thereto; (7) that Securities as to which a Change in Control Purchase Notice has been given by the Holder may be converted pursuant to Article 11 hereof only if the Change in Control Purchase Notice has been withdrawn in accordance with the terms of this Indenture; 22 (8) that Securities must be surrendered to the Paying Agent to collect payment of the Change in Control Purchase Price and contingent interest, if any; (9) that the Change in Control Purchase Price for any Security as to which a Change in Control Purchase Notice has been duly given and not withdrawn, together with any accrued contingent interest payable with respect thereto, will be paid promptly following the later of the Change in Control Purchase Date and the time of surrender of such Security as described in (8); (10) briefly, the procedures the Holder must follow to exercise rights under this Section 3.09; (11) briefly, the conversion rights of the Securities; (12) the procedures for withdrawing a Change in Control Purchase Notice; (13) that, unless the Company defaults in making payment of such Change in Control Purchase Price and contingent interest, if any, Issue Discount and interest (including contingent interest), if any, on Securities surrendered for purchase will cease to accrue on and after the Change in Control Purchase Date; and (14) the CUSIP number of the Securities. (c) A Holder may exercise its rights specified in Section 3.09(a) upon delivery of a written notice of purchase (a "Change in Control Purchase Notice") to the Paying Agent at any time prior to the close of business on the Change in Control Purchase Date, stating: (1) the certificate number of the Security which the Holder will deliver to be purchased; (2) the portion of the Principal Amount at Maturity of the Security which the Holder will deliver to be purchased, which portion must be $1,000 or an integral multiple thereof; and (3) that such Security shall be purchased pursuant to the terms and conditions specified in paragraph 7 of the Securities and this Section 3.09. The delivery of such Security to the Paying Agent prior to, on or after the Change in Control Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent shall be a condition to the receipt by the Holder of the Change in Control Purchase Price therefor; provided, however, that such Change in Control Purchase Price shall be so paid pursuant to this Section 3.09 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Change in Control Purchase Notice and such Change in Control Purchase Notice shall not be validly withdrawn by the Holder. The Company shall purchase from the Holder thereof, pursuant to this Section 3.09, a portion of a Security if the Principal Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply to the purchase of such portion of such Security. 23 Any purchase by the Company contemplated pursuant to the provisions of this Section 3.09 shall be consummated by the delivery of the consideration to be received by the Holder (together with accrued and unpaid contingent interest, if any) promptly following the later of the Change in Control Purchase Date and the time of delivery of the Security to the Paying Agent in accordance with this Section 3.09. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Change in Control Purchase Notice contemplated by this Section 3.09(c) shall have the right to withdraw such Change in Control Purchase Notice at any time prior to the close of business on the Change in Control Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.10. The Paying Agent shall promptly notify the Company of the receipt by it of any Change in Control Purchase Notice or written withdrawal thereof. The Company shall not be required to comply with this Section 3.09 if a third party mails a written notice of Change in Control in the manner, at the times and otherwise in compliance with this Section 3.09 and repurchases all Securities for which a Change in Control Purchase Notice shall be delivered and not withdrawn. SECTION 3.10. Effect of Purchase Notice or Change in Control Purchase Notice. Upon receipt by the Paying Agent of the Purchase Notice or Change in Control Purchase Notice specified in Section 3.08(a) or Section 3.09(c), as applicable, the Holder of the Security in respect of which such Purchase Notice or Change in Control Purchase Notice, as the case may be, was given shall (unless such Purchase Notice or Change in Control Purchase Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Purchase Price or Change in Control Purchase Price, as the case may be, and any accrued and unpaid contingent interest, with respect to such Security to the Purchase Date or Change in Control Purchase Date, as the case may be. Such Purchase Price or Change in Control Purchase Price and contingent interest, if any, shall be paid to such Holder, subject to receipts of funds and/or securities by the Paying Agent, promptly following the later of (x) the Purchase Date or the Change in Control Purchase Date, as the case may be, with respect to such Security (provided the conditions in Section 3.08(a) or Section 3.09(c), as applicable, have been satisfied) and (y) the time of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by Section 3.08(a) or Section 3.09(c), as applicable. Securities in respect of which a Purchase Notice or Change in Control Purchase Notice, as the case may be, has been given by the Holder thereof may not be converted pursuant to Article 11 hereof on or after the date of the delivery of such Purchase Notice or Change in Control Purchase Notice, as the case may be, unless such Purchase Notice or Change in Control Purchase Notice, as the case may be, has first been validly withdrawn as specified in the following two paragraphs. A Purchase Notice or Change in Control Purchase Notice, as the case may be, may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Purchase Notice or Change in Control Purchase Notice, as the case may be, at any time prior to the close of business on the Purchase Date or the Change in Control Purchase Date, as the case may be, specifying: (a) the Principal Amount at Maturity of the Security with respect to which such notice of withdrawal is being submitted; 24 (b) the certificate number of the Security in respect of which such notice of withdrawal is being submitted; and (c) the Principal Amount at Maturity, if any, of such Security which remains subject to the original Purchase Notice or Change in Control Purchase Notice, as the case may be, and which has been or will be delivered for purchase by the Company. There shall be no purchase of any Securities pursuant to Section 3.08 or 3.09 if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Securities, of the required Purchase Notice or Change in Control Purchase Notice, as the case may be) and is continuing an Event of Default (other than a default in the payment of the Purchase Price or Change in Control Purchase Price, as the case may be, and any accrued and unpaid contingent interest with respect to such Securities). The Paying Agent will promptly return to the respective Holders thereof any Securities (x) with respect to which a Purchase Notice or Change in Control Purchase Notice, as the case may be, has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Purchase Price or Change in Control Purchase Price, as the case may be, and any accrued and unpaid contingent interest with respect to such Securities) in which case, upon such return, the Purchase Notice or Change in Control Purchase Notice with respect thereto shall be deemed to have been withdrawn. SECTION 3.11. Deposit of Purchase Price or Change in Control Purchase Price. Prior to 10:00 a.m. New York City time on the Business Day following the Purchase Date or the Change in Control Purchase Date, as the case may be, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an amount of money (in immediately available funds if deposited on such Business Day) sufficient to pay the aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of, and any accrued and unpaid contingent interest with respect to, all the Securities or portions thereof which are to be purchased as of the Purchase Date or Change in Control Purchase Date, as the case may be. After the Purchase Date or the Change in Control Purchase Date, Issue Discount and interest (including contingent interest), if any, shall cease to accrue on such Security, whether or not such Security is delivered to the Paying Agent. SECTION 3.12. Securities Purchased in Part. Any Security which is to be purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate Principal Amount at Maturity equal to, and in exchange for, the portion of the Principal Amount at Maturity of the Security so surrendered which is not purchased. SECTION 3.13. Covenant to Comply With Securities Laws Upon Purchase of Securities. In connection with any offer to purchase or purchase of Securities under Section 3.08 or 3.09 hereof (provided that such offer or purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or purchase), the Company shall (i) comply with Rule 13e-4 and Rule l4e-1 under the Exchange Act and any other then applicable tender offer rules, (ii) file the 25 related Schedule TO (or any successor schedule, form or report) under the Exchange Act, and (iii) otherwise comply with all federal and state securities laws so as to permit the rights and obligations under Sections 3.08 and 3.09 to be exercised in the time and in the manner specified in Sections 3.08 and 3.09. SECTION 3.14. Repayment to the Company. The Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed as provided in paragraph 16 of the Securities, together with interest, if any, thereon (subject to the provisions of Section 7.01(f)), held by them for the payment of the Purchase Price or Change in Control Purchase Price, as the case may be, or contingent interest, if any; provided, however, that to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.11 exceeds the aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of, and the accrued and unpaid contingent interest with respect to, the Securities or portions thereof which the Company is obligated to purchase as of the Purchase Date or Change in Control Purchase Date, as the case may be, then promptly after the Business Day following the Purchase Date or Change in Control Purchase Date, as the case may be, the Trustee shall return any such excess to the Company together with any interest, if any thereon (subject to the provisions of Section 7.01(f)). ARTICLE 4 COVENANTS SECTION 4.01. Payment of Securities. The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities or pursuant to this Indenture. Any amounts to be given to the Trustee or Paying Agent, shall be deposited with the Trustee or Paying Agent by 10:00 a.m. New York City time by the Company. Principal Amount at Maturity, Restated Principal Amount, Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, contingent interest and interest, if any, shall be considered paid on the applicable date due if on such date (or, in the case of a Purchase Price or Change in Control Purchase Price, on the Business Day following the applicable Purchase Date or Change in Control Purchase Date, as the case may be) the Trustee or the Paying Agent holds, in accordance with this Indenture, money or securities, if permitted hereunder, sufficient to pay all such amounts then due. The Company shall, to the extent permitted by law, pay interest on overdue amounts at the rate per annum set forth in paragraph 1 of the Securities, compounded semi-annually, which interest shall accrue from the date such overdue amount was originally due to the date payment of such amount, including interest thereon, has been made or duly provided for. All such interest shall be payable on demand. The accrual of such interest on overdue amounts shall be in lieu of, and not in addition to, the continued accrual of Issue Discount. SECTION 4.02. SEC and Other Reports. The Company shall file with the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. In the event the Company is at any time no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall continue to provide the Trustee with reports containing substantially the same information as would have been required to be filed 26 with the SEC had the Company continued to have been subject to such reporting requirements. In such event, such reports shall be provided at the times the Company would have been required to provide reports had it continued to have been subject to such reporting requirements. The Company also shall comply with the other provisions of TIA Section 314(a). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of the same shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 4.03. Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2004) an Officers' Certificate and the Guarantor shall deliver to the Trustee within 120 days after the end of each fiscal year (beginning with the fiscal year ending December 31, 2004) a Guarantor's Officers' Certificate, each such Certificate stating whether or not to the best knowledge of the signers thereof, the Company or the Guarantor, as the case may be, is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and if the Company or the Guarantor, as the case may be, shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. SECTION 4.04. Further Instruments and Acts. Upon request of the Trustee, each of the Company and the Guarantor will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. SECTION 4.05. Maintenance of Office or Agency. The Company or the Guarantor will maintain in the Borough of Manhattan, The City of New York, an office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, exchange, purchase, redemption or conversion and where notices and demands to or upon the Company or the Guarantor in respect of the Securities and this Indenture may be served. The office of The Bank of New York, located at 101 Barclay Street, New York, New York, 10286 (Attention: Corporate Trust Administration), shall initially be such office or agency for all of the aforesaid purposes. The Company or the Guarantor shall give prompt written notice to the Trustee of the location, and of any change in the location, of any such office or agency (other than a change in the location of the office of the Trustee). If at any time the Company or the Guarantor shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 14.02. The Company or the Guarantor may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company or the Guarantor of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. SECTION 4.06. Delivery of Certain Information. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder or any 27 beneficial holder of Securities or shares of Common Stock issued upon conversion thereof, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such Holder or any beneficial holder of Securities or holder of shares of Common Stock issued upon conversion of Securities, or to a prospective purchaser of any such security designated by any such holder, as the case may be, to the extent required to permit compliance by such Holder or holder with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") in connection with the resale of any such security. "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act. SECTION 4.07. Tax Treatment. The Company agrees, and each Holder and any beneficial holder of a Security shall be deemed to agree, for United States federal income tax purposes, (a) to treat the Securities as debt instruments that are subject to Section 1.1275-4(b) of the Treasury Regulations (the "Contingent Debt Regulations") and, for purposes of the Contingent Debt Regulations, to treat the cash and the fair market value of any stock beneficially received upon any conversion of the Securities as a contingent payment, (b) to accrue interest with respect to outstanding Securities as original issue discount according to the "noncontingent bond method," set forth in section 1.1275-4(b) of the Treasury Regulations, using a comparable yield of 6.53 percent per annum compounded semi-annually based on an issue price of $741.37 on February 8, 2001 and the projected payment schedule attached as Annex A to this Indenture, and (c) to be bound by the "comparable yield" and the "projected payment schedule" within the meaning of the Contingent Debt Regulations, as determined by the Company, in each case, except as required by applicable law. A Holder or beneficial owner may obtain the issue price, Issue Date, amount of Original Issue Discount, yield to maturity, comparable yield and projected payment schedule for the Securities by submitting a written request for such information to the Company at the address of the Company set forth in Section 14.02. The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of Original Issue Discount for United States federal income tax purposes (including daily rates and accrual periods) accrued on outstanding Securities as of the end of such year and (ii) such other specific information relating to such Original Issue Discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time, including the amount of any adjustment made under the noncontingent bond method to account for the amount of any difference between the amount of an actual payment and the amount of a projected payment. The Company acknowledges and agrees, and each Holder and any beneficial holder of a Security by its purchase thereof shall be deemed to acknowledge and agree, that (i) the comparable yield and the schedule of projected payments are determined on the basis of an assumption of linear growth of the stock price and a constant dividend yield and are not determined for any purpose other than for the determination of interest accruals and adjustments thereof in respect of the Securities for United States federal income tax purposes and (ii) the comparable yield and the schedule of projected payments do not constitute a projection or representation regarding the amounts payable on the Securities. The Company may cause to be withheld from any payment hereunder any tax withholding required by law or regulations, including, in the case of any withholding obligation arising from income that does not give rise to any cash or property from which any applicable withholding tax could be satisfied, set off against any subsequent payment of cash or property hereunder. ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.01. When Company May Merge or Transfer Assets. The Company shall not consolidate with or merge with or into any other person or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless: 28 (a) either (1) the Company shall be the continuing corporation or (2) the person (if other than the Company) formed by such consolidation or into which the Company is merged or the person which acquires by conveyance, transfer or lease the properties and assets of the Company substantially as an entirety (i) shall be organized and validly existing under the laws of the United States or any State thereof or the District of Columbia, provided, however, that the condition contained in this section 5.01(a)(2)(i) shall not apply if independent counsel experienced in such matters delivers an opinion to the Company concluding that, under then existing laws, there would be no adverse tax consequences to the Holders if this condition were not satisfied, and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of the obligations of the Company under the Securities and this Indenture; (b) immediately after giving effect to such transaction, no Default shall have occurred and be continuing; and (c) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article 5 and that all conditions precedent herein provided for relating to such transaction have been satisfied. (d) the Guarantor has delivered to the Trustee a Guarantor's Officers' Certificate and an opinion of counsel, each stating that the Guarantor's obligations hereunder shall remain in full force and effect thereafter. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the properties and assets of one or more Subsidiaries (other than to the Company or another Subsidiary), which, if such assets were owned by the Company, would constitute all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. The successor person formed by such consolidation or into which the Company is merged or the successor person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of a lease and obligations the Company may have under a supplemental indenture pursuant to Section 11.15, the Company shall be discharged from all obligations and covenants under this Indenture and the Securities. Subject to Section 9.06, the Company, the Trustee and the successor person shall enter into a supplemental indenture to evidence the succession and substitution of such successor person and such discharge and release of the Company. SECTION 5.02. When Guarantor May Merge or Transfer Assets. The Guarantor shall not consolidate with or merge with or into any other person or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless: (a) either (1) the Guarantor shall be the continuing corporation or (2) the person (if other than the Guarantor) formed by such consolidation or into which the Guarantor is merged or the person which acquires by conveyance, transfer or lease the properties and assets of the Guarantor substantially as an entirety (i) shall be organized and validly existing under the laws of the United 29 States or any State thereof or the District of Columbia, provided, however, that the condition contained in this section 5.02(a)(2)(i) shall not apply if independent counsel experienced in such matters delivers an opinion to the Guarantor concluding that, under then existing laws, there would be no adverse tax consequences to the Holders if this condition were not satisfied, and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of the obligations of the Guarantor under the Securities and this Indenture; (b) immediately after giving effect to such transaction, no Default shall have occurred and be continuing; and (c) the Guarantor shall have delivered to the Trustee a Guarantor's Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article 5 and that all conditions precedent herein provided for relating to such transaction have been satisfied. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the properties and assets of one or more Subsidiaries (other than to the Guarantor or another Subsidiary), which, if such assets were owned by the Guarantor, would constitute all or substantially all of the properties and assets of the Guarantor, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Guarantor. The successor person formed by such consolidation or into which the Guarantor is merged or the successor person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under this Indenture with the same effect as if such successor had been named as the Guarantor herein; and thereafter the Guarantor shall be discharged from all obligations and covenants under this Indenture and the Securities. Subject to Section 9.06, the Guarantor, the Trustee and the successor person shall enter into a supplemental indenture to evidence the succession and substitution of such successor person and such discharge and release of the Guarantor. SECTION 5.03. Assumption by Guarantor. The Guarantor, or a Subsidiary thereof, may directly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the Principal Amount at Maturity, Initial Accreted Principal Amount plus accrued Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, interest payable pursuant to Article 10, if any, and the cash and the cash equivalent of the Common Stock, if any, due upon a conversion pursuant to Article 11, with respect to the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed. Upon any such assumption, the Guarantor or such Subsidiary shall succeed to, and be substituted for and may exercise every right and power of, the Company under this Indenture with the same effect as if the Guarantor or such Subsidiary had been named as the Company herein and the Company shall be released from its liability as obligor on the Securities. No such assumption shall be permitted unless the Guarantor has delivered to the Trustee a Guarantor's Officers' Certificate and an Opinion of Counsel, each stating that such assumption and supplemental indenture comply with this Article, and that all conditions precedent herein provided for relating to such transaction have been complied with and that, in the event of assumption by a Subsidiary, the Guarantees remain in full force and effect. 30 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default. An "Event of Default" means any one of the following events: (a) a default in payment of any contingent interest or of interest which becomes payable after the Securities have been converted to semi-annual coupon notes following the occurrence of a Tax Event, which default, in either case, continues for 30 days; (b) a default in the payment of the Principal Amount at Maturity (or, if the Securities have been converted to semi-annual coupon notes following a Tax Event pursuant to Article 10, the Restated Principal Amount), Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price or Change in Control Purchase Price on any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration, when due for purchase or otherwise (whether or not any such payment shall be prohibited by the terms of this Indenture); (c) the Company or the Guarantor fails to comply with any of its agreements in the Securities or this Indenture (other than those referred to in clauses (a) and (b) above) and such failure (or the failure to obtain a waiver thereof) continues for 60 days after receipt by the Company of a Notice of Default; (d) (1) failure of the Company or the Guarantor to make any payment by the end of any applicable grace period after maturity of Debt in an amount (taken together with amounts in (2) below) in excess of $50,000,000 and continuance of such failure, or (2) the acceleration of Debt in an amount (taken together with amounts in (1) above) in excess of $50,000,000 because of a default with respect to such Debt without such Debt having been discharged or such acceleration having been cured, waived, rescinded or annulled, in the case of (1) or (2) above, for a period of 30 days after receipt by the Company or the Guarantor of a Notice of Default; provided, however, that if any such failure or acceleration referred to in (1) or (2) above shall cease or be cured, waived, rescinded or annulled, then the Event of Default by reason thereof shall be deemed not to be continuing; (e) the Company or the Guarantor pursuant to or under or within the meaning of any Bankruptcy Law: (1) commences a voluntary case or proceeding; (2) consents to the entry of an order for relief against it in an involuntary case or proceeding or the commencement of any case against it; (3) consents to the appointment of a Custodian of it or for any substantial part of its property; (4) makes a general assignment for the benefit of its creditors; (5) files a petition in bankruptcy or answer or consent seeking reorganization or relief; or 31 (6) consents to the filing of such petition or the appointment of or taking possession by a Custodian; or (f) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (1) is for relief against the Company or the Guarantor in an involuntary case or proceeding, or adjudicates the Company or the Guarantor insolvent or bankrupt; (2) appoints a Custodian of the Company or the Guarantor or for any substantial part of its property; or (3) orders the winding up or liquidation of the Company or the Guarantor; and the order or decree remains unstayed and in effect for 60 days. "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Default under clause (c) or clause (d) above is not an Event of Default until the Trustee notifies the Company or the Guarantor, as the case may be, or the Holders of at least 25% in aggregate Principal Amount at Maturity of the Securities at the time outstanding notify the Company or the Guarantor, as the case may be, and the Trustee, of the Default and the Company or the Guarantor, as the case may be, does not cure such Default (and such Default is not waived) within the time specified in clause (c) or clause (d) above after actual receipt of such notice. Any such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Company or the Guarantor, as the case may be, shall deliver to the Trustee, within five (5) days after it becomes aware of the occurrence thereof, written notice of any event which with the giving of notice or the lapse of time, or both, would become an Event of Default under clause (c) or clause (d) above, its status and what action the Company or the Guarantor, as the case may be, is taking or proposes to take with respect thereto. SECTION 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(e) or (f)) occurs and is continuing, the Trustee by Notice to the Company and the Guarantor, or the Holders of at least 25% in aggregate Principal Amount at Maturity of the Securities at the time outstanding by notice to the Company, the Guarantor and the Trustee, may declare the Initial Accreted Principal Amount plus accrued Issue Discount through the date of such declaration, and any accrued and unpaid interest (including contingent interest) through the date of such declaration, on all the Securities to be immediately due and payable. Upon such a declaration, such Initial Accreted Principal Amount plus accrued Issue Discount, and such accrued and unpaid interest (including contingent interest), if any, shall be due and payable immediately. If an Event of Default specified in Section 6.01(e) or (f) occurs and is continuing, the Initial Accreted Principal 32 Amount plus accrued Issue Discount, and any accrued and unpaid interest (including contingent interest), on all the Securities shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders. The Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder) may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of the Initial Accreted Principal Amount plus accrued Issue Discount and any accrued and unpaid interest (including contingent interest) that have become due solely as a result of acceleration and if all amounts due to the Trustee under Section 7.07 have been paid. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the Initial Accreted Principal Amount plus accrued Issue Discount on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if the Trustee does not possess any of the Securities or does not produce any of the Securities in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of, or acquiescence in, the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder), may waive an existing Default and its consequences except (a) an Event of Default described in Section 6.01(a) or (b), (b) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected or (c) a Default which constitutes a failure to convert any Security in accordance with the terms of Article 11. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. This Section 6.04 shall be in lieu of Section 316(a)1(B) of the TIA and such Section 316(a)1(B) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.05. Control by Majority. The Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability unless the Trustee is offered indemnity satisfactory to it. This Section 6.05 shall be in lieu of Section 316(a)1(A) of the TIA and such Section 316(a)1(A) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.06. Limitation on Suits. A Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless: (a) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; 33 (b) the Holders of at least 25% in aggregate Principal Amount at Maturity of the Securities at the time outstanding make a written request to the Trustee to pursue the remedy; (c) such Holder or Holders offer to the Trustee security or indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of such notice, request and offer of security or indemnity; and (e) the Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding do not give the Trustee a direction inconsistent with the request during such 60-day period. A Securityholder may not use this Indenture to prejudice the rights of any other Securityholder or to obtain a preference or priority over any other Securityholder. SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the Principal Amount at Maturity (or if the Securities have been converted to semi-annual coupon notes following a Tax Event pursuant to Article 10, the Restated Principal Amount), Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, contingent interest or interest, if any, in respect of the Securities held by such Holder, on or after the respective due dates expressed in the Securities or any Redemption Date, and to convert the Securities in accordance with Article 11, or to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, shall not be impaired or affected adversely without the consent of such Holder. SECTION 6.08. Collection Suit by Trustee. If an Event of Default described in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company and the Guarantor for the whole amount owing with respect to the Securities and the amounts provided for in Section 7.07. SECTION 6.09. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or the Guarantor or of such other obligor or their creditors, the Trustee (irrespective of whether the Principal Amount at Maturity, Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, contingent interest or interest, if any, in respect of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company or the Guarantor for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of the Principal Amount at Maturity, Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, contingent interest or interest, if any, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, 34 disbursements and advances of the Trustee, its agents and counsel or any other amounts due the Trustee under Section 7.07) and of the Holders allowed in such judicial proceeding, and (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. Priorities. If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to Securityholders for amounts due and unpaid on the Securities for the Principal Amount at Maturity, Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, contingent interest or interest, if any, as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Securities; and THIRD: the balance, if any, to the Company or the Guarantor. The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section 6.10. At least 15 days before such record date, the Trustee shall mail to each Securityholder and the Company a notice that states the record date, the payment date and the amount to be paid. SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant (other than the Trustee) in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in aggregate Principal Amount at Maturity of the Securities at the time outstanding. This Section 6.11 shall be in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.12. Waiver of Stay, Extension or Usury Laws. The Company and the Guarantor covenant (to the extent that they may lawfully do so) that they will not at any time insist 35 upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company or the Guarantor from paying all or any portion of the Principal Amount at Maturity, Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, contingent interest, if any, interest payable pursuant to Article 10, delivering Common Stock upon a conversion pursuant to Article 11 or paying the cash equivalent thereof, in respect of Securities, or any interest on such amounts, as contemplated herein, or which may affect the covenants or the performance of this Indenture; and the Company and the Guarantor (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee need perform only those duties that are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, but in case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein. This Section 7.01(b) shall be in lieu of Section 315(a) of the TIA and such Section 315(a) is hereby expressly excluded from this Indenture, as permitted by the TIA. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (1) this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.01; 36 (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1), 315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and 315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the TIA. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01. (e) The Trustee may refuse to perform any duty or exercise any right or power or expend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee (acting in any capacity hereunder) shall be under no liability for interest on any money received by it hereunder unless otherwise agreed in writing with the Company. SECTION 7.02. Rights of Trustee. Subject to its duties and responsibilities under the provisions of Section 7.01, and, except as expressly excluded from this Indenture pursuant to said Section 7.01, under the TIA: (a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers' Certificate or a Guarantor's Officers' Certificate if such matter pertains to the Guarantor; (c) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (d) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith which it believes to be authorized or within its rights or powers conferred under this Indenture; (e) the Trustee may consult with counsel selected by it and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or 37 suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion of Counsel; (f) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby; (g) any request or direction of the Company or the Guarantor, as the case may be, mentioned herein shall be sufficiently evidenced by a Company Request or Company Order or a Guarantor Request or Guarantor Order, as the case may be, and any resolution of the Board of Directors of the Company or the Guarantor, as the case may be, may be sufficiently evidenced by a resolution of such Board of Directors; (h) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company and the Guarantor, personally or by agent or attorney at the sole cost of the Company or the Guarantor, as the case may be, and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation; (i) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture; (j) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder; and (k) the Trustee may request that the Company deliver an Officers' Certificate and that the Guarantor deliver a Guarantor's Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate or Guarantor's Officers' Certificate may be signed by any person authorized to sign such Officers' Certificate or Guarantor's Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded. SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates or the Guarantor or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion Agent or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. 38 SECTION 7.04. Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use or application of the proceeds from the Securities, it shall not be responsible for any statement in the registration statement for the Securities under the Securities Act or in the Indenture or the Securities (other than its certificate of authentication), or the determination as to which beneficial owners are entitled to receive any notices hereunder. SECTION 7.05. Notice of Defaults. If a Default occurs and if it is known to the Trustee, the Trustee shall give to each Securityholder notice of the Default within 90 days after it occurs unless such Default shall have been cured or waived before the giving of such notice. Except in the case of a Default described in Section 6.01(a) or (b), the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Securityholders. The second sentence of this Section 7.05 shall be in lieu of the proviso to Section 315(b) of the TIA and such proviso is hereby expressly excluded from this Indenture, as permitted by the TIA. The Trustee shall not be deemed to have knowledge of a Default unless a Responsible Officer of the Trustee has received written notice of such Default. SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder a brief report dated as of such May 15 that complies with TIA Section 313(a), if required by such Section 313(a). The Trustee also shall comply with TIA Section 313(b). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each securities exchange, if any, on which the Securities are listed. The Company agrees to promptly notify the Trustee whenever the Securities become listed on any securities exchange and of any delisting thereof. SECTION 7.07. Compensation and Indemnity. The Company and the Guarantor agree: (a) to pay to the Trustee from time to time such compensation as the Company or the Guarantor and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited (to the extent permitted by law) by any provision of law in regard to the compensation of a trustee of an express trust); (b) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses, advances and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (c) to indemnify the Trustee or any predecessor, Trustee and their agents for, and to hold them harmless against, any loss, damage, claim, liability, cost or expense (including attorney's fees and taxes (other than taxes based upon, measured by or determined by the income of the Trustee)) incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim (whether asserted by the Company, the 39 Guarantor or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder. To secure the Company's or the Guarantor's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay the Principal Amount at Maturity, Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, contingent interest, interest payable pursuant to Article 10, or interest, if any, as the case may be, on particular Securities, or Common Stock delivered upon a conversion pursuant to Article 11, or the cash equivalent thereof. The Company's or the Guarantor's payment obligations pursuant to this Section 7.07 shall survive the discharge of this Indenture and the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(e) or (f), the expenses including the reasonable charges and expenses of its counsel, are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 7.08. Replacement of Trustee. The Trustee may resign by so notifying the Company and the Guarantor; provided, however, no such resignation shall be effective until a successor Trustee has accepted its appointment pursuant to this Section 7.08. The Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding may remove the Trustee by so notifying the Trustee, the Company and the Guarantor. The Company or the Guarantor shall remove the Trustee if: (a) the Trustee fails to comply with Section 7.10; (b) the Trustee is adjudged bankrupt or insolvent; (c) a receiver or public officer takes charge of the Trustee or its property; or (d) the Trustee otherwise becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company or the Guarantor shall promptly appoint, by resolution of its Board of Directors, a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee, the Company and the Guarantor satisfactory in form and substance to the retiring Trustee, the Company and the Guarantor. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, the Guarantor or the Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding may petition any court of competent jurisdiction at the expense of the Company or the Guarantor for the appointment of a successor Trustee. 40 If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The Trustee (or its parent holding company) shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. Nothing herein contained shall prevent the Trustee from filing with the Commission the application referred to in the penultimate paragraph of TIA Section 310(b). SECTION 7.11. Preferential Collection of Claims Against Company and Guarantor. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.01. Discharge of Liability on Securities. When (i) the Company or the Guarantor delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding Securities have become due and payable and the Company or the Guarantor deposits with the Trustee cash or, if expressly permitted by the terms of the Securities, Common Stock sufficient to pay all amounts due and owing on all outstanding Securities (other than Securities replaced pursuant to Section 2.07), and if in either case the Company or the Guarantor pays all other sums payable hereunder by the Company and the Guarantor, then this Indenture shall, subject to Section 7.07, cease to be of further effect. The Trustee shall join in the execution of a document prepared by the Company or the Guarantor acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and Opinion of Counsel and at the cost and expense of the Company or on demand of the Guarantor accompanied by a Guarantor's Officer's Certificate and Opinion of Counsel and at the cost and expense of the Guarantor. SECTION 8.02. Repayment to the Company. The Trustee and the Paying Agent shall return to the Company or the Guarantor upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, subject to applicable unclaimed property law. After return to the Company or the Guarantor, Holders entitled to the money or securities must look to the Company or the Guarantor for payment as general creditors unless an applicable abandoned property law designates another person and the Trustee and the Paying Agent shall have no further liability to the Securityholders with respect to such money or securities for that period commencing after the return thereof. 41 ARTICLE 9 AMENDMENTS SECTION 9.01. Without Consent of Holders. The Company, the Guarantor and the Trustee may amend this Indenture or the Securities without the consent of any Securityholder: (a) to cure any ambiguity, omission, defect or inconsistency; (b) to comply with Article 5 or Section 11.15; (c) to secure the Company's obligations under the Securities and this Indenture; (d) to add to the Company's or the Guarantors' covenants for the benefit of the Securityholders or to surrender any right or power conferred upon the Company or the Guarantor; (e) to make any change to comply with the TIA, or any amendment thereto, or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA, or as necessary in connection with the registration of the Securities under the Securities Act; or (f) to make any change that does not adversely affect the rights of any Holders. SECTION 9.02. With Consent of Holders. With the written consent of the Holders of at least a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding, the Company, the Guarantor and the Trustee may amend this Indenture or the Securities. However, without the consent of each Securityholder affected, an amendment to this Indenture or the Securities may not: (a) change the provisions of this Indenture that relate to modifying or amending this Indenture; (b) make any change in the Stated Maturity, the manner or rate of accrual in connection with Issue Discount, make any change in the manner of calculation of, or that adversely affects the right to receive, contingent interest, reduce the rate of interest referred to in paragraph 1 of the Securities, reduce the rate of interest referred to in Section 10.01 upon the occurrence of a Tax Event, or extend the time for payment of Issue Discount, contingent interest or interest, if any, on any Security; (c) reduce the Principal Amount at Maturity, accrued Issue Discount, Restated Principal Amount or the Initial Accreted Principal Amount of or extend the Stated Maturity of any Security; (d) reduce the Redemption Price, Purchase Price or Change in Control Purchase Price of any Security; (e) make any Security payable in money or securities other than that stated in the Security; (f) make any change in Section 6.04 or this Section 9.02, except to increase any percentage set forth therein; 42 (g) make any change that adversely affects the right to convert any Security; (h) make any change that adversely affects the right to require the Company to purchase the Securities in accordance with the terms thereof and this Indenture; (i) make any change to the Guarantee that adversely affects the rights of Holders of the Securities; or (j) impair the right to institute suit for the enforcement of any payment with respect to, or conversion of, the Securities. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. After an amendment under this Section 9.02 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment. SECTION 9.03. Compliance with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall comply with the TIA. SECTION 9.04. Revocation and Effect of Consents, Waivers and Actions. Until an amendment, waiver or other action by Holders becomes effective, a consent thereto by a Holder of a Security hereunder is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same obligation as the consenting Holder's Security, even if notation of the consent, waiver or action is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment, waiver or action becomes effective. After an amendment, waiver or action becomes effective, it shall bind every Securityholder. SECTION 9.05. Notation on or Exchange of Securities. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company or the Guarantor shall so determine, new Securities so modified as to conform, in the opinion of the Board of Directors of the Company or the Guarantor, to any such supplemental indenture may be prepared and executed by the Company or the Guarantor and authenticated and delivered by the Trustee in exchange for outstanding Securities. SECTION 9.06. Trustee to Sign Supplemental Indentures. The Trustee shall sign any supplemental indenture authorized pursuant to this Article 9 if the amendment contained therein does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign such supplemental indenture. In signing such supplemental indenture the Trustee shall receive, and (subject to the provisions of Section 7.01) shall be fully protected in relying upon, an Officers' Certificate or a Guarantor's Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture. SECTION 9.07. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, 43 and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. ARTICLE 10 SPECIAL TAX EVENT CONVERSION SECTION 10.01. Optional Conversion to Semi-Annual Coupon Note Upon Tax Event. Upon the occurrence of a Tax Event, the Company may elect to pay interest on all the Securities in lieu of future Issue Discount at the rate of 1% per annum on a restated principal amount per $1,000 original Principal Amount at Maturity (the "Restated Principal Amount") equal to the Initial Accreted Principal Amount plus Issue Discount accrued through the date of such election (the "Option Exercise Date") and shall pay such interest in cash semi-annually on February 8 and August 8 of each year (each an "Interest Payment Date") to holders of record at the close of business on the 15th calendar day immediately preceding such Interest Payment Date (each, a "Regular Record Date"). Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months and will accrue semi-annually from the most recent date on which interest (other than contingent interest) has been paid or, in the case of the first interest computation, from the Option Exercise Date. Within 15 days of the occurrence of a Tax Event, the Company shall mail a written notice of such Tax Event by facsimile and first-class mail to the Trustee and within 15 days of its exercise of such option the Company shall mail a written notice of the Option Exercise Date by facsimile and first-class mail to the Trustee and by first class mail to the Holders of the Securities. From and after the Option Exercise Date, (i) the Company shall be obligated to pay at Stated Maturity, in lieu of the Principal Amount at Maturity of a Security, the Restated Principal Amount thereof, (ii) "Initial Accreted Principal Amount and accrued Issue Discount," "Initial Accreted Principal Amount plus Issue Discount" or similar words, as used herein, shall mean Restated Principal Amount plus accrued and unpaid interest under this Article 10 with respect to any Security and (iii) contingent interest shall cease to accrue on the Securities. Securities authenticated and delivered after the Option Exercise Date may, and shall if required by the Trustee, bear a notation in a form approved by the Trustee as to the conversion of the Securities to semi-annual coupon notes. ARTICLE 11 CONVERSION SECTION 11.01. Conversion Privilege. A Holder of a Security may convert such Security into cash and Common Stock at any time during the period stated in paragraph 9 of the Securities, subject to the provisions of this Article 11. The combined value of the cash payment and the number of shares of Common Stock, if any, issuable upon conversion of a Security per $1,000 of Principal Amount at Maturity thereof (the "Conversion Rate") shall be determined in accordance with the provisions of paragraph 9 of the Securities, subject to adjustment as set forth herein and therein. A Holder may convert a portion of the Principal Amount at Maturity of a Security if the portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security. "Average Sale Price" means the average of the Sale Prices of the Common Stock for the shortest of: 44 (i) 30 consecutive trading days ending on the last full trading day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Sale Price is being calculated, (ii) the period (x) commencing on the date next succeeding the first public announcement of (a) the issuance of rights, warrants or options or (b) the distribution, in each case, in respect of which the Average Sale Price is being calculated and (y) proceeding through the last full trading day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Sale Price is being calculated (excluding days within such period, if any, which are not trading days), and (iii) the period, if any, (x) commencing on the date next succeeding the Ex-Dividend Time with respect to the next preceding (a) issuance of rights, warrants or options or (b) distribution, in each case, for which an adjustment is required by the provisions of Section 11.06(d), 11.07 or 11.08 and (y) proceeding through the last full trading day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Sale Price is being calculated (excluding days within such period, if any, which are not trading days). In the event that the Ex-Dividend Time (or in the case of a subdivision, combination or reclassification, the effective date with respect thereto) with respect to a dividend, subdivision, combination or reclassification to which Section 11.06(a), (b), (c) or (e) applies occurs during the period applicable for calculating "Average Sale Price" pursuant to the definition in the preceding sentence, "Average Sale Price" shall be calculated for such period in a manner determined by the Board of Directors of the Company to reflect the impact of such dividend, subdivision, combination or reclassification on the Sale Price of the Common Stock during such period. "Time of Determination" means the time and date of the earlier of (i) the determination of stockholders entitled to receive rights, warrants or options or a distribution, in each case, to which Section 11.07 or 11.08 applies and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of "ex-dividend" trading for the Common Stock with respect to which such distribution will be made on the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, on the principal other national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded. Notwithstanding any other provision of this Indenture, in no event shall the Conversion Rate exceed the Maximum Conversion Rate. SECTION 11.02. Conversion Procedure. To convert a Security a Holder must satisfy the requirements in paragraph 9 of the Securities. The date on which the Holder satisfies all those requirements is the conversion date (the "Conversion Date"). As soon as practicable after the Conversion Date, the Company shall deliver to the Holder, through the Conversion Agent, cash and a certificate for the number of full shares of Common Stock, if any, issuable upon the conversion and cash in lieu of any fractional share determined pursuant to Section 11.03. The person in whose name the certificate is registered shall be treated as a stockholder of record on and after the Conversion Date; provided, however, that no surrender of a Security on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the person or persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of 45 Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; such conversion shall be for cash and Common Stock together valued at the Conversion Rate in effect on the date that such Security shall have been surrendered for conversion, as if the stock transfer books of the Company had not been closed. Upon conversion of a Security, such person shall no longer be a Holder of such Security. No payment or adjustment will be made for dividends on, or other distributions with respect to, any Common Stock except as provided in this Article 11. On conversion of a Security, that portion of accrued Original Issue Discount and accrued Issue Discount (or interest, if the Company has exercised its option provided for in Section 10.01) attributable to the period from the Issue Date (or, if the Company has exercised the option provided for in Section 10.01, the later of (x) the date of such exercise by the Company and (y) the date on which interest was last paid) of the Security through the Conversion Date and (except as provided below) accrued contingent interest with respect to the converted Security shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through delivery of the cash payment and the Common Stock, if any, in exchange for the Security being converted pursuant to the provisions hereof; and such cash payment and the fair market value of such shares of Common Stock, if any, shall be treated as issued, to the extent thereof, first in exchange for Original Issue Discount and Issue Discount (or interest, if the Company has exercised its option provided for in Section 10.01) accrued through the Conversion Date and accrued contingent interest, and the balance, if any, of such cash payment and such fair market value of such Common Stock, if any, shall be treated as issued in exchange for the Initial Accreted Principal Amount of the Security being converted pursuant to the provisions hereof. If the Holder converts more than one Security at the same time, the cash payment and the number of shares of Common Stock, if any, issuable upon the conversion shall be based on the total Principal Amount at Maturity of the Securities converted. If the last day on which a Security may be converted is a Legal Holiday, the Security may be surrendered on the next succeeding Business Day that is not a Legal Holiday; provided, however, the Security shall be deemed to have been converted and surrendered as of such last day, notwithstanding the occurrence of a Legal Holiday on such day. Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security (having the Guarantee endorsed thereon) in an authorized denomination equal in Principal Amount at Maturity to the unconverted portion of the Security surrendered. SECTION 11.03. Fractional Shares. The Company will not issue a fractional share of Common Stock upon conversion of a Security. Instead, the Company will deliver cash for the current market value of the fractional share. The current market value of a fractional share shall be determined, to the nearest 1/1,000th of a share, by multiplying the Sale Price of the Common Stock, on the last trading day prior to the Conversion Date, of a full share by the fractional amount and rounding the product to the nearest whole cent. SECTION 11.04. Taxes on Conversion. If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due 46 because the Holder requests the shares to be issued in a name other than the Holder's name. The Conversion Agent may refuse to deliver the cash payment and the certificates representing the Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the cash payment is to be made to, or shares are to be issued in a name other than, the Holder's name. Nothing herein shall preclude any tax withholding required by law or regulations. SECTION 11.05. Company to Provide Stock. The Company shall, prior to issuance of any Securities under this Article 11, and from time to time as may be necessary, reserve out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Securities. All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company will endeavor promptly to comply with all federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or in the over-the-counter market or such other market on which the Common Stock is then listed or quoted. SECTION 11.06. Adjustment for Change In Capital Stock. If, after the Issue Date of the Securities, the Company: (a) pays a dividend or makes a distribution on its Common Stock in shares of its Common Stock; (b) subdivides its outstanding shares of Common Stock into a greater number of shares; (c) combines its outstanding shares of Common Stock into a smaller number of shares; (d) pays a dividend or makes a distribution on its Common Stock in shares of its Capital Stock (other than Common Stock or rights, warrants or options for its Capital Stock); or (e) issues by reclassification of its Common Stock any shares of its Capital Stock (other than rights, warrants or options for its Capital Stock), then the conversion privilege and the Conversion Rate in effect immediately prior to such action shall be adjusted so that the Holder of a Security thereafter converted may receive in cash and Capital Stock the value of the number of shares of Capital Stock of the Company which such Holder would have owned immediately following such action if such Holder had converted the Security immediately prior to such action. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification. If after an adjustment a Holder of a Security upon conversion of such Security may receive shares of two or more classes of Capital Stock of the Company, the Conversion Rate shall thereafter 47 be subject to adjustment upon the occurrence of an action taken with respect to any such class of Capital Stock as is contemplated by this Article 11 with respect to the Common Stock, on terms comparable to those applicable to Common Stock in this Article 11. SECTION 11.07. Adjustment for Rights Issue. If after the Issue Date of the Securities, the Company distributes any rights, warrants or options to all holders of its Common Stock entitling them, for a period expiring within 60 days after the record date for such distribution, to purchase shares of Common Stock at a price per share less than the Sale Price of the Common Stock as of the Time of Determination, the Conversion Rate shall be adjusted in accordance with the formula: R' = R x (O + N) --------------------------- (O + [(N x P)/M)] where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. O = the number of shares of Common Stock outstanding on the record date for the distribution to which this Section 11.07 is being applied. N = the number of additional shares of Common Stock offered pursuant to the distribution. P = the offering price per share of the additional shares. M = the Average Sale Price, minus, in the case of (i) a distribution to which Section 11.06(d) applies, (ii) a distribution to which Section 11.08 applies, or (iii) a distribution to which Section 11.09 applies, for which, in each case, (x) the record date shall occur on or before the record date for the distribution to which this Section 11.07 applies and (y) the Ex-Dividend Time shall occur on or after the date of the Time of Determination for the distribution to which this Section 11.07 applies, the fair market value (on the record date for the distribution to which this Section 11.07 applies) of: (1) the Capital Stock of the Company distributed in respect of each share of Common Stock in such Section 11.06(d) distribution; (2) the assets of the Company or debt securities or any rights, warrants or options to purchase securities of the Company distributed in respect of each share of Common Stock in such Section 11.08 distribution; and (3) the cash distributed in respect of each share of Common Stock in such Section 11.09 distribution. The Board of Directors shall determine fair market values for the purposes of this Section 11.07. 48 The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the rights, warrants or options to which this Section 11.07 applies. If all of the shares of Common Stock subject to such rights, warrants or options have not been issued when such rights, warrants or options expire, then the Conversion Rate shall promptly be readjusted to the Conversion Rate which would then be in effect had the adjustment upon the issuance of such rights, warrants or options been made on the basis of the actual number of shares of Common Stock issued upon the exercise of such rights, warrants or options. No adjustment shall be made under this Section 11.07 if the application of the formula stated above in this Section 11.07 would result in a value of R' that is equal to or less than the value of R. SECTION 11.08. Adjustment for Asset Distributions. (a) Subject to 11.08(b), if, after the Issue Date of the Securities, the Company distributes to all holders of its Common Stock any of its assets or debt securities or any rights, warrants or options to purchase securities of the Company (excluding (x) distributions of Capital Stock referred to in Section 11.06, (y) distributions of rights, warrants or options referred to in Section 11.07 and (z) any cash dividends or other cash distributions, including those referred to in Section 11.09), the Conversion Rate shall be adjusted, subject to the provisions of Section 11.08(c), in accordance with the formula: R' = R x M ------- M - F where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. M = the Average Sale Price, minus, in the case of (i) a distribution to which Section 11.06(d) applies, (ii) a distribution to which Section 11.07 applies or (iii) a distribution to which Section 11.09 applies, for which, in each case, (i) the record date shall occur on or before the record date for the distribution to which this Section 11.08 applies and (ii) the Ex-Dividend Time shall occur on or after the date of the Time of Determination for the distribution to which this Section 11.08 applies, the fair market value (on the record date for the distribution to which this Section 11.08 applies) of: (1) any Capital Stock of the Company distributed in respect of each share of Common Stock in such Section 11.06(d) distribution; (2) any rights, warrants or options in respect of each share of Common Stock in such Section 11.07 distribution; and (3) any cash distributed in respect of each share of Common Stock in such Section 11.09 distribution. F = the fair market value (on the record date for the distribution to which this Section 11.08 applies) of the assets, securities, rights, warrants or options to be distributed in respect of each share of Common Stock in the distribution to which this Section 11.08 is being applied. 49 The Board of Directors shall determine fair market values for the purposes of this Section 11.08. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the distribution to which this Section 11.08 applies. (b) If, after the Issue Date of the Securities, the Company pays a dividend or makes a distribution to all holders of its Common Stock consisting of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit of the Company, the Conversion Rate shall be adjusted in accordance with the formula: R' = R x (1 + F/M) where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. M = the average of the Sale Prices of the Common Stock for the 10 trading days commencing on and including the fifth trading day after the date on which "ex-dividend trading" commences for the Common Stock with respect to which such dividend or distribution will be made on the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, on the principal other national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded (the "Ex-Dividend Date"). F = the fair market value of the Capital Stock or similar equity interests distributed in respect of each share of Common Stock for which this Section 11.08(b) applies shall mean the number of shares of Capital Stock or similar equity interests distributed in respect of each share of Common Stock multiplied by the average of the Sale Prices of those shares of Capital Stock or similar equity interests distributed for the 10 trading days commencing on and including the fifth trading day after the effectiveness of the Ex-Dividend Date (or, in the case of similar equity interests, the trading price for the principal exchange on which such interests are listed or quoted and, if such equity interests are not so traded or quoted, at the fair market value thereof as determined by the Board of Directors). (c) In the event that, with respect to any distribution to which Section 11.08(a) would otherwise apply, the difference between "M-F" is less than $1.00 or "F" is equal to or greater than "M", then the adjustment provided by Section 11.08(a) shall not be made and in lieu thereof the provisions of Section 11.15 shall apply to such distribution. SECTION 11.09. Adjustment for Certain Cash Distributions. If, after the Issue Date of the Securities, the Company distributes to all holders of its Common Stock cash dividends or other cash distributions (excluding (x) any such dividend or distribution in connection with liquidation, dissolution or winding up of the Company and (y) any quarterly cash dividend on the Common Stock of the Company to the extent that such quarterly cash dividend does not exceed, per share of Common 50 Stock of the Company, the Dividend Threshold Amount), the Conversion Rate shall be adjusted, in accordance with the formula: R' = R x M ------- M - D where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. M = the average of the Sale Prices of the Common Stock for the 10 trading days ending on the earlier of the date of calculation of such average or the day before the Ex-Dividend Date for the distribution to which this Section 11.09 applies. D = the cash distributed in respect of each share of Common Stock for which this Section 11.09 applies, which per share amount, in the case of a quarterly dividend subject to this Section 11.09, shall be based on the amount of cash distributed in excess of the Dividend Threshold Amount. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the distribution to which this Section 11.09 applies. The "Dividend Threshold Amount" means $0.10 per share. The Dividend Threshold Amount shall be adjusted whenever the Conversion Rate is adjusted by multiplying the Dividend Threshold Amount by a fraction, the numerator of which is the Conversion Rate in effect immediately prior to the adjustment thereof and the denominator of which is the Conversion Rate as so adjusted, provided that no adjustment will be made to the Dividend Threshold Amount for any adjustment made to the Conversion Rate pursuant to this Section 11.09. SECTION 11.10. When Adjustment May Be Deferred. No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate; provided that the Company will carry forward any adjustments that are less than 1% of the conversion rate and make such carried forward adjustments within one year of the first such adjustment carried forward or upon notice of redemption, in either case, regardless of whether the aggregate adjustment is less than 1%. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article 11 shall be made to the nearest cent or to the nearest 1/1,000th of a share, as the case may be. SECTION 11.11. When No Adjustment Required. No adjustment need be made for a transaction referred to in Section 11.06, 11.07, 11.08, 11.09 or 11.15 if Securityholders are to participate in the transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction. Such participation by Securityholders may include participation upon conversion 51 provided that an adjustment shall be made at such time as the Securityholders are no longer entitled to participate. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value or no par value of the Common Stock. To the extent the Securities become convertible pursuant to this Article 11 into cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash. SECTION 11.12. Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Securityholders a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such notice and a certificate from the Company's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof. SECTION 11.13. Voluntary Increase. The Company from time to time may increase the Conversion Rate by any amount for any period of time. Whenever the Conversion Rate is increased, the Company shall mail to Securityholders and file with the Trustee and the Conversion Agent a notice of the increase. The Company shall mail the notice at least 15 days before the date the increased Conversion Rate takes effect. The notice shall state the increased Conversion Rate and the period it will be in effect. A voluntary increase of the Conversion Rate does not change or adjust the Conversion Rate otherwise in effect for purposes of Section 11.06, 11.07, 11.08 or 11.09. SECTION 11.14. Notice of Certain Transactions. If: (a) the Company takes any action that would require an adjustment in the Conversion Rate pursuant to Section 11.06, 11.07, 11.08 or 11.09 (unless no adjustment is to occur pursuant to Section 11.11); or (b) the Company takes any action that would require a supplemental indenture pursuant to Section 11.15; or (c) there is a liquidation or dissolution of the Company; then the Company shall mail to Securityholders and file with the Trustee and the Conversion Agent a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, binding share exchange, transfer, liquidation or dissolution. The Company shall file and mail the notice at least 15 days before such date. Failure to file or mail the notice or any defect in it shall not affect the validity of the transaction. SECTION 11.15. Reorganization of Company; Special Distributions. If the Company is a party to a transaction subject to Section 5.01 (other than a sale of all or substantially all of the assets of the Company in a transaction in which the holders of Common Stock immediately prior to such 52 transaction do not receive securities, cash, property or other assets of the Company or any other person) or a merger or binding share exchange which reclassifies or changes its outstanding Common Stock, the person obligated to deliver securities, cash or other assets upon conversion of Securities shall enter into a supplemental indenture. If the issuer of securities deliverable upon conversion of Securities is an Affiliate of the successor Company, that issuer shall join in the supplemental indenture. The supplemental indenture shall provide that the Holder of a Security may convert it into cash and, in lieu of shares of Common Stock, the kind and amount of securities, cash or other assets which such Holder would have received immediately after the consolidation, merger, binding share exchange or transfer that is equal in value to the shares of Common Stock, if any, such Holder would have received if such Holder had converted the Security immediately before the effective date of the transaction, assuming (to the extent applicable) that such Holder (i) was not a constituent person or an Affiliate of a constituent person to such transaction; (ii) made no election with respect thereto; and (iii) was treated alike with the plurality of non-electing Holders. The supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Article 11. The successor Company shall mail to Securityholders a notice briefly describing the supplemental indenture. If this Section applies, neither Section 11.06 nor 11.07 applies. If the Company makes a distribution to all holders of its Common Stock of any of its assets, or debt securities or any rights, warrants or options to purchase securities of the Company that, but for the provisions of Section 11.08(b), would otherwise result in an adjustment in the Conversion Rate pursuant to the provisions of Section 11.08, then, from and after the record date for determining the holders of Common Stock entitled to receive the distribution, a Holder of a Security that converts such Security in accordance with the provisions of this Indenture shall upon such conversion be entitled to receive, in addition to the cash and the shares of Common Stock, if any, into which the Security is convertible, the kind and amount of securities, cash or other assets comprising the distribution that such Holder would have received if such Holder had converted the Security immediately prior to the record date for determining the holders of Common Stock entitled to receive the distribution. SECTION 11.16. Company Determination Final. Any determination that the Company or the Board of Directors must make pursuant to Section 11.03, 11.06, 11.07, 11.08, 11.09, 11.10, 11.11, 11.15 or 11.18 is conclusive. SECTION 11.17. Trustee's Adjustment Disclaimer. The Trustee has no duty to determine when an adjustment under this Article 11 should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 11.15 need be entered into or whether any provisions of any supplemental indenture are correct. The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities. The Trustee shall not be responsible for the Company's failure to comply with this Article 11. Each Conversion Agent shall have the same protection under this Section 11.17 as the Trustee. SECTION 11.18. Simultaneous Adjustments. In the event that this Article 11 requires adjustments to the Conversion Rate under more than one of Sections 11.06(d), 11.07, 11.08 or 11.09, and the record dates for the distributions giving rise to such adjustments shall occur on the same date, 53 then such adjustments shall be made by applying, first, the provisions of Section 11.06, second, the provisions of Section 11.08 , third, the provisions of Section 11.09, and, fourth, the provisions of Section 11.07. SECTION 11.19. Successive Adjustments. After an adjustment to the Conversion Rate under this Article 11, any subsequent event requiring an adjustment under this Article 11 shall cause an adjustment to the Conversion Rate as so adjusted. SECTION 11.20. Rights Issued in Respect of Common Stock Issued Upon Conversion. Each share of Common Stock issued upon conversion of Securities pursuant to this Article 11 shall be entitled to receive the appropriate number of common stock or preferred stock purchase rights, as the case may be (the "Rights"), if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any shareholder rights agreement adopted by the Company, as the same may be amended from time to time (in each case, a "Rights Agreement"). Provided that such Rights Agreement requires that each share of Common Stock issued upon conversion of Securities at any time prior to the distribution of separate certificates representing the Rights be entitled to receive such Rights, then, notwithstanding anything else to the contrary in this Article 11, there shall not be any adjustment to the conversion privilege or Conversion Rate as a result of the issuance of Rights, the distribution of separate certificates representing the Rights, the exercise or redemption of such Rights in accordance with any such Rights Agreement, or the termination or invalidation of such Rights. ARTICLE 12 PAYMENT OF INTEREST SECTION 12.01. Interest Payments. If applicable, semi-annual or contingent interest on any Security that is payable, and is punctually paid or duly provided for, on any applicable payment date shall be paid to the person in whose name that Security is registered at the close of business on the Regular Record Date or accrual date, as the case may be, for such interest at the office or agency of the Company maintained for such purpose. Each installment of semi-annual or contingent interest on any Security shall be paid in same-day funds by transfer to an account maintained by the payee located inside the United States. In the case of a permanent Global Security, semi-annual or contingent interest payable on any applicable payment date will be paid to the Depositary, with respect to that portion of such permanent Global Security held for its account by Cede & Co. for the purpose of permitting such party to credit the interest received by it in respect of such permanent Global Security to the accounts of the beneficial owners thereof. SECTION 12.02. Defaulted Interest. Except as otherwise specified with respect to the Securities, any semi-annual or contingent interest on any Security that is payable, but is not punctually paid or duly provided for, within 30 days following any applicable payment date (herein called "Defaulted Interest", which term shall include any accrued and unpaid interest that has accrued on such defaulted amount in accordance with paragraph 1 of the Securities), shall forthwith cease to be payable to the registered Holder thereof on the relevant Regular Record Date or accrual date, as the case may be, by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company or the Guarantor, as the case may be, at its election in each case, as provided in clause (a) or (b) below: 54 (a) The Company or the Guarantor may elect to make payment of any Defaulted Interest to the persons in whose names the Securities are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company or the Guarantor shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment (which shall not be less than 20 days after such notice is received by the Trustee), and at the same time the Company or the Guarantor shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date (the "Special Record Date") for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company or the Guarantor of such Special Record Date and, in the name and at the expense of the Company or the Guarantor, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities at his address as it appears on the list of Securityholders maintained pursuant to Section 2.05 not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the Securities are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (b) The Company or the Guarantor may make payment of any Defaulted Interest on the Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company or the Guarantor to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. SECTION 12.03. Interest Rights Preserved. Subject to the foregoing provisions of this Article 12 and Section 2.06, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to semi-annual and contingent interest accrued and unpaid, and to accrue, which were carried by such other Security. ARTICLE 13 GUARANTEE OF SECURITIES SECTION 13.01. Unconditional Guarantee. The Guarantor hereby unconditionally guarantees to each Holder of a Security authenticated and delivered by the Trustee the due and punctual payment of the Principal Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, and interest payable pursuant to Article 10, if any, and the cash and the cash equivalent of the Common Stock, if any, due upon a conversion pursuant to Article 11, with respect to the Securities, when and as the same shall become due and payable, whether at maturity, by acceleration, redemption or otherwise, in accordance with the terms of such Security and 55 of this Indenture, regardless of any defense, right of set-off or counterclaim which the Company may have or assert, other than the defense of payment. The Guarantor's obligations under the Guarantee are several and independent of the obligations of the Company with respect to the Securities. In case of the failure of the Company punctually to pay any Principal Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, interest payable pursuant to Article 10, if any, and the cash and the cash equivalent of the Common Stock, if any, due upon a conversion pursuant to Article 11, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at maturity, upon acceleration, redemption or otherwise, and as if such payment were made by the Company. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Security or this Indenture, any failure to enforce the provisions of any such Security or this Indenture, or any waiver, modification, consent or indulgence granted to the Company with respect thereto by the Holder of such Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that the Guarantee will not be discharged except by payment in full of the Principal Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, interest payable pursuant to Article 10, if any, and the cash and the cash equivalent of the Common Stock, if any, due upon a conversion pursuant to Article 11, and the complete performance of all other obligations contained in the Securities. The Guarantor shall be subrogated to all rights of the Holder of any Security against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of the Guarantee; provided, however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the Principal Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, interest payable pursuant to Article 10, if any, and the cash and the cash equivalent of the Common Stock, if any, due upon a conversion pursuant to Article 11, required with respect to, all Securities of the same series shall have been paid in full. Notwithstanding anything to the contrary contained herein, if following any payment of amounts due under the Security by the Company to the Holders thereof it is determined by a final decision of a court of competent jurisdiction that such payment shall be avoided by a trustee in bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C. Section 547 and such payment is paid by such holder to such trustee in bankruptcy, then and to the extent of such repayment the obligations of the Guarantor hereunder shall remain in full force and effect. SECTION 13.02. Execution, Authentication and Delivery. To evidence the Guarantee to the Holders specified in Section 13.01, the Guarantor hereby agrees to execute a Guarantee on each Security authenticated and delivered by the Trustee. The Guarantee shall be executed on behalf 56 of the Guarantor by its Chairman of the Board, the President or any Executive Managing Director, Senior Managing Director, Managing Director or one of its Vice Presidents, under its corporate seal reproduced thereon, and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Guarantees may be manual or facsimile. A Guarantee bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Guarantor shall bind the Guarantor notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Guarantee or did not hold such offices at the date of such Guarantee. The delivery by the Trustee of a Security with such a Guarantee endorsed thereon shall, after the authentication of such Security hereunder, constitute due delivery of such Guarantee on behalf of the Guarantor. No Guarantee endorsed on any Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on the Security on which such Guarantee is endorsed a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature. ARTICLE 14 MISCELLANEOUS SECTION 14.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 14.02. Notices. Any request, demand, authorization, notice, waiver, consent or communication shall be in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by guaranteed overnight courier) to the following facsimile numbers: if to the Company: Countrywide Financial Corporation 4500 Park Granada Calabasas, CA 91302 Telephone No. (818) 225-3000 Facsimile No. (818) 225-4055 Attention: Sandor E. Samuels, Esq., Chief Legal Officer if to the Guarantor: Countrywide Home Loans, Inc. 4500 Park Granada Calabasas, CA 91302 Telephone No. (818) 225-3000 Facsimile No. (818) 225-4055 57 Attention: Sandor E. Samuels, Esq., Chief Legal Officer if to the Trustee: The Bank of New York 101 Barclay Street New York, New York 10286 Telephone No. (212) 815-3036 Facsimile No. (212) 815-5704 Attention: Corporate Trust Administration The Company, the Guarantor or the Trustee by notice given to the other in the manner provided above may designate additional or different addresses for subsequent notices or communications. Any notice or communication given to a Securityholder shall be mailed to the Securityholder, by first-class mail, postage prepaid, at the Securityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee. If the Company or the Guarantor mails a notice or communication to the Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar. SECTION 14.03. Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have the protection of TIA Section 312(c). SECTION 14.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company or the Guarantor to the Trustee to take any action under this Indenture, the Company and the Guarantor shall furnish to the Trustee: (a) an Officers' Certificate of the Company and the Guarantor stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 14.05. Statements Required in Certificate or Opinion. Each Officers' Certificate, Guarantor's Officers' Certificate or Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture shall include: (a) a statement that each person making such Officers' Certificate, Guarantor's Officers' Certificate or Opinion of Counsel has read such covenant or condition; 58 (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers' Certificate, Guarantor's Officers' Certificate or Opinion of Counsel are based; (c) a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable such person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement that, in the opinion of such person, such covenant or condition has been complied with. SECTION 14.06. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 14.07. Rules by Trustee, Paying Agent, Conversion Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar, Conversion Agent and the Paying Agent may make reasonable rules for their functions. SECTION 14.08. Calculations. The calculation of the Purchase Price, Change in Control Purchase Price, Conversion Rate, Market Price, Sale Price of the Common Stock and each other calculation to be made hereunder (other than the Securities Market Price) shall be the obligation of the Company. All calculations made by the Company as contemplated pursuant to this Section 14.08 shall be final and binding on the Company, the Guarantor and the Holders absent manifest error. The Trustee, Paying Agent, Conversion Agent and Bid Solicitation Agent shall not be obligated to recalculate, recompute or confirm any such calculations. SECTION 14.09. Legal Holidays. A "Legal Holiday" is any day other than a Business Day. If any specified date (including a date for giving notice) is a Legal Holiday, the action shall be taken on the next succeeding day that is not a Legal Holiday, and, if the action to be taken on such date is a payment in respect of the Securities, no Issue Discount or interest, if any, shall accrue for the intervening period. SECTION 14.10. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES. SECTION 14.11. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company or the Guarantor shall not have any liability for any obligations of the Company or the Guarantor under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 14.12. Successors. All agreements of the Company or the Guarantor in this Indenture and the Securities shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successor. 59 SECTION 14.13. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. 60 IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written. COUNTRYWIDE FINANCIAL CORPORATION By: _______________________________ Name: Title: COUNTRYWIDE HOME LOANS, INC. By: _______________________________ Name: Title: THE BANK OF NEW YORK By: _______________________________ Name: Title EXHIBIT A-1 [FORM OF FACE OF GLOBAL SECURITY] FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THIS SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS FEBRUARY 8, 2001, AND THE COMPARABLE YIELD FOR PURPOSES OF ACCRUING ORIGINAL ISSUE DISCOUNT IS 6.53% PER ANNUM. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. A-1 COUNTRYWIDE FINANCIAL CORPORATION Convertible Security due 2031 No. R- CUSIP: ________________ Issue Date: September __, 2004 Issue Discount: $________ Initial Accreted Principal Amount: $________ (for each $1,000 Principal Amount at Maturity) (for each $1,000 Principal Amount at Maturity) COUNTRYWIDE FINANCIAL CORPORATION, a Delaware corporation, promises to pay to Cede & Co. or registered assigns, the Principal Amount at Maturity of _______________ DOLLARS ($_____________________) on February 8, 2031. This Security shall not bear interest except as specified on the other side of this Security. Issue Discount will accrue as specified on the other side of this Security. This Security is convertible as specified on the other side of this Security. Additional provisions of this Security are set forth on the other side of this Security. Dated: September __, 2004 COUNTRYWIDE FINANCIAL CORPORATION By: _____________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION THE BANK OF NEW YORK, as Trustee, certifies that this is one of the Securities referred to in the within-mentioned Indenture. By: _________________________ Authorized Signatory Dated: _______________________ A-2 [FORM OF REVERSE SIDE OF CONVERTIBLE SECURITY] Convertible Security due 2031 1. Interest. This Security shall not bear interest, except as specified in this paragraph or in paragraphs 5 and 12, hereof. If the Principal Amount at Maturity hereof or any portion of such Principal Amount at Maturity is not paid when due (whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the date set for payment of the Redemption Price pursuant to paragraph 6 hereof, upon the date set for payment of the Purchase Price or Change in Control Purchase Price pursuant to paragraph 7 hereof or upon the Stated Maturity of this Security) or if interest (including contingent interest, if any) due hereon or any portion of such interest is not paid when due in accordance with paragraph 5 or 12 hereof, then in each such case the overdue amount shall, to the extent permitted by law, bear interest at the rate of 1.00% per annum, compounded semi-annually, which interest shall accrue from the date such overdue amount was originally due to the date payment of such amount, including interest thereon, has been made or duly provided for. All such interest shall be payable on demand. The accrual of such interest on overdue amounts shall be in lieu of, and not in addition to, the continued accrual of Issue Discount. Issue Discount (the difference between the Initial Accreted Principal Amount and the Principal Amount at Maturity of the Security), in the period during which a Security remains outstanding, shall accrue at 1% per annum, on a semi-annual bond equivalent basis using a 360-day year composed of twelve 30-day months, from the Issue Date of this Security. 2. Method of Payment. Subject to the terms and conditions of the Indenture, the Company will make payments in respect of Redemption Prices, Purchase Prices, Change in Control Purchase Prices and at Stated Maturity to Holders who surrender Securities to a Paying Agent to collect such payments in respect of the Securities. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. 3. Paying Agent, Conversion Agent, Registrar and Bid Solicitation Agent. Initially, The Bank of New York, a New York banking corporation (the "Trustee"), will act as Paying Agent, Conversion Agent, Registrar and Bid Solicitation Agent. The Company may appoint and change any Paying Agent, Conversion Agent, Registrar or co-registrar or Bid Solicitation Agent without notice, other than notice to the Trustee except that the Company will maintain at least one Paying Agent in the State of New York, City of New York, Borough of Manhattan, which shall initially be an office or agency of the Trustee. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar. None of the Company, any of its Subsidiaries or any of their Affiliates shall act as Bid Solicitation Agent. A-3 4. Indenture. The Company issued the Securities under an Indenture dated as of September __, 2004 (the "Indenture"), among the Company, the Guarantor and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Securities themselves and the Trust Indenture Act of 1939, as in effect from time to time (the "TIA"). Terms used herein that are defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the TIA for a statement of those terms. The Securities are unsecured and unsubordinated obligations of the Company limited to $675,000,000 aggregate Principal Amount at Maturity (subject to Section 2.07 of the Indenture) and will rank equally in right of payment to all the Company's future unsecured and unsubordinated indebtedness. The Indenture does not limit other indebtedness of the Company, secured or unsecured. 5. Contingent Interest. Subject to the accrual and record date provisions specified in this paragraph 5, the Company shall pay contingent interest to the Holders during any six-month period (a "Contingent Interest Period") from February 8 to August 7 and from August 8 to February 7, with the initial six-month period commencing after February 8, 2006, if the average Securities Market Price for the Five-Day Period with respect to such Contingent Interest Period equals 120% or more of the sum of the Initial Accreted Principal Amount and the Issue Discount accrued thereon to the trading day immediately preceding the first day of the relevant Contingent Interest Period. The amount of contingent interest payable per $1,000 Principal Amount at Maturity hereof in respect of any Contingent Interest Period shall equal the greater of (x) 0.125% of the average Securities Market Price for the Five-Day Period with respect to such Contingent Interest Period and (y) a Fixed Amount multiplied by the Conversion Rate as of the accrual date for such contingent interest. The Fixed Amount shall be equal to $0.20 and shall be adjusted whenever the Conversion Rate is adjusted by multiplying the then-current Fixed Amount by a fraction, the numerator of which is the Conversion Rate in effect immediately prior to the adjustment thereof and the denominator of which is the Conversion Rate as so adjusted. Contingent interest, if any, will accrue and be payable to Holders as of the 15th day (whether or not a Business Day) preceding the last day of the relevant Contingent Interest Period. Such payments shall be paid on the last day of the relevant Contingent Interest Period. Issue Discount will continue to accrue at 1% per annum whether or not contingent interest is paid. "Five-Day Period" means, with respect to any Contingent Interest Period, the five trading days ending on the second trading day immediately preceding the first day of such Contingent Interest Period; provided, however, if the Company shall have declared a Regular Cash Dividend on its Common Stock that is payable during such Contingent Interest Period but for which the record date for determining stockholders entitled thereto precedes the first day of such Contingent Interest Period, then "Five-Day Period" shall mean, with respect to such Contingent Interest Period, the five trading days ending on the second trading day immediately preceding such record date. A-4 "Securities Market Price" means, as of any date of determination, the average of the secondary market bid quotations per $1,000 Principal Amount at Maturity obtained by the Bid Solicitation Agent for $10,000,000 Principal Amount at Maturity of Securities at approximately 3:30 p.m., New York City time, on such determination date from three recognized securities dealers in The City of New York (none of which shall be an Affiliate of the Company) selected by the Company; provided, however, if (a) at least three such bids are not obtained by the Bid Solicitation Agent or (b) in the Company's reasonable judgment, the bid quotations are not indicative of the secondary market value of the Securities as of such determination date, then the Securities Market Price for such determination date shall equal the product of (i) the Conversion Rate in effect as of such determination date multiplied by (ii) the average Sale Price of the Common Stock for the five trading days ending on such determination date, appropriately adjusted to take into account the occurrence, during the period commencing on the first of such trading days during such five trading day period and ending on such determination date, of any event described in Section 11.06, 11.07, 11.08 or 11.09 (subject to the conditions set forth in Sections 11.10 and 11.11) of the Indenture. Upon determination that Holders will be entitled to receive contingent interest which may become payable during a Contingent Interest Period, on or prior to the first day of such Contingent Interest Period, the Company shall issue a press release and publish such information on its web site or by other appropriate means. 6. Redemption at the Option of the Company. No sinking fund is provided for the Securities. The Securities are redeemable as a whole, or from time to time in part, at any time at the option of the Company at the Redemption Prices set forth below, provided that the Securities are not redeemable prior to February 8, 2006. The table below shows Redemption Prices of a Security per $1,000 Principal Amount at Maturity on the dates shown below and at Stated Maturity, which prices reflect the Initial Accreted Principal Amount plus accrued Issue Discount calculated to each such date. The Redemption Price of a Security redeemed between such dates shall include an additional amount reflecting the additional Issue Discount accrued since the preceding date in the table.

REDEMPTION DATE REDEMPTION PRICE --------------- ---------------- February 8: 2006........................................ $ 779.28 2007........................................ 787.10 2008 ....................................... 794.99 2009 ....................................... 802.96 2010 ....................................... 811.01 2011 ....................................... 819.14 2012 ....................................... 827.35 2013 ....................................... 835.64 2014 ....................................... 844.02

A-5 2015 ....................................... 852.48 2016 ....................................... 861.03 2017 ....................................... 869.66 2018 ....................................... 878.38 2019 ....................................... 887.18 2020 ....................................... 896.08 2021 ....................................... 905.06 2022 ....................................... 914.14 2023 ....................................... 923.30 2024 ....................................... 932.56 2025 ....................................... 941.90 2026 ....................................... 951.35 2027 ....................................... 960.88 2028 ....................................... 970.52 2029 ....................................... 980.25 2030........................................ 990.07 At Stated Maturity ......................... 1,000.00 If this Security has been converted to a semi-annual coupon note following the occurrence of a Tax Event, the Redemption Price will be equal to the Restated Principal Amount plus accrued and unpaid interest from the date of such conversion to the Redemption Date. In addition to the Redemption Price payable with respect to all Securities or portions thereof to be redeemed as of a Redemption Date, the Holders of such Securities (or portions thereof) shall be entitled to receive accrued and unpaid contingent interest, if any, with respect thereto, which contingent interest shall be paid in cash on the Redemption Date. 7. Purchase by the Company at the Option of the Holder. Subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase, at the option of the Holder, the Securities held by such Holder on the following Purchase Dates and at the following Purchase Prices per $1,000 Principal Amount at Maturity, upon delivery of a Purchase Notice containing the information set forth in the Indenture, at any time from the opening of business on the date that is at least 20 Business Days prior to such Purchase Date until the close of business on the Business Day immediately preceding such Purchase Date and upon delivery of the Securities to the Paying Agent by the Holder as set forth in the Indenture.

Purchase Date Purchase Price - ------------- -------------- February 8, 2006 $ 779.28 February 8, 2011 $ 819.14 February 8, 2016 $ 861.03 February 8, 2021 $ 905.06 February 8, 2026 $ 951.35

The Purchase Price (equal to the Initial Accreted Principal Amount plus accrued Issue Discount to the Purchase Date) shall be paid in cash. A-6 If prior to a Purchase Date this Security has been converted at the option of the Company to a semi-annual coupon note following the occurrence of a Tax Event, the Purchase Price will be equal to the Restated Principal Amount plus accrued and unpaid interest from the date of conversion to the Purchase Date. At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase all or a portion of the Securities in integral multiples of $1,000 Principal Amount at Maturity held by such Holder no later than 35 Business Days after the occurrence of a Change in Control of the Company or the Guarantor occurring on or prior to February 8, 2006 for a Change in Control Purchase Price for each $1,000 Principal Amount at Maturity for such Securities equal to the Initial Accreted Principal Amount plus accrued Issue Discount to the Change in Control Purchase Date, which Change in Control Purchase Price shall be paid in cash. If prior to a Change in Control Purchase Date this Security has been converted at the option of the Company to a semi-annual coupon note following the occurrence of a Tax Event, the Change in Control Purchase Price shall be equal to the Restated Principal Amount plus accrued and unpaid interest from the date of conversion to the Change in Control Purchase Date. In addition to the Purchase Price or Change in Control Purchase Price, as the case may be, payable with respect to all Securities or portions thereof to be purchased as of the Purchase Date or the Change in Control Purchase Date, as the case may be, the Holders of such Securities (or portions thereof) shall be entitled to receive accrued and unpaid contingent interest, if any, with respect thereto, which contingent interest shall be paid in cash promptly following the later of the Purchase Date or the Change in Control Purchase Date, as the case may be and the time of delivery of such Securities to the Paying Agent pursuant to the Indenture. Holders have the right to withdraw any Purchase Notice or Change in Control Purchase Notice, as the case may be, by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture. If cash sufficient to pay the Purchase Price or Change in Control Purchase Price, as the case may be, of, together with any accrued and unpaid contingent interest, with respect to all Securities or portions thereof to be purchased as of the Purchase Date or the Change in Control Purchase Date, as the case may be, is deposited with the Paying Agent on the Purchase Date or the Change in Control Purchase Date, as the case may be, Issue Discount and interest (including contingent interest), if any, shall cease to accrue on such Securities (or portions thereof) immediately after such Purchase Date or Change in Control Purchase Date, as the case may be, and the Holder thereof shall have no other rights as such (other than the right to receive the Purchase Price or Change in Control Purchase Price, as the case may be, and accrued and unpaid contingent interest, if any, upon surrender of such Security). 8. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at the Holder's registered address. If money sufficient to pay the Redemption Price of, and accrued and unpaid contingent interest, if any, with respect to, all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, immediately after such Redemption Date, Issue Discount and interest (including contingent interest), if any, shall cease to accrue on such Securities or portions thereof. Securities in denominations larger than $1,000 of A-7 Principal Amount at Maturity may be redeemed in part but only in integral multiples of $1,000 of Principal Amount at Maturity. 9. Conversion. Subject to the provisions of this paragraph 9 and the terms of the Indenture and notwithstanding the fact that any other condition to conversion has not been satisfied, Holders may convert the Securities into cash and Common Stock on a Conversion Date in any calendar quarter (and only during such calendar quarter) if, as of the last day of the preceding calendar quarter, the Sale Price of the Common Stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of such preceding calendar quarter is greater than the conversion trigger price. The "conversion trigger price" for any calendar quarter shall be a reference percentage, beginning at 132.27%, and declining 0.21% per quarter thereafter, of the accreted conversion price per share of Common Stock on the last trading day of such preceding calendar quarter. The "accreted conversion price" per share of Common Stock as of any day equals the quotient of: the Initial Accreted Principal Amount plus accrued Issue Discount to that day, divided by the Conversion Rate. For illustrative purposes only, the table below shows the conversion trigger price per share of Common Stock in respect of each of the first 20 calendar quarters. These prices reflect the accreted conversion price per share of Common Stock (assuming that no events occurred requiring an adjustment to the initial Conversion Rate of 46.2820 shares of Common Stock per $1,000 Principal Amount of Maturity) multiplied by the applicable percentage for the respective calendar quarter. Thereafter, the accreted conversion price per share of Common Stock increases each calendar quarter by the accrued Issue Discount for the quarter and the applicable percentage declines by 0.21% per quarter. The conversion trigger price (subject to adjustment) for the calendar quarter beginning January 1, 2031 is $23.73.

ACCRETED CONVERSION APPLICABLE CONVERSION PRICE PERCENTAGE TRIGGER PRICE QUARTER (1) (2) (1)X(2) ------- --- --- ------- 2004 Third Quarter............... $16.57 132.27 $21.92 Fourth Quarter.............. $16.61 132.06 $21.94 2005 First Quarter............... $16.65 131.85 $21.96 Second Quarter.............. $16.69 131.64 $21.98 Third Quarter............... $16.74 131.43 $22.00 Fourth Quarter.............. $16.78 131.22 $22.02 2006 First Quarter............... $16.82 131.01 $22.04 Second Quarter.............. $16.86 130.80 $22.06 Third Quarter............... $16.90 130.59 $22.08 Fourth Quarter.............. $16.95 130.38 $22.10 2007 First Quarter............... $16.99 130.17 $22.11 Second Quarter.............. $17.03 129.96 $22.13 Third Quarter............... $17.07 129.75 $22.15 Fourth Quarter.............. $17.12 129.54 $22.17 2008 First Quarter............... $17.16 129.33 $22.19 Second Quarter.............. $17.20 129.12 $12.21

A-8 Third Quarter............... $17.25 128.91 $22.23 Fourth Quarter.............. $17.29 128.70 $22.25 2009 First Quarter............... $17.33 128.49 $22.27 Second Quarter.............. $17.38 128.28 $22.29 Subject to the provisions of this paragraph 9 and the Indenture and notwithstanding the fact any other condition to conversion has not been satisfied, Holders may convert the Securities into cash and Common Stock on a Conversion Date during any period in which the credit rating assigned to the Securities by a Rating Agency falls below the Applicable Rating. "Rating Agency" means (1) Moody's Investors Service, Inc. and its successors ("Moody's"), (2) Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies Inc., and its successors ("Standard & Poor's") or (3) if Moody's or Standard & Poor's or both of them are not making ratings of the Securities publicly available, a nationally recognized U.S. rating agency or agencies, as the case may be, selected by the Company, which will be substituted for Moody's or Standard & Poor's or both, as the case may be. "Applicable Rating" means (1) Baa, in the case of Moody's (or its equivalent under any successor ratings categories of Moody's), (2) BBB, in the case of Standard & Poor's (or its equivalent, under any successor ratings categories of Standard & Poor's) or (3) the equivalent in respect of ratings categories of any Rating Agencies substituted for Moody's or Standard & Poor's. Subject to the provisions of this paragraph 9 and the Indenture and notwithstanding the fact that any other condition to conversion has not been satisfied, a Holder may convert into cash and Common Stock a Security or portion of a Security which has been called for redemption pursuant to paragraph 6 hereof, even if the Security, or any portion thereof is not subject to conversion by the Holder, but such Securities may be surrendered for conversion until the close of business on the second Business Day immediately preceding the Redemption Date. Subject to the provisions of this paragraph 9 and the Indenture and notwithstanding the fact that any other condition to conversion has not been satisfied, in the event the Company declares a dividend or distribution described in Section 11.07, Section 11.08 or Section 11.09 of the Indenture, where the fair market value of such dividend or distribution per share of Common Stock, as determined in the Indenture, exceeds 15% of the Sale Price of the Common Stock on the Business Day immediately preceding the date of declaration for such dividend or distribution, the Securities may be surrendered for conversion beginning on the date the Company gives notice to the Holders of such right, which shall not be less than 20 days prior to the Ex-Dividend Time for such dividend or distribution, and Securities may be surrendered for conversion at any time thereafter until the close of business on the Business Day prior to the Ex-Dividend Time or until the Company announces that such dividend or distribution will not take place. Subject to the provisions of this paragraph 9 and the Indenture and notwithstanding the fact that any other condition to conversion has not been satisfied, in the event that the Company is a party to a consolidation, merger or binding share exchange pursuant to which the Common Stock would be converted into cash, securities or other property as set forth in Section 11.15 of the Indenture, the Securities may be surrendered for conversion at any time from and after the date which is 15 days prior to the date of the anticipated effective time of such transaction announced by the Company until 15 days after the actual effective date of such transaction, and at the effective time of such A-9 transaction the right to convert a Security into Common Stock will be deemed to have changed into a right to convert it into the kind and amount of cash, securities or other property which the holder would have received if the holder had converted its Security immediately prior to the transaction. Subject to the provisions of this paragraph 9 and the Indenture and notwithstanding the fact that any other condition to conversion has not been satisfied, in the event that the Guarantor is a party to any transaction in which at least a majority of the total voting power in the aggregate of all classes of Capital Stock of the Guarantor is owned by a party other than the Company, the Company's Subsidiaries or any of their respective employee benefit plans, the Securities may be surrendered for conversion at any time from and after the date which is 15 days prior to the date of the anticipated effective time of such transaction announced by the Guarantor until 15 days after the actual effective date of such transaction; provided that a merger or consolidation of the Company and the Guarantor with one another only shall not cause any Security to become convertible. A Security in respect of which a Holder has delivered a Purchase Notice or Change in Control Purchase Notice exercising the option of such Holder to require the Company to purchase such Security may be converted only if such notice of exercise is withdrawn in accordance with the terms of the Indenture. The initial Conversion Rate is 46.2820 shares of Common Stock per $1,000 Principal Amount at Maturity (but payable in cash and Common Stock), subject to adjustment for certain events described in the Indenture or this paragraph 9; provided that in no event shall the Conversion Rate exceed the Maximum Conversion Rate. Except as otherwise described in this paragraph 9, upon conversion, the Company will deliver cash (the "Cash Amount") in an amount equal to the lesser of (a) the Initial Accreted Principal Amount and Issue Discount accrued thereon and (b) the product of Conversion Rate times the average of the Sale Price of the Common Stock on each of the 20 trading days prior to the Conversion Date (the "Settlement Stock Price") and a number of shares of Common Stock equal to (x) the product of the Conversion Rate multiplied by the Settlement Stock Price minus (y) the Cash Amount, all divided by (z) the Settlement Stock Price. In addition, the Company will deliver cash in lieu of any fractional shares of Common Stock. "Maximum Conversion Rate" means 81.1688 shares of Common Stock of the Company, subject to adjustment. In the event the Company exercises its option pursuant to Section 10.01 of the Indenture to have interest in lieu of Issue Discount accrue on the Security following a Tax Event, the Holder will be entitled on conversion to receive the same cash payment and number of shares of Common Stock, if any, such Holder would have received if the Company had not exercised such option. Accrued and unpaid interest in lieu of Issue Discount and contingent interest will not be paid on Securities that are converted; provided, however that Securities surrendered for conversion during the period, in the case of interest in lieu of Issue Discount, from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date or, in the case of contingent interest, from the close of business on any date on which contingent interest accrues to the opening of business on the date on which such contingent interest is payable, shall be entitled to receive such interest, in lieu of Issue Discount or contingent interest, as the case may be, payable on such Securities on the corresponding Interest Payment Date or the date on which such contingent interest is payable and (except Securities with respect to which the Company has mailed a notice of redemption) Securities surrendered for conversion during such periods must be accompanied by payment of an amount equal to the interest in lieu of Issue Discount or contingent interest with respect thereto that the registered Holder is to receive. A-10 To convert a Security, a Holder must (1) complete and manually sign the conversion notice below (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender the Security to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if required. A Holder may only convert a portion of a Security pursuant to the terms of this paragraph 9 and in accordance with the Indenture if the Principal Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000. No payment or adjustment will be made for dividends on the Common Stock except as provided herein and in the Indenture. On conversion of a Security, that portion of accrued Original Issued Discount, accrued Issue Discount (or interest if the Company has exercised its option provided for in paragraph 12 hereof) attributable to the period from the Issue Date (or, if the Company has exercised the option referred to in paragraph 12 hereof, the later of (x) the date of such exercise and (y) the date on which interest was last paid) through the Conversion Date and (except as provided above) accrued contingent interest with respect to the converted Security shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through the delivery of the cash payment and the Common Stock, if any, in exchange for the Security being converted pursuant to the terms hereof; and the fair market value of such cash payment and such shares of Common Stock shall be treated as issued, to the extent thereof, first in exchange for Original Issued Discount and Issue Discount (or interest, if the Company has exercised its option provided for in paragraph 12 hereof) accrued through the Conversion Date and accrued contingent interest, and the balance, if any, of such fair market value of such cash payment and such Common Stock, if any, shall be treated as issued in exchange for the Initial Accreted Principal Amount of the Security being converted pursuant to the provisions hereof. The Conversion Rate will be adjusted for dividends or distributions on Common Stock payable in Common Stock or other Capital Stock; subdivisions, combinations or certain reclassifications of Common Stock; distributions to all holders of Common Stock of certain rights to purchase Common Stock for a period expiring within 60 days at less than the Sale Price of the Common Stock at the Time of Determination; and distributions to such holders of assets or debt securities of the Company or certain rights to purchase securities of the Company; and certain cash dividends or distributions. However, no adjustment need be made if Securityholders may participate in the transaction or in certain other cases. The Company from time to time may voluntarily increase the Conversion Rate. If the Conversion Rate is adjusted pursuant to Article 11 of the Indenture, then the Maximum Conversion Rate shall be adjusted by the same proportion as the Conversion Rate except that the Maximum Conversion Rate shall not be adjusted as a result of any adjustments to the Conversion Rate made solely for quarterly cash dividends pursuant to Section 11.09 of the Indenture. If the Company is a party to a consolidation, merger or binding share exchange or a transfer of all or substantially all of its assets, or upon certain distributions described in the Indenture, the right to convert a Security into cash and Common Stock may be changed into a right to convert it into securities, cash or other assets of the Company or another person. The Conversion Rate will not be adjusted for accrued Issue Discount or any contingent interest. 10. Conversion Arrangement on Call for Redemption. Any Securities called for redemption, unless surrendered for conversion before the close of business on the Redemption Date, may be deemed to be purchased from the Holders of such Securities at an amount not less than the Redemption Price, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Securities from the Holders, to A-11 convert them into Common Stock of the Company and to make payment for such Securities to the Trustee in trust for such Holders. 11. Tax Treatment. The Company agrees, and each Holder and any beneficial holder of a Security shall be deemed to agree, for United States federal income tax purposes, (1) to treat the Securities as debt instruments that are subject to the Contingent Debt Regulations and, for purposes of the Contingent Debt Regulations, to treat the cash and the fair market value of any stock beneficially received upon any conversion of the Securities as a contingent payment, (2) to accrue interest with respect to outstanding Securities as original issue discount according to the "noncontingent bond method," set forth in section 1.1275-4(b) of the Treasury Regulations, using a comparable yield of 6.53 percent per annum compounded semi-annually based on an issue price of $709.40 on February 8, 2001 and the projected payment schedule attached as Annex A to this Indenture, and (3) to be bound by the "comparable yield" and the "projected payment schedule" within the meaning of the Contingent Debt Regulations, as determined by the Company, in each case, except as required by applicable law. A Holder or beneficial owner may obtain the issue price, Issue Date, amount of Original Issue Discount, yield to maturity, comparable yield and projected payment schedule for the Securities by submitting a written request for such information to the Company at the address of the Company set forth in Section 14.02 of the Indenture. 12. Tax Event. (a) Upon the occurrence of a Tax Event, the Company may elect to pay interest on all the Securities in lieu of future Issue Discount at the rate of 1% per annum on a restated principal amount per $1,000 original Principal Amount at Maturity (the "Restated Principal Amount") equal to the Initial Accreted Principal Amount plus Issue Discount accrued through the date of such election (the "Option Exercise Date") and shall pay such interest in cash semi-annually on February 8 and August 8 of each year (each an "Interest Payment Date") to holders of record at the close of business on the 15th calendar day immediately preceding such Interest Payment Date (each, a "Regular Record Date"). Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months and will accrue semi-annually from the most recent date to which interest has been paid or, if no interest has been paid, from the Option Exercise Date. (b) Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Security is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose. Each installment of interest on any Security shall be paid in same-day funds by transfer to an account maintained by the payee located inside the United States. (c) From and after the Option Exercise Date, contingent interest provided for in paragraph 5 hereof shall cease to accrue on this Security. 13. Defaulted Interest. Except as otherwise specified with respect to the Securities, any Defaulted Interest on any Security shall forthwith cease to be payable to the registered Holder thereof on the relevant Regular Record Date or accrual date, as the case may be, by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company as provided for in Section 12.02 of the Indenture. A-12 14. Denominations; Transfer; Exchange. The Securities are in fully registered form, without coupons, in denominations of $1,000 of Principal Amount at Maturity and integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities in respect of which a Purchase Notice or Change in Control Purchase Notice has been given and not withdrawn (except, in the case of a Security to be purchased in part, the portion of the Security not to be purchased) or any Securities for a period of 15 days before the mailing of a notice of redemption of Securities to be redeemed. 15. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of this Security for all purposes. 16. Unclaimed Money or Securities. The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, subject to applicable unclaimed property laws. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. 17. Amendment; Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding and (ii) certain Defaults may be waived with the written consent of the Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 or Section 11.15 of the Indenture, to secure the Company's obligations under this Security or to add to the Company's covenants for the benefit of the Securityholders or to surrender any right or power conferred, or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA, or as necessary in connection with the registration of the Securities under the Securities Act. 18. Defaults and Remedies. Under the Indenture, Events of Default include (i) default in the payment of contingent interest when the same becomes due and payable or of interest which becomes due and payable upon exercise by the Company of its option provided for in paragraph 12 hereof and Article 10 of the Indenture which default in either case continues for 30 days; (ii) default in payment of the Principal Amount at Maturity (or, if the Securities have been converted to semi-annual coupon notes pursuant to paragraph 12 hereof and Section 10.01 of the Indenture following a Tax Event, the Restated A-13 Principal Amount), Initial Accreted Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price or Change in Control Purchase Price, as the case may be, in respect of the Securities when the same becomes due and payable; (iii) failure by the Company or the Guarantor to comply with any of its other agreements in the Indenture or the Securities, subject to notice and lapse of time; (iv) (a) failure of the Company or the Guarantor to make any payment by the end of any applicable grace period after maturity of Debt in an amount (taken together with amounts in (b) below) in excess of $50,000,000, or (b) the acceleration of Debt in an amount (taken together with amounts in (a) above) in excess of $50,000,000 because of a default with respect to such Debt without such Debt having been discharged or such acceleration having been cured, waived, rescinded or annulled, subject to notice and lapse of time; provided, however, that if any such failure or acceleration referred to in (a) or (b) above shall cease or be cured, waived, rescinded or annulled, then the Event of Default by reason thereof shall be deemed not to be continuing; and (v) certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee, or the Holders of at least 25% in aggregate Principal Amount at Maturity of the Securities at the time outstanding, may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities becoming due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security reasonably satisfactory to it. Subject to certain limitations, Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of amounts specified in clause (i) or (ii) above) if it determines that withholding notice is in their interests. 19. Trustee Dealings with the Company and the Guarantor. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company, the Guarantor or their respective Affiliates and may otherwise deal with the Company, the Guarantor or their respective Affiliates with the same rights it would have if it were not Trustee. 20. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company or the Guarantor shall not have any liability for any obligations of the Company or the Guarantor under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 21. Authentication. This Security (including the Guarantee attached hereto) shall not be valid until an authorized signatory of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Security. 22. Abbreviations. A-14 Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 23. GOVERNING LAW. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS SECURITY. A-15 GUARANTEE OF COUNTRYWIDE HOME LOANS, INC. FOR VALUE RECEIVED, Countrywide Home Loans, Inc., a corporation duly organized and existing under the laws of the State of New York (the "Guarantor"), hereby unconditionally guarantees to the Holder of the attached Convertible Security due 2031 (the "Security") of Countrywide Financial Corporation (the "Company"), issued under the Indenture (the "Indenture"), dated as of September __, 2004, among the Company, the Guarantor, and The Bank of New York (the "Trustee"), authenticated and delivered by the Trustee, the due and punctual payment of the Principal Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, and interest payable pursuant to paragraph 1 or paragraph 12 of the Security, if any, and the cash and the cash equivalent of the Common Stock, if any, due upon a conversion pursuant to paragraph 9 of the Security, with respect to the Security, when and as the same shall become due and payable, whether at maturity, by acceleration, redemption or otherwise, in accordance with the terms of the Security and of the Indenture. In case of the failure of Countrywide Financial Corporation (the "Company") punctually to pay any Principal Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, interest payable pursuant to paragraph 1 or paragraph 12 of the Security, if any, and the cash and the cash equivalent of the Common Stock, if any, due upon a conversion pursuant to paragraph 9 of the Security, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at maturity, upon acceleration, redemption or otherwise, and as if such payment were made by the Company. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of the Security or the Indenture, any failure to enforce the provisions of any the Security or the Indenture, or any waiver, modification, consent or indulgence granted to the Company with respect thereto by the Holder of the Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any the Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that the Guarantee will not be discharged except by payment in full of the Principal Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, interest payable pursuant to paragraph 1 or paragraph 12 of the Security, if any, and the cash and the cash equivalent of the Common Stock, if any, due upon a conversion pursuant to paragraph 9 of the Security, and the complete performance of all other obligations contained in the Security. This Guarantee will rank equally in right of payment to all the Guarantor's future unsecured and unsubordinated indebtedness. The Guarantor shall be subrogated to all rights of the Holder of the Security against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of the Guarantee; provided, however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the Principal Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase Price, contingent interest, if any, interest payable pursuant to paragraph 1 or paragraph 12 of the Security, if any, and the cash and the cash equivalent of A-16 the Common Stock, if any, due upon a conversion pursuant to paragraph 9 of the Security, required with respect to, all Securities of the same series shall have been paid in full. Notwithstanding anything to the contrary contained herein, if following any payment of amounts due under the Security by the Company to the Holder thereof it is determined by a final decision of a court of competent jurisdiction that such payment shall be avoided by a trustee in bankruptcy (including any debtor-in-possession) as a preference under 11 U.S.C. Section 547 and such payment is paid by such holder to such trustee in bankruptcy, then and to the extent of such repayment the obligations of the Guarantor hereunder shall remain in full force and effect. This Guarantee shall not be valid or become obligatory for any purpose with respect to the Security until the certificate of authentication of the Security shall have been signed by the Trustee or on its behalf by the Trustee's authenticating agent. This Guarantee shall be governed by the laws of the State of New York. All capitalized but undefined terms used in this Guarantee shall have the respective meanings ascribed thereto in the Indenture. Dated: September __, 2004 COUNTRYWIDE HOME LOANS, INC. By: -------------------------------------- Name: Title: A-17 The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to: Countrywide Financial Corporation 4500 Park Granada Calabasas, CA 91302 Att: Sandor E. Samuels, Esq., Chief Legal Officer ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax ID no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ___________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. CONVERSION NOTICE To convert this Security into cash and Common Stock of the Company, check the box: [ ] To convert only part of this Security, state the Principal Amount at Maturity to be converted (which must be $1,000 or an integral multiple of $1,000): $ -------------------- If you want the stock certificate made out in another person's name, fill in the form below: - -------------------------------------------------------------------------------- (Insert other person's soc. sec. or tax ID no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type other person's name, address and zip code) - -------------------------------------------------------------------------------- Date: Your Signature: ------------------------------------------ ---------------- A-18 (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: ----------------------- SIGNATURE GUARANTEE Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-19 ANNEX A Projected Payment Schedule*

Semi-annual Period Ending Projected Payment per Security - ------------------------- ------------------------------ August 8, 2001 $ - February 8, 2002 $ - August 8, 2002 $ - February 8, 2003 $ - August 8, 2003 $ - February 8, 2004 $ - August 8, 2004 $ - February 8, 2005 $ - August 8, 2005 $ - February 8, 2006 $ - August 8, 2006 $ - February 8, 2007 $ - August 8, 2007 $ - February 8, 2008 $ - August 8, 2008 $ - February 8, 2009 $ 3.9739 August 8, 2009 $ 4.1105 February 8, 2010 $ 4.2518 August 8, 2010 $ 4.3979 February 8, 2011 $ 4.5491 August 8, 2011 $ 4.7055 February 8, 2012 $ 4.8672 August 8, 2012 $ 5.0345 February 8, 2013 $ 5.2076 August 8, 2013 $ 5.3866 February 8, 2014 $ 5.5718 August 8, 2014 $ 5.7633 February 8, 2015 $ 5.9614 August 8, 2015 $ 6.1663 February 8, 2016 $ 6.3783 August 8, 2016 $ 6.5975 February 8, 2017 $ 6.8243 August 8, 2017 $ 7.0589 February 8, 2018 $ 7.3016 August 8, 2018 $ 7.5526 February 8, 2019 $ 7.8122 August 8, 2019 $ 8.0807 February 8, 2020 $ 8.3585 August 8, 2020 $ 8.6458 February 8, 2021 $ 8.9430 August 8, 2021 $ 9.2504 February 8, 2022 $ 9.5684 August 8, 2022 $ 9.8973

- ---------- * The comparable yield and the schedule of projected payments are determined on the basis of an assumption of linear growth of the stock price and a constant dividend yield and are not determined for any purpose other than for the determination of interest accruals and adjustments thereof in respect of the Securities for United States federal income tax purposes. The comparable yield and the schedule of projected payments do not constitute a projection or representation regarding the amounts payable on Securities. Annex A-1 Semi-annual Period Ending Projected Payment per Security - ------------------------- ------------------------------ February 8, 2023 $ 10.2376 August 8, 2023 $ 10.5895 February 8, 2024 $ 10.9535 August 8, 2024 $ 11.3300 February 8, 2025 $ 11.7195 August 8, 2025 $ 12.1224 February 8, 2026 $ 12.5391 August 8, 2026 $ 12.9701 February 8, 2027 $ 13.4159 August 8, 2027 $ 13.8771 February 8, 2028 $ 14.3541 August 8, 2028 $ 14.8476 February 8, 2029 $ 15.3579 August 8, 2029 $ 15.8859 February 8, 2030 $ 16.4319 August 8, 2030 $ 16.9968 February 8, 2031 $ 4,350.4332 Annex A-2 EX-23.1 3 v00210a1exv23w1.txt CONSENT OF GRANT THORNTON LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our report dated February 27, 2004, accompanying the consolidated financial statements and schedules of Countrywide Financial Corporation and Subsidiaries appearing in the 2003 Annual Report of the Company on Form 10-K for the year ended December 31, 2003, which is incorporated by reference in this Registration Statement on Form S-4/A (the "Registration Statement"). We consent to the incorporation by reference in the Registration Statement of the aforementioned report and to the use of our name as it appears under the caption "Experts." /s/ GRANT THORNTON LLP Los Angeles, California August 17, 2004 EX-23.2 4 v00210a1exv23w2.txt EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our report dated February 6, 2004, accompanying the financial statements and schedules of Countrywide Securities Corporation appearing in the Current Report on Form 8-K of Countrywide Financial Corporation dated February 27, 2004, which is incorporated by reference in this Registration Statement on Form S-4/A (the "Registration Statement"). We consent to the incorporation by reference in the Registration Statement of the aforementioned report and to the use of our name as it appears under the caption "Experts." /s/ GRANT THORNTON LLP Los Angeles, California August 17, 2004 EX-99.1 5 v00210a1exv99w1.htm EXHIBIT 99.1

EXHIBIT 99.1

LETTER OF TRANSMITTAL

for

Countrywide Financial Corporation

Offer to Exchange

Convertible Securities due 2031

(CUSIP No. 222372 AE 4)

and an Exchange Fee

for all outstanding

Liquid Yield Option^TM Notes due 2031

(CUSIP No. 222372 AD 6)

Pursuant to, and subject to the terms and conditions described in, the Prospectus dated August         , 2004

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON SEPTEMBER       , 2004, UNLESS EARLIER TERMINATED OR EXTENDED.

The Exchange Agent for the Exchange Offer is:

THE BANK OF NEW YORK

By Hand:

The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street – Floor 7E
New York, NY 10286
Attention: William Buckley By Courier:

The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street – Floor 7E
New York, NY 10286
Attention: William Buckley By Registered or
Certified Mail:

The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street – Floor 7E
New York, NY 10286
Attention: William Buckley By Facsimile
(Eligible Institutions Only):

(212) 298-1915

For Confirmation by Telephone: (212) 815-5788

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY.

      Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below).

      This Letter of Transmittal need not be completed if (a) the Liquid Yield Option^TM Notes due 2031 (the “Old Securities”) are being tendered by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in the Prospectus under “The Exchange Offer — Procedures for Exchange” beginning on page 25 and (b) an “agent’s message” is delivered to the Exchange Agent as described on page 25 of the Prospectus.

      THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. If Old Securities are registered in different names, a separate Letter of Transmittal must be submitted for each registered owner. See Instruction 2.

      This Letter of Transmittal (the “Letter”) relates to the offer (the “Exchange Offer”) of Countrywide Financial Corporation (“CFC”) to exchange $1,000 principal amount at maturity of Convertible Securities due 2031 (the “New Securities”) and an exchange fee of $2.50 for each $1,000 principal amount at maturity of validly tendered and accepted Old Securities, pursuant to the prospectus dated August      , 2004 (as may be amended or supplemented from time to time, the “Prospectus”). All tenders of Old Securities pursuant to the Exchange Offer must be received by the Exchange Agent prior to 5:00 p.m., New York City time, on September      , 2004; provided that CFC reserves the right, at any time or from time to time, to extend the Exchange Offer at its discretion, in which event the term “Expiration Date” shall mean the latest time and date to which the Exchange Offer is extended. CFC will notify holders of the Old Securities of any extension by means of a press release or other public announcement prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date.

      The Exchange Offer is subject to certain conditions precedent as set forth in the Prospectus under the caption “The Exchange Offer — Conditions to the Exchange Offer.”

      This Letter is to be completed by a holder of Old Securities if a tender is to be made by book-entry transfer to the account maintained by the Exchange Agent at DTC pursuant to the procedures set forth in the Prospectus under “The Exchange Offer — Procedures for Exchange” beginning on page 25, but only if an agent’s message is not delivered through DTC’s Automated Tender Offer Program (“ATOP”). Tenders by book-entry transfer may also be made through ATOP. DTC participants that are accepting the Exchange Offer must transmit their acceptance to DTC through ATOP. DTC will then verify the acceptance and execute a book-entry delivery to the Exchange Agent’s account at DTC. DTC will also send an agent’s message to the Exchange Agent for its acceptance. The agent’s message will state that DTC has received an express acknowledgment from the tendering holder of Old Securities, which acknowledgment will confirm that such holder of Old Securities received and agrees to be bound by, and makes each of the representations and warranties contained in, this Letter, and that CFC may enforce this Letter against such holder of Old Securities. Delivery of the agent’s message by DTC will satisfy the terms of the Exchange Offer in lieu of execution and delivery of this Letter by the DTC participant identified in the agent’s message. Accordingly, this Letter need not be completed by a holder tendering through ATOP.

DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

      The undersigned has completed, executed and delivered this Letter to indicate the action the undersigned desires to take with respect to the Exchange Offer.

      List below the Old Securities to which this Letter relates. If Old Securities are registered in different names, a separate Letter must be submitted for each registered owner. See Instruction 2.

DESCRIPTION OF OLD SECURITIES TENDERED
Name of DTC Participant
and Participant’s DTC Account Number	Principal Amount at Maturity
in Which Old Securities Are Held	of Old Securities Tendered

2

PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS

Ladies and Gentlemen:

      By execution hereof, the undersigned acknowledges that he or she has received the Prospectus and this Letter, which together constitute the Exchange Offer, to exchange $1,000 principal amount at maturity of New Securities and an exchange fee of $2.50 for each $1,000 principal amount at maturity of validly tendered and accepted Old Securities, on the terms and subject to the conditions of the Prospectus.

      Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to CFC the principal amount of Old Securities indicated above pursuant to the Exchange Offer. As used herein, “Exchange Date” shall mean the third business day following September      , 2004, or, if CFC extends the Exchange Offer, the third business day following the latest date and time to which the Exchange Offer is extended (as so extended, the “Expiration Date”).

      Subject to, and effective upon, the acceptance of Old Securities tendered hereby, by executing and delivering this Letter (or agreeing to the terms of this Letter pursuant to an agent’s message) the undersigned: (i) irrevocably sells, assigns, and transfers to or upon the order of CFC all right, title and interest in and to, and all claims in respect of or arising or having arisen as a result of the undersigned’s status as a holder of the Old Securities tendered thereby; (ii) waives any and all rights with respect to the Old Securities tendered; and (iii) releases and discharges CFC, Countrywide Home Loans, Inc. and the Trustee with respect to the Old Securities from any and all claims such holder may have, now or in the future, arising out of or related to the Old Securities. The undersigned acknowledges and agrees that the tender of Old Securities made hereby may not be withdrawn except in accordance with the procedures set forth in the Prospectus.

      The undersigned represents and warrants that it has full power and authority to legally tender, exchange, assign and transfer the Old Securities tendered hereby and to acquire the New Securities issuable upon the exchange of such tendered Old Securities, and that, when and if the Old Securities tendered hereby are accepted for exchange, CFC will acquire good and unencumbered title to the tendered Old Securities, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or CFC to be necessary or desirable to transfer ownership of such Old Securities on the account books maintained by DTC.

      The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that the Exchange Agent also acts as the agent of CFC) with respect to such Old Securities with full power of substitution to: (i) transfer ownership of such Old Securities on the account books maintained by DTC to, or upon the order of, CFC; (ii) present such Old Securities for transfer of ownership on the books of CFC; (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Old Securities; and (iv) deliver, in book-entry form, the New Securities issuable upon acceptance of the Old Securities tendered hereby, together with any Old Securities not accepted in the Exchange Offer, to the DTC account designated herein by the undersigned, all in accordance with the terms and conditions of the Exchange Offer as described in the Prospectus.

      All authority conferred or agreed to be conferred in this Letter shall survive the death or incapacity of the undersigned and all obligations of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned.

      The Exchange Offer is subject to certain conditions as set forth in the Prospectus under the caption “The Exchange Offer — Conditions to the Exchange Offer.” The undersigned recognizes that as a result of these conditions (which may be waived by CFC, in whole or in part, in the sole discretion of CFC), as more particularly set forth in the Prospectus, CFC may not be required to accept all or any of the Old Securities tendered hereby.

      The undersigned understands that a valid tender of Old Securities is not made in acceptable form and risk of loss therefore does not pass until receipt by the Exchange Agent of this Letter (or an agent’s message in lieu thereof) or a facsimile hereof, duly completed, dated and signed, together with all accompanying evidences of authority and any other required documents and signature guarantees in form satisfactory to CFC (which may delegate power in whole or in part to the Exchange Agent). All questions as to validity, form and eligibility of any tender of the Old Securities hereunder

3

(including time of receipt) and acceptance of tenders and withdrawals of Old Securities will be determined by CFC in its sole judgment (which may delegate power in whole or in part to the Exchange Agent) and such determination shall be final and binding.

      The undersigned acknowledges and agrees that issuance of the New Securities and payment of the exchange fee in exchange for validly tendered Old Securities that are accepted in the Exchange Offer will be made promptly after the Exchange Date.

      Unless otherwise indicated in the “Special Issuance and Payment Instructions” box, the New Securities and the exchange fee will be credited to the DTC account number specified on page 2. In the event that the “Special Issuance and Payment Instructions” box is completed, the undersigned hereby understands and acknowledges that any Old Securities tendered but not accepted in the Exchange Offer will be issued in the name(s), and delivered by book-entry transfer to the DTC account number(s), indicated in such box. However, the undersigned understands and acknowledges that CFC has no obligation pursuant to the “Special Issuance and Payment Instructions” box to transfer any Old Securities from the name(s) of the registered holders thereof to the person indicated in such box, if CFC does not accept any Old Securities so tendered. The undersigned acknowledges and agrees that CFC and the Exchange Agent may, in appropriate circumstances, defer effecting transfer of Old Securities, and may retain such Old Securities, until satisfactory evidence of payment of transfer taxes payable on account of such transfer by the undersigned, or exemption therefrom, is received by the Exchange Agent.

      Your bank or broker can assist you in completing this form. The instructions included with this Letter must be followed. Questions and requests for assistance or for additional copies of the Prospectus and this Letter may be directed to the Information Agent, whose address and telephone number appear on the final page of this Letter. See Instruction 7 below.

4

METHOD OF DELIVERY

o  CHECK HERE IF TENDERED OLD SECURITIES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC, AND COMPLETE THE FOLLOWING:

Name of Tendering Institution

Account Number

Transaction Code Number

Signature(s) of Holder(s) of Old Securities

     Must be signed by registered holder(s) of Old Securities exactly as such participant’s name appears on a security position listing as the owner of Old Securities, or by person(s) authorized to become holder(s) by endorsements and documents transmitted with this Letter. If signing is by attorney, executor, administrator, trustee or guardian, agent or other person acting in a fiduciary or representative capacity, please set forth full title. See Instructions 2 & 3.

Date

Name(s)

Capacity

Address (Include Zip Code)

DTC Account to which New Securities should be delivered

Tax Identification or Social Security Number (See Instruction 9)

Telephone Number (Include Area Code)

5

SPECIAL ISSUANCE AND PAYMENT INSTRUCTIONS

(See Instructions 2 & 6)

      To be completed ONLY if New Securities are to be issued and the exchange fee is to be paid, and Old Securities tendered but not accepted in the Exchange Offer are to be issued, in the name of someone other than the undersigned registered owner and to a DTC account number other than the account number specified on page 2 above.

      Record ownership of New Securities in book-entry form, pay the exchange fee and issue Old Securities tendered but not accepted in the Exchange Offer, in the name and to the DTC account number set forth below.

Name

DTC Account #

Address (Including Zip Code)

(Tax Identification or Social Security Number)

(See Instruction 8)

MEDALLION SIGNATURE GUARANTEE (SEE INSTRUCTIONS 2 & 3 BELOW)

(CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION)

Name of Eligible Institution Guaranteeing Signatures

Address (Including Zip Code)

Telephone Number (Including Area Code)

Authorized Signature

Printed Name

Title

Date

6

INSTRUCTIONS

      1. Delivery of Letter of Transmittal. To tender Old Securities in the Exchange Offer, book-entry transfer of the Old Securities into the Exchange Agent’s account with DTC, as well as a properly completed and duly executed copy or manually signed facsimile of this Letter, or an agent’s message in lieu of this Letter, and any other documents required by this Letter, must be received by the Exchange Agent, at its address set forth herein, prior to 5:00 p.m. New York City time on the Expiration Date. Tenders of Old Securities in the Exchange Offer may be made prior to the Expiration Date in the manner described in the preceding sentence and otherwise in compliance with this Letter.

      THE METHOD OF DELIVERY OF THIS LETTER, AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT, INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT’S MESSAGE TRANSMITTED THROUGH DTC’S AUTOMATED TENDER OFFER PROGRAM, IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER OF OLD SECURITIES. IF SUCH DELIVERY IS MADE BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED AND THAT SUFFICIENT TIME BE ALLOWED TO ASSURE TIMELY DELIVERY. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF OLD SECURITIES WILL BE ACCEPTED. EXCEPT AS OTHERWISE PROVIDED BELOW, DELIVERY WILL BE MADE WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. THIS LETTER AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO CFC OR DTC.

      Old Securities tendered pursuant to the Exchange Offer may be withdrawn at any time prior to 5:00 p.m. New York City time on the Expiration Date, unless the Exchange Offer is extended, in which case tenders of Old Securities may be withdrawn under the conditions described in the extension. In order to be valid, notice of withdrawal of tendered Old Securities must comply with the requirements set forth in the Prospectus under the caption “The Exchange Offer — Proper Execution and Delivery of Letter of Transmittal — Withdrawal of Tenders” on page 27.

      2. Signatures on Letter of Transmittal, Powers and Endorsements. This Letter must be signed by or on behalf of the registered holder(s) of the Old Securities tendered hereby. The signature(s) on this Letter must be exactly the same as the name(s) that appear(s) on the security position listing of DTC in which such holder of Old Securities is a participant, without alteration or enlargement or any change whatsoever. IN ALL OTHER CASES, ALL SIGNATURES ON LETTERS OF TRANSMITTAL MUST BE GUARANTEED BY A MEDALLION SIGNATURE GUARANTOR.

      If any of the Old Securities tendered hereby are registered in the name of two or more holders, all such holders must sign this Letter.

      If this Letter or any Old Securities or powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by CFC, proper evidence satisfactory to CFC of its authority so to act must be submitted with this Letter.

      3. Guarantee of Signatures. Except as otherwise provided below, all signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by a recognized participant in the Securities Transfer Agents Medallion Program, the NYSE Medallion Signature Program or the Stock Exchange Medallion Program. Signatures on this Letter need not be guaranteed if:

•  this Letter is signed by a participant in DTC whose name appears on a security position listing of DTC as the owner of the Old Securities and the holder(s) has not completed the portion entitled “Special Issuance and Payment Instructions” on the letter of transmittal; or

•  the Old Securities are tendered for the account of an Eligible Guarantor Institution (defined below).

      If this Letter is not signed by the holder, the holder must transmit a separate, properly completed power with this Letter (in either case, executed exactly as the name(s) of the participant(s) appear(s) on such security position listing), with the signature on the endorsement or power guaranteed by a Medallion Signature Guarantor, unless such powers are executed by an Eligible Guarantor Institution (defined below).

7

      An Eligible Guarantor Institution (as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), means:

      (i) Banks (as defined in Section 3(a) of the Federal Deposit Insurance Act);

      (ii) Brokers, dealers, municipal securities dealers, municipal securities brokers, government securities dealers, and government securities brokers, as those terms are defined under the Exchange Act;

      (iii) Credit unions (as that term is defined in Section 19b(1)(A) of the Federal Reserve Act);

      (iv) National securities exchanges, registered securities associations, and clearing agencies, as those terms are used under the Exchange Act; and

      (v) Savings associations (as that term is defined in Section 3(b) of the Federal Deposit Insurance Act).

      For a correction of name or a change in name which does not involve a change in ownership, you may proceed as follows: for a change in name by marriage, etc., this Letter should be signed, e.g., “Mary Doe, now by marriage, Mary Jones.” For a correction in name, this Letter should be signed, e.g., “James E. Brown, incorrectly inscribed as J. E. Brown.” In any such case, the signature on this Letter must be guaranteed as provided above, and the holder must complete the Special Issuance and Payment Instructions above.

      You should consult your own tax advisor as to possible tax consequences resulting from the issuance of New Securities, as described above, in a name other than that of the registered holder(s) of the surrendered Old Securities.

      4. Transfer Taxes. CFC will pay all transfer taxes, if any, applicable to the transfer and exchange of Old Securities to CFC in the Exchange Offer. If transfer taxes are imposed for any other reason, the amount of those transfer taxes, whether imposed on the registered holder or any other persons, will be payable by the tendering holder. Other reasons transfer taxes could be imposed include:

•  if New Securities in book-entry form are to be registered in the name of any person other than the person signing this Letter; or

•  if tendered Old Securities are registered in the name of any person other than the person signing this Letter.

      If satisfactory evidence of payment of or exemption from those transfer taxes is not submitted with the Letter, the amount of those transfer taxes will be billed directly to the tendering holder and/or withheld from any payments due with respect to the Old Securities tendered by such holder.

      5. Validity of Surrender; Irregularities. All questions as to validity, form and eligibility of any surrender of the Old Securities hereunder will be determined by CFC, in its sole judgment (which may delegate power in whole or in part to the Exchange Agent), and such determination shall be final and binding. CFC reserves the right to waive any irregularities or defects in the surrender of any Old Securities and its interpretations of the terms and conditions of this Letter (including these instructions) with respect to such irregularities or defects shall be final and binding. A surrender will not be deemed to have been made until all irregularities have been cured or waived.

      6. Special Issuance and Payment Instructions and Special Delivery Instructions. Indicate the name in which ownership of the New Securities on the DTC security listing position is to be recorded if different from the name of the person(s) signing this Letter. A Social Security Number will be required.

      7. Additional Copies. Additional copies of this Letter may be obtained from the Information Agent at the address listed below.

      8. Substitute Form W-9. You are required, unless an exemption applies, to provide the Exchange Agent with a correct Taxpayer Identification Number (“TIN”), generally the holder’s social security number or employer identification number, and with certain other information, on Substitute Form W-9, which is provided below and to certify under penalties of perjury, that such TIN is correct and that you are not subject to backup withholding by checking the box in Part 2 of the form. Failure to provide the information on the form may subject the holder (or other payee) to a penalty of $50 imposed by the Internal Revenue Service (“IRS”) and a federal income tax backup withholding on the payment of the amounts due. The box in Part 3 of the form may be checked if you have not been issued a TIN and have applied for a number or intend to apply for a number in the near future. If the box in Part 3 is checked and the Exchange Agent is

8

not provided with a TIN within 60 days, the Exchange Agent will backup withhold on payment of the amounts due until a TIN is provided to the Exchange Agent.

IF FURTHER INSTRUCTIONS ARE DESIRED, CONTACT THE INFORMATION AGENT

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers Call (Collect): (212) 269-5550

All Other Call (Toll Free): (800) 758-5378

IMPORTANT TAX INFORMATION

      Under U.S. federal income tax law, a holder whose Old Securities are accepted for exchange is required by law to provide the Exchange Agent with such holder’s correct TIN on Substitute Form W-9 (provided below) and to certify that the TIN provided is correct (or that such holder is awaiting a TIN). If such holder is an individual, the TIN is his or her social security number. If the Exchange Agent is not provided with the correct TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue Service (the “IRS”). In addition, payments that are made to such holder pursuant to this Letter may be subject to backup withholding.

      Certain holders (including, among others, all corporations and certain foreign individuals and entities) may be exempted from these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that holder must submit a statement, signed under penalties of perjury, attesting to that individual’s exempt status (Form W-8BEN). Such statements can be obtained from the Exchange Agent. Holders are urged to consult their own tax advisors to determine whether they are exempt from these backup withholding and reporting requirements.

      If backup withholding applies, the Exchange Agent may be required to backup withhold on any such payments made to the holder. Backup withholding (currently at a rate of 28%) is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained from the IRS. The Exchange Agent cannot refund amounts withheld by reason of backup withholding.

What Number to Give the Paying Agent

      The holder is required to give the Exchange Agent the TIN, generally the social security number or employer identification number, of the record owner of the tendered Old Securities. If the Old Securities are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidelines on which number to report. If the holder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, he or she should check the box in Part 3 of the Substitute Form W-9, sign and date the Substitute Form W-9 and complete the Certificate of Awaiting Taxpayer Identification Number in order to avoid backup withholding. If the box in Part 3 is checked and the Exchange Agent is not provided with a TIN within 60 days, the Exchange Agent will backup withhold on all cash payments until a TIN is provided to the Exchange Agent.

9

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

      GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (You) to Give the Payer. — Social security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. All “Section” references are to the Internal Revenue New Code of 1986, as amended. “IRS” is the Internal Revenue Service.

		Give the SOCIAL
		SECURITY number
For this type of account:		of —
1.	Individual	The Individual
2.	Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor(2)
4.	a. The usual revocable savings trust account (grantor is also trustee)	The grantor-trustee(1)
	b. So-called trust account that is not a legal or valid trust under state law	The actual owner(1)
5.	Sole proprietorship	The owner(3)

For this type of account:		Give the EMPLOYER IDENTIFICATION number of —
6.	Sole proprietorship	The owner(3)
7.	A valid trust, estate, or pension trust	The legal entity(4)
8.	Corporate	The corporation
9.	Association, club, religious, charitable, educational, or other tax-exempt organization	The organization
10.	Partnership	The partnership
11.	A broker or registered nominee	The broker or nominee
12.	Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments	The public entity

(1)	List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person’s number must be furnished.
(2)	Circle the minor’s name and furnish the minor’s social security number.
(3)	You must show your individual name, but you may also enter your business or “doing business as” name. You may use either your social security number or your employer identification number (if you have one).
(4)	List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

NOTE:     If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

10

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Obtaining a Number

If you don’t have a taxpayer identification number or you don’t know your number, obtain Form SS-5, Application for a Social Security Card, at the local Social Administration office, or Form SS-4, Application for Employer Identification Number, by calling 1 (800) TAX-FORM or from the IRS website at www.irs.gov, and apply for a number.

Payees Exempt from Backup Withholding

Payees specifically exempted from withholding include:

•  An organization exempt from tax under Section 501(a), an individual retirement account (IRA), or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(2).

•  The United States or a state thereof, the District of Columbia, a possession of the United States, or a political subdivision or instrumentality of any one or more of the foregoing.

•  An international organization or any agency or instrumentality thereof.

•  A foreign government and any political subdivision, agency or instrumentality thereof.

Payees that may be exempt from backup withholding include:

•  A corporation.

•  A financial institution.

•  A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States.

•  A real estate investment trust.

•  A common trust fund operated by a bank under Section 584(a).

•  An entity registered at all times during the tax year under the Investment Company Act of 1940.

•  A middleman known in the investment community as a nominee or custodian.

•  A futures commission merchant registered with the Commodity Futures Trading Commission.

•  A foreign central bank of issue.

•  A trust exempt from tax under Section 664 or described in Section 4947.

Payments of dividends and patronage dividends generally exempt from backup withholding include:

•  Payments to nonresident aliens subject to withholding under Section 1441.

•  Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner.

•  Payments of patronage dividends not paid in money.

•  Payments made by certain foreign organizations.

•  Section 404(k) payments made by an ESOP.

Payments of interest generally exempt from backup withholding include:

•  Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and you have not provided your correct taxpayer identification number to the payer.

•  Payments of tax-exempt interest (including exempt-interest dividends under Section 852).

•  Payments described in Section 6049(b)(5) to nonresident aliens.

•  Payments on tax-free covenant bonds under Section 1451.

•  Payments made by certain foreign organizations.

•  Mortgage interest paid to you.

Certain payments, other than payments of interest, dividends, and patronage dividends, that are exempt from information reporting are also exempt from backup withholding. For details, see the regulations under sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N.

EXEMPT PAYEES DESCRIBED ABOVE MUST FILE FORM W-9 OR A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” IN PART II OF THE FORM, SIGN AND DATE THE FORM, AND RETURN IT TO THE PAYER.

Privacy Act Notice — Section 6109 requires you to provide your correct taxpayer identification number to payers, who must report the payments to the IRS. The IRS uses the number for identification purposes and may also provide this information to various government agencies for tax enforcement or litigation purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold up to 28% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to payer. Certain penalties may also apply.

Penalties

(1) Failure to Furnish Taxpayer Identification Number. — If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information With Respect to Withholding. — If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.

(3) Criminal Penalty for Falsifying Information. — Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.

11

PAYER’S NAME:
SUBSTITUTE FORM W-9	Part 1 — PLEASE PROVIDE YOUR NAME AND TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.
Department of the Treasury Internal Revenue Service Payer’s Request for Taxpayer Identification Number (TIN)	Part 2 — Certification — Under penalty of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the “IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and (3) I am a U.S. person (including a U.S. resident alien).	Name Social Security Number OR Employer Identification Number Part 3 — o  Awaiting TIN
	CERTIFICATE INSTRUCTIONS — You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2).
	The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.
Sign Here	SIGNATURE
	DATE

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF UP TO 28% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING IF YOU CHECKED

THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

      I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, up to 28% of all reportable payments made to me will be withheld.

Signature ______________________________  Date _________________________ , 20

--

12 EX-99.2 6 v00210a1exv99w2.htm EXHIBIT 99.2

EXHIBIT 99.2

Countrywide Financial Corporation

Offer to Exchange

Convertible Securities due 2031

(CUSIP No. 222372 AE 4)

and an Exchange Fee

for all outstanding

Liquid Yield Option™ Notes due 2031

(CUSIP No. 222372 AD 6)

Pursuant to, and subject to the terms and conditions described in,

the Prospectus dated August         , 2004

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON SEPTEMBER       , 2004, UNLESS EARLIER
TERMINATED OR EXTENDED.

August      , 2004

To Brokers, Dealers, Commercial Banks,

Trust Companies and other Nominees:

     Countrywide Financial Corporation (“CFC”) is offering to exchange $1,000 principal amount at maturity of Convertible Securities due 2031 ( the “New Securities”) and an exchange fee of $2.50 for each $1,000 principal amount at maturity of validly tendered and accepted Liquid Yield Option™ Notes due 2031 (the “Old Securities”). Terms used but not defined herein that are defined in the Prospectus (as defined below) shall have the same meaning given them in such Prospectus.

     The exchange offer is made on the terms and are subject to the conditions set forth in CFC’s prospectus dated August     , 2004 (as may be amended or supplemented from time to time, the “Prospectus”) and the accompanying Letter of Transmittal.

     We are asking you to contact your clients for whom you hold Old Securities. For your use and for forwarding to those clients, we are enclosing copies of the Prospectus, as well as a Letter of Transmittal for the Old Securities. We are also enclosing a printed form of letter which you may send to your clients, with space provided for obtaining their instructions with regard to the Exchange Offer. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.

     D.F. King & Co., Inc. has been appointed Information Agent for the Exchange Offer. Any inquiries you may have with respect to the exchange offer should be addressed to the Information Agent or to the Dealer Manager, at the respective addresses and telephone numbers as set forth on the back cover of the Prospectus. Additional copies of the enclosed materials may be obtained from the Information Agent.

Very truly yours,

COUNTRYWIDE FINANCIAL CORPORATION

     NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.

EX-99.3 7 v00210a1exv99w3.htm EXHIBIT 99.3

EXHIBIT 99.3

Countrywide Financial Corporation

Offer to Exchange

Convertible Securities due 2031

(CUSIP No. 222372 AE 4)

and an Exchange Fee

for all outstanding

Liquid Yield Option^TM Notes due 2031

(CUSIP No. 222372 AD 6)

Pursuant to, and subject to the terms and conditions described in, the Prospectus dated August        , 2004

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON SEPTEMBER       , 2004, UNLESS EARLIER TERMINATED OR EXTENDED.

August      , 2004

To Our Clients:

      Countrywide Financial Corporation (“CFC”) is offering to exchange $1,000 principal amount at maturity of Convertible Securities due 2031 (the “New Securities”) and an exchange fee of $2.50 for each $1,000 principal amount at maturity of validly tendered and accepted Liquid Yield Option^TM Notes due 2031 (the “Old Securities”). Terms used but not defined herein that are defined in the Prospectus (as defined below) shall have the same meaning given them in such Prospectus.

      The exchange offer is made on the terms and are subject to the conditions set forth in CFC’s prospectus dated August      , 2004 (as may be amended or supplemented from time to time, the “Prospectus”) and the accompanying Letter of Transmittal.

      The enclosed Prospectus is being forwarded to you as the beneficial owner of Old Securities held by us for your account but not registered in your name. The accompanying Letter of Transmittal is furnished to you for informational purposes only and may not be used by you to tender Old Securities held by us for your account. A tender of such Old Securities may be made only by us as the registered holder and only pursuant to your instructions.

      Accordingly, we request instructions as to whether you wish us to tender and deliver the Old Securities held by us for your account. If you wish to have us do so, please so instruct us by completing, executing and returning to us the instruction form that appears below.

INSTRUCTIONS

      The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to CFC’s exchange offer with respect to the Old Securities (CUSIP No. 222372 AD 6).

      This will instruct you to tender the specified principal amount at maturity of Old Securities indicated below held by you for the account of the undersigned pursuant to the terms and conditions set forth in the Prospectus and the related Letter of Transmittal.

	Principal Amount at Maturity Held for Account of
Type	Holders(s)*
Liquid Yield OptionTM Notes due 2031

*  Unless otherwise indicated, the entire principal amount at maturity listed in the box entitled “Principal Amount at Maturity Held for Account of Holder(s)” will be tendered.

Signature(s)

Please print name(s)

Address

Zip Code

Area Code and Telephone No.

Tax Identification or Social Security No.

My Account Number with You

Date

EX-4.5

                                                                     EXHIBIT 4.5



                        COUNTRYWIDE FINANCIAL CORPORATION

                                       AND

                          COUNTRYWIDE HOME LOANS, INC.

                             CONVERTIBLE SECURITIES

                                    DUE 2031


             -------------------------------------------------------


                                   INDENTURE

                         DATED AS OF SEPTEMBER __, 2004


                    -----------------------------------------


                              THE BANK OF NEW YORK

                                   AS TRUSTEE


                    -----------------------------------------

                             CROSS REFERENCE TABLE*



TIA Section                                                   Indenture Section
                                                           
310(a)(1)................................................           7.10
(a)(2)...................................................           7.10
(a)(3)...................................................            N/A
(a)(4)...................................................            N/A
(b) .....................................................        7.08; 7.10
(c)......................................................            N/A
311(a)...................................................           7.11
(b) .....................................................           7.11
(c) .....................................................            N/A
312(a)...................................................           2.05
(b) .....................................................           14.03
(c) .....................................................           14.03
313(a)...................................................           7.06
(b)(1)...................................................            N/A
(b)(2)...................................................           7.06
(c) .....................................................           14.02
(d) .....................................................           7.06
314(a) ..................................................     4.02; 4.03; 14.02
(b) .....................................................            N/A
(c)(1)...................................................           14.04
(c)(2) ..................................................           14.04
(c)(3)...................................................            N/A
(d) .....................................................            N/A
(e) .....................................................           14.05
(f) .....................................................            N/A
315(a)...................................................           7.01
(b) .....................................................     7.05; 14.02; 7.01
(c) .....................................................           7.01
(d) .....................................................           7.01
(e) .....................................................           6.11
316(a) (last sentence) ..................................           2.08
(a)(1)(A)................................................           6.05
(a)(1)(B)................................................           6.04
(a)(2)...................................................            N/A
(b) .....................................................           6.07
317(a)(1)................................................           6.08
(a)(2)...................................................           6.09
(b) .....................................................           2.04
318(a) ..................................................           14.01



*Note: This Cross Reference Table shall not, for any purpose, be deemed to be
       part of the Indenture.

                                TABLE OF CONTENTS



                                                                            PAGE
                                                                      
                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.    Definitions..............................................     1

SECTION 1.02.    Other Definitions........................................     6

SECTION 1.03.    Incorporation by Reference of Trust Indenture Act........     7

SECTION 1.04.    Rules of Construction....................................     7

SECTION 1.05.    Acts of Holders..........................................     8

                                    ARTICLE 2
                                 THE SECURITIES

SECTION 2.01.    Form and Dating..........................................     9

SECTION 2.02.    Execution and Authentication.............................    10

SECTION 2.03.    Registrar, Paying Agent, Conversion Agent and Bid
                 Solicitation Agent.......................................    10

SECTION 2.04.    Paying Agent to Hold Money and Securities in Trust.......    11

SECTION 2.05.    Securityholder Lists.....................................    11

SECTION 2.06.    Transfer and Exchange....................................    11

SECTION 2.07.    Replacement Securities...................................    12

SECTION 2.08.    Outstanding Securities; Determinations of Holders' Action    13

SECTION 2.09.    Temporary Securities.....................................    14

SECTION 2.10.    Cancellation.............................................    14

SECTION 2.11.    Persons Deemed Owners....................................    14

SECTION 2.12.    Global Securities........................................    15

SECTION 2.13.    CUSIP Numbers............................................    16

                                    ARTICLE 3
                            REDEMPTION AND PURCHASES

SECTION 3.01.    Right to Redeem; Notices to Trustee......................    16


                                                                      
SECTION 3.02.    Selection of Securities to Be Redeemed...................    16

SECTION 3.03.    Notice of Redemption.....................................    17

SECTION 3.04.    Effect of Notice of Redemption...........................    18

SECTION 3.05.    Deposit of Redemption Price..............................    18

SECTION 3.06.    Securities Redeemed in Part..............................    18

SECTION 3.07.    Conversion Arrangement on Call for Redemption............    18

SECTION 3.08.    Purchase of Securities at Option of the Holder...........    19

SECTION 3.09.    Purchase of Securities at Option of the Holder upon
                 Change in Control........................................    21

SECTION 3.10.    Effect of Purchase Notice or Change in Control Purchase
                 Notice...................................................    24

SECTION 3.11.    Deposit of Purchase Price or Change in Control Purchase
                 Price....................................................    25

SECTION 3.12.    Securities Purchased in Part.............................    25

SECTION 3.13.    Covenant to Comply With Securities Laws Upon Purchase of
                 Securities...............................................    25

SECTION 3.14.    Repayment to the Company.................................    26

                                    ARTICLE 4
                                    COVENANTS

SECTION 4.01.    Payment of Securities....................................    26

SECTION 4.02.    SEC and Other Reports....................................    26

SECTION 4.03.    Compliance Certificate...................................    27

SECTION 4.04.    Further Instruments and Acts.............................    27

SECTION 4.05.    Maintenance of Office or Agency..........................    27

SECTION 4.06.    Delivery of Certain Information..........................    27

SECTION 4.07.    Tax Treatment............................................    28

                                    ARTICLE 5
                              SUCCESSOR CORPORATION

SECTION 5.01.    When Company May Merge or Transfer Assets................    28

SECTION 5.02.    When Guarantor May Merge or Transfer Assets..............    29



                                                                      
SECTION 5.03.    Assumption by Guarantor..................................    30

                                   ARTICLE 6
                             DEFAULTS AND REMEDIES

SECTION 6.01.    Events of Default........................................    31

SECTION 6.02.    Acceleration.............................................    32

SECTION 6.03.    Other Remedies...........................................    33

SECTION 6.04.    Waiver of Past Defaults..................................    33

SECTION 6.05.    Control by Majority......................................    33

SECTION 6.06.    Limitation on Suits......................................    33

SECTION 6.07.    Rights of Holders to Receive Payment.....................    34

SECTION 6.08.    Collection Suit by Trustee...............................    34

SECTION 6.09.    Trustee May File Proofs of Claim.........................    34

SECTION 6.10.    Priorities...............................................    35

SECTION 6.11.    Undertaking for Costs....................................    35

SECTION 6.12.    Waiver of Stay, Extension or Usury Laws..................    35

                                    ARTICLE 7
                                 TRUSTEE SECTION

SECTION 7.01.    Duties of Trustee........................................    36

SECTION 7.02.    Rights of Trustee........................................    37

SECTION 7.03.    Individual Rights of Trustee.............................    38

SECTION 7.04.    Trustee's Disclaimer.....................................    39

SECTION 7.05.    Notice of Defaults.......................................    39

SECTION 7.06.    Reports by Trustee to Holders............................    39

SECTION 7.07.    Compensation and Indemnity...............................    39

SECTION 7.08.    Replacement of Trustee...................................    40

SECTION 7.09.    Successor Trustee by Merger..............................    41

SECTION 7.10.    Eligibility; Disqualification............................    41



                                                                      
SECTION 7.11.    Preferential Collection of Claims Against Company and
                 Guarantor................................................    41

                                    ARTICLE 8
                             DISCHARGE OF INDENTURE

SECTION 8.01.    Discharge of Liability on Securities.....................    41

SECTION 8.02.    Repayment to the Company.................................    41

                                    ARTICLE 9
                                   AMENDMENTS

SECTION 9.01.    Without Consent of Holders...............................    42

SECTION 9.02.    With Consent of Holders..................................    42

SECTION 9.03.    Compliance with Trust Indenture Act......................    43

SECTION 9.04.    Revocation and Effect of Consents, Waivers and Actions...    43

SECTION 9.05.    Notation on or Exchange of Securities....................    43

SECTION 9.06.    Trustee to Sign Supplemental Indentures..................    43

SECTION 9.07.    Effect of Supplemental Indentures........................    43

                                   ARTICLE 10
                          SPECIAL TAX EVENT CONVERSION

SECTION 10.01.   Optional Conversion to Semi-Annual Coupon Note Upon Tax
                 Event....................................................    44

                                   ARTICLE 11
                                   CONVERSION

SECTION 11.01.   Conversion Privilege.....................................    44

SECTION 11.02.   Conversion Procedure.....................................    45

SECTION 11.03.   Fractional Shares........................................    46

SECTION 11.04.   Taxes on Conversion......................................    46

SECTION 11.05.   Company to Provide Stock.................................    47

SECTION 11.06.   Adjustment for Change In Capital Stock...................    47

SECTION 11.07.   Adjustment for Rights Issue..............................    48

SECTION 11.08.   Adjustment for Asset Distributions.......................    49




                                                                      
SECTION 11.09.   Adjustment for Certain Cash Distributions................    50

SECTION 11.10.   When Adjustment May Be Deferred..........................    51

SECTION 11.11.   When No Adjustment Required..............................    51

SECTION 11.12.   Notice of Adjustment.....................................    52

SECTION 11.13.   Voluntary Increase.......................................    52

SECTION 11.14.   Notice of Certain Transactions...........................    52

SECTION 11.15.   Reorganization of Company; Special Distributions.........    52

SECTION 11.16.   Company Determination Final..............................    53

SECTION 11.17.   Trustee's Adjustment Disclaimer..........................    53

SECTION 11.18.   Simultaneous Adjustments.................................    53

SECTION 11.19.   Successive Adjustments...................................    54

SECTION 11.20.   Rights Issued in Respect of Common Stock Issued Upon
                 Conversion...............................................    54

                                   ARTICLE 12
                               PAYMENT OF INTEREST

SECTION 12.01.   Interest Payments........................................    54

SECTION 12.02.   Defaulted Interest.......................................    54

SECTION 12.03.   Interest Rights Preserved................................    55

                                   ARTICLE 13
                             GUARANTEE OF SECURITIES

SECTION 13.01.   Unconditional Guarantee..................................    55

SECTION 13.02.   Execution, Authentication and Delivery...................    56

                                   ARTICLE 14
                                  MISCELLANEOUS

SECTION 14.01.   Trust Indenture Act Controls.............................    57

SECTION 14.02.   Notices..................................................    57

SECTION 14.03.   Communication by Holders with Other Holders..............    58

SECTION 14.04.   Certificate and Opinion as to Conditions Precedent.......    58

SECTION 14.05.   Statements Required in Certificate or opinion............    58



                                                                      
SECTION 14.06.   Separability Clause......................................    59

SECTION 14.07.   Rules by Trustee, Paying Agent, Conversion Agent and
                 Registrar................................................    59

SECTION 14.08.   Calculations.............................................    59

SECTION 14.09.   Legal Holidays...........................................    59

SECTION 14.10.   GOVERNING LAW............................................    59

SECTION 14.11.   No Recourse Against Others...............................    59

SECTION 14.12.   Successors...............................................    59

SECTION 14.13.   Multiple Originals.......................................    60



      INDENTURE dated as of September __, 2004, among COUNTRYWIDE FINANCIAL
CORPORATION, a Delaware corporation ("Company"), COUNTRYWIDE HOME LOANS, INC., a
New York corporation ("Guarantor"), and THE BANK OF NEW YORK, a New York banking
corporation ("Trustee").

      Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Company's Securities:

                                   ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

      SECTION 1.01. Definitions.

      "Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.

      "Board of Directors" means either the board of directors of the Company or
the Guarantor, as the case may be, or any duly authorized committee of such
board.

      "Business Day" means each day of the year other than a Saturday or a
Sunday or other day on which banking institutions in The City of New York are
required or authorized to close.

      "Capital Stock" for any corporation means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) stock issued by that corporation.

      "Common Stock" shall mean the shares of Common Stock, $0.05 par value, of
the Company as it exists on the date of this Indenture or any other shares of
Capital Stock of the Company into which the Common Stock shall be reclassified
or changed.

      "Company" means the party named as the "Company" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.

      "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any two Officers.

      "Corporate Trust Office" means the principal office of the Trustee at
which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 101 Barclay Street, New York, New York
10286, Attention: Corporate Trust Administration, or such other address as the
Trustee may designate from time to time by notice to the Holders and the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as a successor Trustee may designate from time to time by
notice to the Holders and the Company).


                                       1

      "Debt" means with respect to either the Company or the Guarantor, at any
date, without duplication, obligations (other than nonrecourse obligations) for
borrowed money or evidenced by bonds, debentures, notes or similar instruments.

      "Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

      "Global Securities" means Securities that are substantially in the form of
the Securities attached hereto as Exhibit A-1.

      "Guarantee" means the full and unconditional guarantee of the Securities
by the Guarantor to the extent set forth in Article 13 hereof.

      "Guarantor" means the Person named as the "Guarantor" in the first
paragraph of this instrument until a successor Person replaces it pursuant to
the applicable provisions of this instrument, and thereafter shall mean such
successor Person. The foregoing sentence shall likewise apply to any subsequent
such successor or successors.

      "Guarantor Request" or "Guarantor Order" means a written request or order
executed in the name of the Guarantor by any two Officers.

      "Guarantor's Officers' Certificate" means a written certificate containing
the information specified in Sections 14.04 and 14.05, executed in the name of
the Guarantor by any two Officers, and delivered to the Trustee. A Guarantor's
Officers' Certificate given pursuant to Section 4.03 shall be signed by an
authorized financial or accounting Officer of the Guarantor but need not contain
the information specified in Sections 14.04 and 14.05.

      "Holder" or "Securityholder" means a person in whose name a Security is
registered on the Registrar's books.

      "Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.

      "Initial Accreted Principal Amount" of any Security means, in connection
with the initial issuance of such Security, the accreted principal amount of
such Security as of its initial issuance, as set forth on the face of the
Security.

      "Issue Date" of any Security means the date on which the Security was
initially issued or deemed issued as set forth on the face of the Security.

      "Issue Discount" of any Security means the difference between the Initial
Accreted Principal Amount and the Principal Amount at Maturity of such Security
as set forth on the face of such Security.

      "Maximum Conversion Rate" means 81.1688 shares of Common Stock; provided,
that if the Conversion Rate is adjusted pursuant to Article 11, the Maximum
Conversion Rate shall be adjusted on the same basis as the Conversion Rate
except that the Maximum Conversion Rate shall not be adjusted as a result of any
adjustments to the Conversion Rate made solely for quarterly cash dividends
pursuant to Section 11.09.

      "Officer" means the Chairman of the Board, the President or any Executive
Managing Director, Senior Managing Director, Managing Director, the Treasurer or
the Secretary of the Company or the Guarantor, as the case may be, that complies
with the requirements of Section 314(e) of the TIA and is delivered to the
Trustee.



                                       2

      "Officers' Certificate" means a written certificate containing the
information specified in Sections 14.04 and 14.05, signed in the name of the
Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 4.03 shall be signed by an authorized
financial or accounting Officer of the Company but need not contain the
information specified in Sections 14.04 and 14.05.

      "Opinion of Counsel" means a written opinion containing the information
specified in Sections 14.04 and 14.05, from legal counsel who is acceptable to
the Trustee. The counsel may be an employee of, or counsel to, the Company, the
Guarantor or the Trustee.

      "Original Issue Discount" means original issue discount, as determined for
United States federal income tax purposes, attributable to the Securities.

      "Person" or "person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.

      "Principal Amount at Maturity" of a Security means the Principal Amount at
Maturity as set forth on the face of such Security.

      "Redemption Date" or "redemption date" means the date specified for
redemption of the Securities in accordance with the terms of the Securities and
this Indenture.

      "Redemption Price" or "redemption price" shall have the meaning set forth
in paragraph 6 of the form of Security set forth in Exhibit A-1 of this
Indenture.

      "Responsible Officer" means, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant treasurer, trust officer or any
other officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.

      "Sale Price" of Common Stock on any date means the closing per share sale
price (or, if no closing sale price is reported, the average of the bid and ask
prices or, if more than one in either case, the average of the average bid and
the average ask prices) on such date as reported in the composite transactions
for the New York Stock Exchange or, if the Common Stock is not listed on the New
York Stock Exchange, on the principal other national or regional securities
exchange on which the Common Stock is then listed or, if the Common Stock is not
listed on a national or regional securities exchange, on the National
Association of Securities Dealers Automated Quotation System or, if the Common
Stock is not quoted on the National Association of Securities Dealers Automated
Quotation System, on the principal other market on which the Common Stock is
then traded. In the absence of such quotation, the Company shall be entitled to
determine the Sale Price on the basis of such quotations as it considers
appropriate.

      "SEC" means the Securities and Exchange Commission or any successor
thereto.



                                       3

      "Securities" means any of the Company's Convertible Securities due 2031,
as amended or supplemented from time to time, issued under this Indenture, the
terms of which shall be substantially in the form of Security set forth in
Exhibit A-1 of this Indenture.

      "Securityholder" or "Holder" means a person in whose name a Security is
registered on the Registrar's books.

      "Special Record Date" means for the payment of any Defaulted Interest, the
date fixed by the Trustee pursuant to Section 12.02.

      "Stated Maturity", when used with respect to any Security or any
installment of semi-annual or contingent interest thereon, means the date
specified in such Security as the fixed date on which an amount equal to the
Principal Amount at Maturity of such Security or such installment of semi-annual
or contingent interest is due and payable.

      "Subsidiary" means (i) a corporation, a majority of whose Capital Stock
with voting power, under ordinary circumstances, to elect directors is, at the
date of determination, directly or indirectly owned by the Company or the
Guarantor, as the case may be, by one or more Subsidiaries of the Company or the
Guarantor, as the case may be, or by the Company or the Guarantor, as the case
may be, and one or more Subsidiaries of the Company or the Guarantor, as the
case may be, (ii) a partnership in which the Company or the Guarantor, as the
case may be, or a Subsidiary of the Company or the Guarantor, as the case may
be, holds a majority interest in the equity capital or profits of such
partnership, or (iii) any other person (other than a corporation) in which the
Company or the Guarantor, as the case may be, a Subsidiary of the Company or the
Guarantor, as the case may be, or the Company or the Guarantor, as the case may
be, and one or more Subsidiaries of the Company or the Guarantor, as the case
may be, directly or indirectly, at the date of determination, has (x) at least a
majority ownership interest or (y) the power to elect or direct the election of
a majority of the directors or other governing body of such person.

      "Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after September __, 2004, as a result of (a) any amendment or addition to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein or (b) any amendment or addition to, or
change in, an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority, in each
case which amendment, addition or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after September __, 2004, there is more than an insubstantial risk
that interest (including accrued Original Issue Discount, accrued Issue Discount
and contingent interest, if any) payable on the Securities either (i) would not
be deductible on a current accrual basis or (ii) would not be deductible under
any other method, in either case in whole or in part, by the Company (by reason
of deferral, disallowance, or otherwise) for United States federal income tax
purposes.

      "TIA" means the Trust Indenture Act of 1939 as in effect on the date of
this Indenture, provided, however, that in the event the TIA is amended after
such date, TIA means, to the extent required by any such amendment, the TIA as
so amended.

      "trading day" means a day during which trading in securities generally
occurs on the New York Stock Exchange or, if the Common Stock is not listed on
the New York Stock Exchange, on the


                                       4

principal other national or regional securities exchange on which the Common
Stock is then listed or, if the Common Stock is not listed on a national or
regional securities exchange, on the National Association of Securities Dealers
Automated Quotation System or, if the Common Stock is not quoted on the National
Association of Securities Dealers Automated Quotation System, on the principal
other market on which the Common Stock is then traded.

      "Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.



                                       5

      SECTION 1.02. Other Definitions.



TERM                                     DEFINED IN SECTION
- ----                                     ------------------
                                      
"Act"                                    1.05(a)
"Agent Members"                          2.12(b)
"Associate"                              3.09(a)
"Average Sale Price"                     11.01
"Bankruptcy Law"                         6.01
"beneficial owner"                       3.09(a)
"Bid Solicitation Agent"                 2.03
"cash"                                   3.08(a)
"Change In Control"                      3.09(a)
"Change In Control Purchase Date"        3.09(a)
"Change in Control Purchase Notice"      3.09(c)
"Change in Control Purchase Price"       3.09(a)
"Company Notice"                         3.08(c)
"Company Notice Date"                    3.08(b)
"Contingent Debt Regulations"            4.07
"Conversion Agent"                       2.03
"Conversion Date"                        11.02
"Conversion Rate"                        11.01
"Conversion Trigger Price"               11.06
"Custodian"                              6.01
"Defaulted Interest"                     12.02
"Depositary"                             2.01(b)
"DTC"                                    2.01(b)
"Event of Default"                       6.01
"Exchange Act"                           2.12(b)(1)
"Ex-Dividend Date"                       11.08(a)
"Ex-Dividend Time"                       11.01
"Fixed Amount"                           Exhibit A-1
"Interest Payment Date"                  10.01
"Legal Holiday"                          14.09
"noncontingent bond method"              4.07
"Notice of Default"                      6.01
"Option Exercise Date"                   10.01
"Paying Agent"                           2.03
"Purchase Date"                          3.08(a)
"Purchase Notice"                        3.08(a)
"Purchase Price"                         3.08(a)
"Registrar"                              2.03
"Regular Record Date"                    10.01
"Restated Principal Amount"              10.01
"Rights"                                 11.20
"Rights Agreement"                       11.20
"Rule 144A Information"                  4.06
"Securities Act"                         4.06
"Securities Market Price"                Exhibit A-1



                                       6



TERM                                     DEFINED IN SECTION
- ----                                     ------------------
                                      
"Tax Event Date"                         10.01
"Time of Determination"                  11.01


      SECTION 1.03. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:

      "Commission" means the SEC.

      "indenture securities" means the Securities.

      "indenture security holder" means a Securityholder.

      "indenture to be qualified" means this Indenture.

      "indenture trustee" or "institutional trustee" means the Trustee.

      "obligor" on the Securities means the Company.

      All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.

      SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:

      (a) a term has the meaning assigned to it;

      (b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles as in effect from
time to time;

      (c) "or" is not exclusive;

      (d) "including" means including, without limitation; and

      (e) words in the singular include the plural, and words in the plural
include the singular.



                                       7

      SECTION 1.05. Acts of Holders.

      (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company or the Guarantor. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of Holders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee, the Company and the Guarantor,
if made in the manner provided in this Section.

      (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such officer the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer's individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer's authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.

      (c) The ownership of Securities shall be proved by the register maintained
by the Registrar.

      (d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee, the Company or the
Guarantor in reliance thereon, whether or not notation of such action is made
upon such Security.

      (e) If the Company or the Guarantor shall solicit from the Holders any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company or the Guarantor, as the case may be, may, at its option, by or
pursuant to a resolution of the Board of Directors of the Company or the
Guarantor, as the case may be, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but neither the Company nor the
Guarantor, shall have any obligation to do so. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six months
after the record date.



                                       8

                                   ARTICLE 2

                                 THE SECURITIES

      SECTION 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-1
which is a part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage; provided that any
such notation, legend or endorsement required by usage is in a form acceptable
to the Company and the Guarantor and as are not inconsistent with the provisions
of this Indenture. The Company and the Guarantor shall provide any such
notations, legends or endorsements to the Trustee in writing. Each Security
shall be dated the date of its authentication.

      (a) Certificated Securities. Except as provided in Section 2.12, owners of
beneficial interests in Global Securities will not be entitled to receive
physical delivery of Securities in definitive form.

      (b) Global Securities in General. Each Global Security shall represent
such of the outstanding Securities as shall be specified therein and each shall
provide that it shall represent the aggregate Principal Amount at Maturity of
outstanding Securities from time to time endorsed thereon and that the aggregate
Principal Amount at Maturity of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and conversions.

      Any adjustment of the aggregate Principal Amount at Maturity of a Global
Security to reflect the amount of any increase or decrease in the Principal
Amount at Maturity of outstanding Securities represented thereby shall be made
by the Trustee in accordance with instructions given by the Holder thereof as
required by Section 2.12 hereof and shall be made on the records of the Trustee
and the Depository Trust Company ("DTC") or the nominee thereof (such
depositary, or any successor thereto, and any such nominee being hereinafter
referred to as the "Depositary").

      (c) Book-Entry Provisions. This Section 2.01(c) shall apply only to Global
Securities deposited with or on behalf of the Depositary.

      The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(c), authenticate and deliver initially one or more Global
Securities, with the Guarantee endorsed thereon by the Guarantor, that (1) shall
be registered in the name of the Depositary, (2) shall be delivered by the
Trustee to the Depositary or pursuant to the Depositary's instructions and (3)
shall bear legends substantially to the following effect:

      "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION
      OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
      IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
      AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
      HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
      AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
      PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY


                                       9

      OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
      CO., HAS AN INTEREST HEREIN.

      TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE
      BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
      SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
      THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
      THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON
      THE REVERSE HEREOF."

      SECTION 2.02. Execution and Authentication. The Securities shall be
executed on behalf of the Company by any Officer of the Company, with the
Guarantee endorsed thereon on behalf of the Guarantor by any Officer of the
Guarantor. The signature of the Officer of the Company on the Securities and the
endorsement of the Guarantee by the Officer of the Guarantor on the Securities
may be manual or facsimile.

      Securities bearing the manual or facsimile signatures of an individual who
was at the time of the execution of the Securities the proper Officer of the
Company or the Guarantor, as the case may be, shall bind the Company or the
Guarantor, as the case may be, notwithstanding that such individual has ceased
to hold such office prior to the authentication and delivery of such Securities
or did not hold such office at the date of authentication of such Securities.

      No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.

      The Trustee shall authenticate and deliver Securities for original issue
in an aggregate Principal Amount at Maturity of up to $675,000,000 upon a
Company and Guarantor Order without any further action by the Company or the
Guarantor. The aggregate Principal Amount at Maturity of Securities outstanding
at any time may not exceed the amount set forth in the foregoing sentence,
except as provided in Section 2.07.

      The Securities shall be issued only in registered form without coupons and
only in denominations of $1,000 of Principal Amount at Maturity and any integral
multiple thereof.

      SECTION 2.03. Registrar, Paying Agent, Conversion Agent and Bid
Solicitation Agent. The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for
purchase or payment ("Paying Agent") and an office or agency where Securities
may be presented for conversion ("Conversion Agent"). The Company shall also
appoint a bid solicitation agent (the "Bid Solicitation Agent") to act pursuant
to paragraph 5 of the Securities. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-registrars, one or more additional paying agents and one or more additional
conversion agents. The term Paying Agent includes any additional paying agent,
including any named pursuant to Section 4.05. The term Conversion Agent includes
any additional conversion agent, including any named pursuant to Section 4.05.



                                       10

      The Company shall enter into an appropriate agency agreement with any
Registrar or co-registrar, Paying Agent, Conversion Agent or Bid Solicitation
Agent (other than the Trustee). The agreement shall implement the provisions of
this Indenture that relate to such agent. The Company shall notify the Trustee
of the name and address of any such agent. If the Company fails to maintain a
Registrar, Paying Agent, Conversion Agent or Bid Solicitation Agent, the Trustee
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.07. The Company or any Subsidiary or an Affiliate of
either of them may act as Paying Agent, Registrar, Conversion Agent or
co-registrar. None of the Company or any Subsidiary of the Company, or the
Guarantor, or any Subsidiary of the Guarantor, or any Affiliate of any of them
may act as Bid Solicitation Agent.

      The Company initially appoints the Trustee as Registrar, Conversion Agent,
Paying Agent and Bid Solicitation Agent in connection with the Securities.

      SECTION 2.04. Paying Agent to Hold Money and Securities in Trust. Except
as otherwise provided herein, on or prior to each due date of payments in
respect of any Security, the Company shall deposit with the Paying Agent a sum
of money (in immediately available funds if deposited on the due date) or Common
Stock sufficient to make such payments when so becoming due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that the
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money and Common Stock held by the Paying Agent for the making of
payments in respect of the Securities and shall notify the Trustee of any
default by the Company in making any such payment. At any time during the
continuance of any such default, the Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money and Common Stock
so held in trust. If the Company, a Subsidiary or an Affiliate of either of them
acts as Paying Agent, it shall segregate the money and Common Stock held by it
as Paying Agent and hold it as a separate trust fund. The Company at any time
may require a Paying Agent to pay all money and Common Stock held by it to the
Trustee and to account for any funds and Common Stock disbursed by it. Upon
doing so, the Paying Agent shall have no further liability for the money or
Common Stock. This Section 2.04 shall also apply to the Guarantor in respect of
any amounts payable by it under the Guarantee.

      SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall cause to be furnished to the Trustee at least
semi-annually on May 1 and November 1 a listing of Securityholders dated within
15 days of the date on which the list is furnished and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.

      SECTION 2.06. Transfer and Exchange. Subject to Section 2.12 hereof, upon
surrender for registration of transfer of any Security, together with a written
instrument of transfer satisfactory to the Registrar duly executed by the
securityholder or such Securityholder's attorney duly authorized in writing, at
the office or agency of the Company designated as Registrar or co-registrar
pursuant to Section 2.03, the Company shall execute, and the Trustee upon
receipt of a Company Order shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities (having the
Guarantee endorsed thereon by the Guarantor) of any authorized denomination or
denominations, of a like aggregate Principal Amount at Maturity. The Company
shall not charge a service charge for any registration of transfer or exchange,
but the Company may require payment of a sum sufficient to pay all taxes,


                                       11

assessments or other governmental charges that may be imposed in connection with
the transfer or exchange of the Securities from the Securityholder requesting
such transfer or exchange.

      At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
Principal Amount at Maturity, upon surrender of the Securities to be exchanged,
together with a written instrument of transfer satisfactory to the Registrar
duly executed by the Securityholder or such Securityholder's attorney duly
authorized in writing, at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee upon
receipt of a Company Order shall authenticate and deliver, the Securities
(having the Guarantee endorsed thereon by the Guarantor) which the Holder making
the exchange is entitled to receive.

      The Company shall not be required to make, and the Registrar need not
register, transfers or exchanges of Securities selected for redemption (except,
in the case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice has been given and not withdrawn by the Holder thereof
in accordance with the terms of this Indenture (except, in the case of
Securities to be purchased in part, the portion thereof not to be purchased) or
any Securities for a period of 15 days before the mailing of a notice of
redemption of Securities to be redeemed.

      (b) Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, shall be made
only in accordance with Section 2.12 and this Section 2.06(b). Transfers of a
Global Security shall be limited to transfers of such Global Security in whole,
or in part, to nominees of the Depositary or to a successor of the Depositary or
such successor's nominee.

      (c) Successive registrations and registrations of transfers and exchanges
as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the register for the Securities.

      (d) Any Registrar appointed pursuant to Section 2.03 hereof shall provide
to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange of Securities.

      (e) No Registrar shall be required to make registrations of transfer or
exchange of Securities during any periods designated in the text of the
Securities or in this Indenture as periods during which such registration of
transfers and exchanges need not be made.

      SECTION 2.07. Replacement Securities. If (a) any mutilated Security is
surrendered to the Trustee, or (b) the Company and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, and
there is delivered to the Company and the Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and upon its written request the
Trustee shall authenticate and deliver, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new
Security (having the Guarantee endorsed thereon by the Guarantor) of like tenor
and Principal Amount at Maturity, bearing a number not contemporaneously
outstanding.



                                       12

      In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be purchased by the
Company pursuant to Article 3 hereof, the Company in its discretion may, instead
of issuing a new Security, pay or purchase such Security, as the case may be.

      Upon the issuance of any new Securities under this Section, the Company or
the Guarantor may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

      Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and the Guarantor, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

      The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

      SECTION 2.08. Outstanding Securities; Determinations of Holders' Action.
Securities outstanding at any time are all the Securities authenticated by the
Trustee except for those cancelled by it, those delivered to it pursuant to
Section 2.07 for cancellation and those described in this Section 2.08 as not
outstanding. A Security does not cease to be outstanding because the Company or
the Guarantor or an Affiliate of the Company or the Guarantor holds the
Security; provided, however, that in determining whether the Holders of the
requisite Principal Amount at Maturity of Securities have given or concurred in
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or the Guarantor or any other obligor
upon the Securities or any Affiliate of the Company or the Guarantor or such
other obligor shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Subject to the foregoing, only Securities
outstanding at the time of such determination shall be considered in any such
determination (including, without limitation, determinations pursuant to
Articles 6 and 9).

      If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

      If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following the Purchase Date or a Change
in Control Purchase Date, or on Stated Maturity, money or securities, if
permitted hereunder, sufficient to pay Securities payable on that date, then
immediately after such Redemption Date, Purchase Date, Change in Control
Purchase Date or Stated Maturity, as the case may be, such Securities shall
cease to be outstanding and Issue Discount and interest (including contingent
interest), if any, on such Securities shall cease to accrue; provided, that if
such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture.



                                       13

      If a Security is converted in accordance with Article 11, then from and
after the time of conversion on the Conversion Date, such Security shall cease
to be outstanding and Issue Discount and interest (including contingent
interest), if any, shall cease to accrue on such Security, whether or not the
Security is delivered to the Paying Agent.

      SECTION 2.09. Temporary Securities. Subject to Section 2.12 hereof,
pending the preparation of definitive Securities, the Company may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as conclusively evidenced by
their execution of such Securities.

      If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company or the Guarantor designated for such purpose pursuant
to Section 2.03, without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Securities the Company shall execute and upon
Company Order the Trustee shall authenticate and deliver in exchange therefor a
like Principal Amount at Maturity of definitive Securities (having the Guarantee
endorsed thereon) of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.

      SECTION 2.10. Cancellation. All Securities surrendered for payment,
purchase by the Company pursuant to Article 3, conversion, redemption or
registration of transfer or exchange shall, if surrendered to any person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company or the Guarantor may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company or the Guarantor, as the case may be, may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly cancelled
by the Trustee. The Company may not issue new Securities to replace Securities
it has paid or delivered to the Trustee for cancellation or that any Holder has
converted pursuant to Article 11. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities held
by the Trustee shall be disposed of by the Trustee in accordance with the
Trustee's customary procedure.

      SECTION 2.11. Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Guarantor, the Trustee
and any agent of the Company, the Guarantor or the Trustee may treat the Person
in whose name such Security is registered as the owner of such Security for the
purpose of receiving payment of principal of the Security or the payment of any
Redemption Price, Purchase Price or Change in Control Purchase Price in respect
thereof, and interest (including contingent interest, if any) thereon, for the
purpose of conversion and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Guarantor, the Trustee nor any
agent of the Company, the Guarantor or the Trustee shall be affected by notice
to the contrary.




                                       14

      SECTION 2.12. Global Securities.

      (a) Transfer of Global Security. Notwithstanding any other provisions of
this Indenture or the Securities, transfers of a Global Security, in whole or in
part, shall be made only in accordance with Section 2.06 and Section 2.12(a). A
Global Security may not be transferred, in whole or in part, to any Person other
than the Depositary or a nominee or any successor thereof, and no such transfer
to any such other Person may be registered; provided that this clause (a) shall
not prohibit any transfer of a Security that is issued in exchange for a Global
Security but is not itself a Global Security. No transfer of a Security to any
Person shall be effective under this Indenture or the Securities unless and
until such Security has been registered in the name of such Person. As used in
this paragraph, the term "transfer" encompasses any sale, pledge, transfer,
hypothecation or other disposition of any Security.

      (b) The provisions of clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:

            (1) Notwithstanding any other provisions of this Indenture or the
      Securities, except as provided in Section 2.12(a), a Global Security shall
      not be exchanged in whole or in part for a Security registered in the name
      of any Person other than the Depositary or one or more nominees thereof,
      provided that a Global Security may be exchanged for Securities registered
      in the names of any person designated by the depositary in the event that
      (i) the Depositary has notified the Company that it is unwilling or unable
      to continue as Depositary for such Global Security or such Depositary has
      ceased to be a "clearing agency" registered under the Securities Exchange
      Act of 1934, as amended (the "Exchange Act"), and a successor Depositary
      is not appointed by the Company within 90 days, (ii) the Company decides
      to discontinue the use of the system of book-entry transfer through the
      Depositary (or any successor Depositary) or (iii) an Event of Default has
      occurred and is continuing with respect to the Securities. Any Global
      Security exchanged pursuant to clause (i) above shall be so exchanged in
      whole and not in part, and any Global Security exchanged pursuant to
      clause (iii) above may be exchanged in whole or from time to time in part
      as directed by the Depositary. Any Security issued in exchange for a
      Global Security or any portion thereof shall be a Global Security;
      provided that any such Security so issued that is registered in the name
      of a Person other than the Depositary or a nominee thereof shall not be a
      Global Security.

            (2) Securities issued in exchange for a Global Security or any
      portion thereof shall be issued in definitive, fully registered form,
      without interest coupons, shall have an aggregate Principal Amount at
      Maturity equal to that of such Global Security or portion thereof to be so
      exchanged, shall be registered in such names and be in such authorized
      denominations as the Depositary shall designate and shall bear the
      applicable legends provided for herein. Any Global Security to be
      exchanged in whole shall be surrendered by the Depositary to the Trustee,
      as Registrar. With regard to any Global Security to be exchanged in part,
      either such Global Security shall be so surrendered for exchange or, if
      the Trustee is acting as custodian for the Depositary or its nominee with
      respect to such Global Security, the Principal Amount at Maturity thereof
      shall be reduced, by an amount equal to the portion thereof to be so
      exchanged, by means of an appropriate adjustment made on the records of
      the Trustee. Upon any such surrender or adjustment, the Trustee shall
      authenticate and deliver the Security issuable on such exchange to or upon
      the order of the Depositary or an authorized representative thereof.

            (3) Subject to the provisions of clause (5) below, the registered
      Holder may grant proxies and otherwise authorize any Person, including
      Agent Members (as defined below)


                                       15

      and persons that may hold interests through Agent Members, to take any
      action which a holder is entitled to take under this Indenture or the
      Securities.

            (4) In the event of the occurrence of any of the events specified in
      clause (1) above, the Company will promptly make available to the Trustee
      a reasonable supply of Certificated Securities in definitive, fully
      registered form, without interest coupons.

            (5) Neither any members of, or participants in, the Depositary
      (collectively, the "Agent Members") nor any other Persons on whose behalf
      Agent Members may act shall have any rights under this Indenture with
      respect to any Global Security registered in the name of the Depositary or
      any nominee thereof, or under any such Global Security, and the Depositary
      or such nominee, as the case may be, may be treated by the Company, the
      Guarantor, the Trustee and any agent of the Company, the Guarantor or the
      Trustee as the absolute owner and holder of such Global Security for all
      purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
      prevent the Company, the Guarantor or the Trustee or any agent of the
      Company, the Guarantor or the Trustee from giving effect to any written
      certification, proxy or other authorization furnished by the Depositary or
      such nominee, as the case may be, or impair, as between the Depositary,
      its Agent Members and any other person on whose behalf an Agent Member may
      act, the operation of customary practices of such Persons governing the
      exercise of the rights of a holder of any Security.

      SECTION 2.13. CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.

                                    ARTICLE 3

                            REDEMPTION AND PURCHASES

      SECTION 3.01. Right to Redeem; Notices to Trustee.

      The Company, at its option, may redeem the Securities in accordance with
the provisions of paragraphs 6 and 8 of the Securities. If the Company elects to
redeem Securities pursuant to paragraph 6 of the Securities, it shall notify the
Trustee in writing of the Redemption Date, the Principal Amount at Maturity of
Securities to be redeemed, the Redemption Price and the amount of contingent
interest, if any, payable on the Redemption Date.

      The Company shall give the notice to the Trustee provided for in this
Section 3.01 by a Company Order at least 20 days before the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee).

      SECTION 3.02. Selection of Securities to Be Redeemed.



                                       16

      If less than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed pro rata based on ownership thereof or by
lot or by any other method the Trustee considers fair and appropriate (so long
as such method is not prohibited by the rules of any stock exchange on which the
Securities are then listed). The Trustee shall make the selection at least 15
days but not more than 60 days before the Redemption Date from outstanding
Securities not previously called for redemption. The Trustee may select for
redemption portions of the Principal Amount at Maturity of Securities that have
denominations larger than $1,000.

      Securities and any portions thereof that the Trustee selects shall be in
Principal Amounts at Maturity of $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.

      If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed may be treated by
the Trustee as outstanding for the purpose of such selection.

      SECTION 3.03. Notice of Redemption.

      At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail, postage prepaid,
to each Holder of Securities to be redeemed.

      The notice shall identify the Securities to be redeemed and shall state:

      (a) the Redemption Date;

      (b) the Redemption Price and, to the extent known at the time of such
notice, the amount of contingent interest, if any, payable on the Redemption
Date;

      (c) the Conversion Rate;

      (d) the name and address of the Paying Agent and Conversion Agent;

      (e) that Securities called for redemption may be converted at any time
before the close of business on the second Business Day immediately preceding
the Redemption Date;

      (f) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;

      (g) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price and contingent interest, if any;

      (h) if fewer than all the outstanding Securities are to be redeemed, the
certificate number and Principal Amounts at Maturity of the particular
Securities to be redeemed;



                                       17

      (i) that, unless the Company defaults in making payment of such Redemption
Price and contingent interest, if any, Issue Discount and interest (including
contingent interest), if any, on Securities called for redemption will cease to
accrue on and after the Redemption Date; and

      (j) the CUSIP number of the Securities.

      At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense, provided that the Company
makes such request at least 15 days (unless a shorter period shall be acceptable
to the Trustee) prior to the date such notice of redemption must be mailed.

      SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is
given, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price (together with accrued contingent interest, if
any) stated in the notice except for Securities which are converted in
accordance with the terms of this Indenture. Upon surrender to the Paying Agent,
such Securities shall be paid at the Redemption Price (together with accrued
contingent interest, if any) stated in the notice.

      SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. (New York
City time) on the Redemption Date, the Company shall deposit with the Paying
Agent (or if the Company or a Subsidiary of the Company, or the Guarantor or a
Subsidiary of the Guarantor, or an Affiliate of any of them is the Paying Agent,
shall segregate and hold in trust) money sufficient to pay the Redemption Price
of, and any accrued and unpaid contingent interest with respect to, all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which on or prior thereto have been delivered
by the Company to the Trustee for cancellation or have been converted. The
Paying Agent shall as promptly as practicable return to the Company any money,
not required for that purpose because of conversion of Securities pursuant to
Article 11. If such money is then held by the Company in trust and is not
required for such purpose it shall be discharged from such trust.

      SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Security (having the Guarantee
endorsed thereon by the Guarantor) in an authorized denomination equal in
Principal Amount at Maturity to the unredeemed portion of the Security
surrendered.

      SECTION 3.07. Conversion Arrangement on Call for Redemption. In connection
with any redemption of Securities, the Company may arrange for the purchase and
conversion of any Securities called for redemption by an agreement with one or
more investment bankers or other purchasers to purchase such Securities by
paying to the Trustee in trust for the Securityholders, on or prior to 10:00
a.m. New York City time on the Redemption Date, an amount that, together with
any amounts deposited with the Trustee by the Company for the redemption of such
Securities, is not less than the Redemption Price of, and any accrued and unpaid
contingent interest with respect to, such Securities. Notwithstanding anything
to the contrary contained in this Article 3, the obligation of the Company to
pay the Redemption Prices of such Securities shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, any Securities not duly surrendered for conversion by
the Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article 11) surrendered
by


                                       18

such purchasers for conversion, all as of immediately prior to the close of
business on the Business Day prior to the Redemption Date, subject to payment of
the above amount as aforesaid. The Trustee shall hold and pay to the Holders
whose Securities are selected for redemption any such amount paid to it for
purchase and conversion in the same manner as it would moneys deposited with it
by the Company for the redemption of Securities. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Securities shall increase or otherwise affect any
of the powers, duties, responsibilities or obligations of the Trustee as set
forth in this Indenture, and the Company agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.

      SECTION 3.08. Purchase of Securities at Option of the Holder.

      (a) General. Securities shall be purchased by the Company in U.S. legal
tender ("cash") pursuant to paragraph 7 of the Securities as of February 8,
2006, February 8, 2011, February 8, 2016, February 8, 2021, and February 8, 2026
(each, a "Purchase Date"), at the purchase price of $779.28 per $1,000 of
Principal Amount at Maturity as of February 8, 2006, of $819.14 per $1,000 of
Principal Amount at Maturity as of February 8, 2011, of $861.03 per $1,000
Principal Amount at Maturity as of February 8, 2016, of $905.06 per $1,000
Principal Amount at Maturity as of February 8, 2021, and of $951.35 per $1,000
Principal Amount at Maturity as of February 8, 2026 (each, a "Purchase Price",
as applicable), at the option of the Holder thereof, upon:

            (1) delivery to the Paying Agent, by the Holder of a written notice
      of purchase (a "Purchase Notice") at any time from the opening of business
      on the date that is at least 20 Business Days prior to a Purchase Date
      until the close of business on the Business Day immediately preceding such
      Purchase Date stating:

                  (A) the certificate number of the Security which the Holder
                  will deliver to be purchased,

                  (B) the portion of the Principal Amount at Maturity of the
                  Security which the Holder will deliver to be purchased, which
                  portion must be a Principal Amount at Maturity of $1,000 or an
                  integral multiple thereof, and

                  (C) that such Security shall be purchased as of the Purchase
                  Date pursuant to the terms and conditions specified in (i)
                  paragraph 7 of the Securities and (ii) this Indenture; and

            (2) delivery of such Security to the Paying Agent prior to, on or
      after the Purchase Date (together with all necessary endorsements) at the
      offices of the Paying Agent, such delivery being a condition to receipt by
      the Holder of the Purchase Price therefor; provided, however, that such
      Purchase Price shall be so paid pursuant to this Section 3.08 only if the
      Security so delivered to the Paying Agent shall conform in all respects to
      the description thereof in the related Purchase Notice, as determined by
      the Company.



                                       19

      The Company shall purchase from the Holder thereof, pursuant to this
Section 3.08, a portion of a Security if the Principal Amount at Maturity of
such portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.

      Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.08 shall be consummated by the delivery of the consideration to
be received by the Holder (together with accrued and unpaid contingent interest,
if any) promptly following the later of the Purchase Date and the time of
delivery of the Security.

      Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Purchase Notice contemplated by this Section 3.08(a) shall
have the right to withdraw such Purchase Notice at any time prior to the close
of business on the Purchase Date by delivery of a written notice of withdrawal
to the Paying Agent in accordance with Section 3.10.

      The Paying Agent shall promptly notify the Company of the receipt by it of
any Purchase Notice or written notice of withdrawal thereof.

      (b) Purchase with Cash. On each Purchase Date, the Purchase Price of
Securities in respect of which a Purchase Notice pursuant to Section 3.08(a) has
been given, or a specified percentage thereof, shall be paid by the Company with
cash equal to the aggregate Purchase Price of such Securities. The Company
Notice, as provided in Section 3.08(c), shall be sent to Holders (and to
beneficial owners as required by applicable law) not less than 20 Business Days
prior to such Purchase Date (the "Company Notice Date").

      (c) Company Notice. The Company's notice shall be sent to the Holders (and
to beneficial owners as required by applicable law) in the manner provided in
Section 14.02 at the time specified in Section 3.08(b) (the "Company Notice").
Such Company Notice shall include a form of Purchase Notice to be completed by a
Securityholder and shall state:

      (1) the Purchase Price, the Conversion Rate and, to the extent known at
      the time of such notice, the amount of contingent interest, if any, that
      will be accrued and payable with respect to the Securities as of the
      Purchase Date;

      (2) the name and address of the Paying Agent and the Conversion Agent;

      (3) that Securities as to which a Purchase Notice has been given may be
      converted pursuant to Article 11 hereof only if the applicable Purchase
      Notice has been withdrawn in accordance with the terms of this Indenture;

      (4) that Securities must be surrendered to the Paying Agent to collect
      payment of the Purchase Price and contingent interest, if any;

      (5) that the Purchase Price for any Security as to which a Purchase Notice
      has been given and not withdrawn, together with any accrued contingent
      interest payable with respect thereto, will be paid promptly following the
      later of the Purchase Date and the time of surrender of such Security as
      described in (4);

      (6) the procedures the Holder must follow to exercise rights under
      Section 3.08 and a brief description of those rights;



                                       20


      (7) briefly, the conversion rights of the Securities;

      (8) the procedures for withdrawing a Purchase Notice (including,
      without limitation, for a conditional withdrawal pursuant to the terms of
      Section 3.10);

      (9) that, unless the Company defaults in making payment of such Purchase
      Price and contingent interest, if any, Issue Discount and interest
      (including contingent interest), if any, on Securities surrendered for
      purchase will cease to accrue on and after the Purchase Date; and

      (10) the CUSIP number of the Securities.

      At the Company's request, the Trustee shall give such Company Notice in
the Company's name and at the Company's expense, provided that the Company makes
such request at least 15 days (unless a shorter period shall be acceptable to
the Trustee) prior to the date such Company Notice must be mailed; and provided,
further, that, in all cases, the text of such Company Notice shall be prepared
by the Company.

      (d) Procedure upon Purchase. The Company shall deposit cash at the time
and in the manner as provided in Section 3.11, sufficient to pay the aggregate
Purchase Price of, and any accrued and unpaid contingent interest with respect
to, all Securities to be purchased pursuant to this Section 3.08.

      SECTION 3.09. Purchase of Securities at Option of the Holder upon Change
in Control.

      (a) If on or prior to February 8, 2006 there shall have occurred a Change
in Control, Securities shall be purchased by the Company, at the option of the
Holder thereof, at a purchase price specified in paragraph 7 of the Securities
(the "Change in Control Purchase Price"), as of the date that is 35 Business
Days after the occurrence of the Change in Control (the "Change in Control
Purchase Date"), subject to satisfaction by or on behalf of the Holder of the
requirements set forth in Section 3.09(c).

      A "Change in Control" shall be deemed to have occurred at such time as
either of the following events shall occur:

            (1) There is a report filed on Schedule 13D or Schedule TO (or any
      successor schedule, form or report) pursuant to the Exchange Act,
      disclosing that any person including its Affiliates or Associates (for the
      purposes of this Section 3.09 only, as the term "person" is used in
      Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
      beneficial owner (as the term "beneficial owner" is defined under Rule
      13d-3 or any successor rule or regulation promulgated under the Exchange
      Act) of 50% or more of the voting power of the (x) voting common stock of
      the Company or the Guarantor then outstanding or (y) other Capital Stock
      into which the Common Stock or the Guarantor's common stock is
      reclassified or changed; provided, however, that a person shall not be
      deemed beneficial owner of, or to own beneficially, (A) any securities
      tendered pursuant to a tender or exchange offer made by or on behalf of
      such person or any of such person's Affiliates or Associates until such
      tendered securities are accepted for purchase or exchange thereunder, or
      (B) any securities if such beneficial ownership (1) arises solely as a
      result of a revocable proxy delivered in


                                       21




      response to a proxy or consent solicitation made pursuant to the
      applicable rules and regulations under the Exchange Act, and (2) is not
      also then reportable on Schedule 13D (or any successor schedule) under the
      Exchange Act; or

            (2) There shall be consummated any share exchange, consolidation or
      merger of the Company or the Guarantor pursuant to which its respective
      voting common stock would be converted into cash, securities or other
      property, in each case other than a share exchange, consolidation or
      merger of the Company or the Guarantor, as the case may be, in which the
      holders of such voting common stock immediately prior to the share
      exchange, consolidation or merger have, directly or indirectly, at least a
      majority of the total voting power in the aggregate of all classes of
      Capital Stock of the continuing or surviving corporation immediately after
      the share exchange, consolidation or merger.

Notwithstanding the foregoing provisions of this Section 3.09, a Change in
Control shall not be deemed to have occurred by virtue of the Company, the
Guarantor, any Subsidiary, any employee stock ownership plan or any other
employee benefit plan of the Company, the Guarantor or any Subsidiary, or any
person holding its respective voting common stock for or pursuant to the terms
of any such employee benefit plan, filing or becoming obligated to file a report
under or in response to Schedule 13D or Schedule TO (or any successor schedule,
form or report) under the Exchange Act disclosing beneficial ownership by it of
shares of such Capital Stock, whether in excess of 50% or otherwise.

      "Associate" shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.

      (b) Within 15 Business Days after the occurrence of a Change in Control,
the Company shall mail a written notice of Change in Control by first-class mail
to the Trustee and to each Holder (and to beneficial owners as required by
applicable law). The notice shall include a form of Change in Control Purchase
Notice to be completed by the Securityholder and shall state:

            (1) briefly, the events causing a Change in Control and the date of
      such Change in Control;

            (2) the date by which the Change in Control Purchase Notice pursuant
      to this Section 3.09 must be given;

            (3) the Change in Control Purchase Date;

            (4) the Change in Control Purchase Price and, to the extent known at
      the time of such notice, the amount of contingent interest, if any, that
      will be accrued and payable with respect to the Securities as of the
      change in Control Purchase Date;

            (5) the name and address of the Paying Agent and the Conversion
      Agent;

            (6) the Conversion Rate and any adjustments thereto;

            (7) that Securities as to which a Change in Control Purchase Notice
      has been given by the Holder may be converted pursuant to Article 11
      hereof only if the Change in Control Purchase Notice has been withdrawn in
      accordance with the terms of this Indenture;



                                       22

            (8) that Securities must be surrendered to the Paying Agent to
      collect payment of the Change in Control Purchase Price and contingent
      interest, if any;

            (9) that the Change in Control Purchase Price for any Security as to
      which a Change in Control Purchase Notice has been duly given and not
      withdrawn, together with any accrued contingent interest payable with
      respect thereto, will be paid promptly following the later of the Change
      in Control Purchase Date and the time of surrender of such Security as
      described in (8);

            (10) briefly, the procedures the Holder must follow to exercise
      rights under this Section 3.09;

            (11) briefly, the conversion rights of the Securities;

            (12) the procedures for withdrawing a Change in Control Purchase
      Notice;

            (13) that, unless the Company defaults in making payment of such
      Change in Control Purchase Price and contingent interest, if any, Issue
      Discount and interest (including contingent interest), if any, on
      Securities surrendered for purchase will cease to accrue on and after the
      Change in Control Purchase Date; and

            (14) the CUSIP number of the Securities.

      (c) A Holder may exercise its rights specified in Section 3.09(a) upon
delivery of a written notice of purchase (a "Change in Control Purchase Notice")
to the Paying Agent at any time prior to the close of business on the Change in
Control Purchase Date, stating:

            (1) the certificate number of the Security which the Holder will
      deliver to be purchased;

            (2) the portion of the Principal Amount at Maturity of the Security
      which the Holder will deliver to be purchased, which portion must be
      $1,000 or an integral multiple thereof; and

            (3) that such Security shall be purchased pursuant to the terms and
      conditions specified in paragraph 7 of the Securities and this Section
      3.09.

      The delivery of such Security to the Paying Agent prior to, on or after
the Change in Control Purchase Date (together with all necessary endorsements)
at the offices of the Paying Agent shall be a condition to the receipt by the
Holder of the Change in Control Purchase Price therefor; provided, however, that
such Change in Control Purchase Price shall be so paid pursuant to this Section
3.09 only if the Security so delivered to the Paying Agent shall conform in all
respects to the description thereof set forth in the related Change in Control
Purchase Notice and such Change in Control Purchase Notice shall not be validly
withdrawn by the Holder.

      The Company shall purchase from the Holder thereof, pursuant to this
Section 3.09, a portion of a Security if the Principal Amount at Maturity of
such portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.



                                       23



      Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.09 shall be consummated by the delivery of the consideration to
be received by the Holder (together with accrued and unpaid contingent interest,
if any) promptly following the later of the Change in Control Purchase Date and
the time of delivery of the Security to the Paying Agent in accordance with this
Section 3.09.

      Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Change in Control Purchase Notice contemplated by this
Section 3.09(c) shall have the right to withdraw such Change in Control Purchase
Notice at any time prior to the close of business on the Change in Control
Purchase Date by delivery of a written notice of withdrawal to the Paying Agent
in accordance with Section 3.10.

      The Paying Agent shall promptly notify the Company of the receipt by it of
any Change in Control Purchase Notice or written withdrawal thereof.

      The Company shall not be required to comply with this Section 3.09 if a
third party mails a written notice of Change in Control in the manner, at the
times and otherwise in compliance with this Section 3.09 and repurchases all
Securities for which a Change in Control Purchase Notice shall be delivered and
not withdrawn.

      SECTION 3.10. Effect of Purchase Notice or Change in Control Purchase
Notice. Upon receipt by the Paying Agent of the Purchase Notice or Change in
Control Purchase Notice specified in Section 3.08(a) or Section 3.09(c), as
applicable, the Holder of the Security in respect of which such Purchase Notice
or Change in Control Purchase Notice, as the case may be, was given shall
(unless such Purchase Notice or Change in Control Purchase Notice is withdrawn
as specified in the following two paragraphs) thereafter be entitled to receive
solely the Purchase Price or Change in Control Purchase Price, as the case may
be, and any accrued and unpaid contingent interest, with respect to such
Security to the Purchase Date or Change in Control Purchase Date, as the case
may be. Such Purchase Price or Change in Control Purchase Price and contingent
interest, if any, shall be paid to such Holder, subject to receipts of funds
and/or securities by the Paying Agent, promptly following the later of (x) the
Purchase Date or the Change in Control Purchase Date, as the case may be, with
respect to such Security (provided the conditions in Section 3.08(a) or Section
3.09(c), as applicable, have been satisfied) and (y) the time of delivery of
such Security to the Paying Agent by the Holder thereof in the manner required
by Section 3.08(a) or Section 3.09(c), as applicable. Securities in respect of
which a Purchase Notice or Change in Control Purchase Notice, as the case may
be, has been given by the Holder thereof may not be converted pursuant to
Article 11 hereof on or after the date of the delivery of such Purchase Notice
or Change in Control Purchase Notice, as the case may be, unless such Purchase
Notice or Change in Control Purchase Notice, as the case may be, has first been
validly withdrawn as specified in the following two paragraphs.

      A Purchase Notice or Change in Control Purchase Notice, as the case may
be, may be withdrawn by means of a written notice of withdrawal delivered to the
office of the Paying Agent in accordance with the Purchase Notice or Change in
Control Purchase Notice, as the case may be, at any time prior to the close of
business on the Purchase Date or the Change in Control Purchase Date, as the
case may be, specifying:

            (a) the Principal Amount at Maturity of the Security with respect to
      which such notice of withdrawal is being submitted;

                                       24


            (b) the certificate number of the Security in respect of which such
      notice of withdrawal is being submitted; and

            (c) the Principal Amount at Maturity, if any, of such Security which
      remains subject to the original Purchase Notice or Change in Control
      Purchase Notice, as the case may be, and which has been or will be
      delivered for purchase by the Company.

      There shall be no purchase of any Securities pursuant to Section 3.08 or
3.09 if there has occurred (prior to, on or after, as the case may be, the
giving, by the Holders of such Securities, of the required Purchase Notice or
Change in Control Purchase Notice, as the case may be) and is continuing an
Event of Default (other than a default in the payment of the Purchase Price or
Change in Control Purchase Price, as the case may be, and any accrued and unpaid
contingent interest with respect to such Securities). The Paying Agent will
promptly return to the respective Holders thereof any Securities (x) with
respect to which a Purchase Notice or Change in Control Purchase Notice, as the
case may be, has been withdrawn in compliance with this Indenture, or (y) held
by it during the continuance of an Event of Default (other than a default in the
payment of the Purchase Price or Change in Control Purchase Price, as the case
may be, and any accrued and unpaid contingent interest with respect to such
Securities) in which case, upon such return, the Purchase Notice or Change in
Control Purchase Notice with respect thereto shall be deemed to have been
withdrawn.

      SECTION 3.11. Deposit of Purchase Price or Change in Control Purchase
Price. Prior to 10:00 a.m. New York City time on the Business Day following the
Purchase Date or the Change in Control Purchase Date, as the case may be, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an
amount of money (in immediately available funds if deposited on such Business
Day) sufficient to pay the aggregate Purchase Price or Change in Control
Purchase Price, as the case may be, of, and any accrued and unpaid contingent
interest with respect to, all the Securities or portions thereof which are to be
purchased as of the Purchase Date or Change in Control Purchase Date, as the
case may be. After the Purchase Date or the Change in Control Purchase Date,
Issue Discount and interest (including contingent interest), if any, shall cease
to accrue on such Security, whether or not such Security is delivered to the
Paying Agent.

      SECTION 3.12. Securities Purchased in Part. Any Security which is to be
purchased only in part shall be surrendered at the office of the Paying Agent
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder in aggregate Principal Amount at Maturity equal to, and in exchange
for, the portion of the Principal Amount at Maturity of the Security so
surrendered which is not purchased.

      SECTION 3.13. Covenant to Comply With Securities Laws Upon Purchase of
Securities. In connection with any offer to purchase or purchase of Securities
under Section 3.08 or 3.09 hereof (provided that such offer or purchase
constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as
used herein, includes any successor provision thereto) under the Exchange Act at
the time of such offer or purchase), the Company shall (i) comply with Rule
13e-4 and Rule l4e-1 under the Exchange Act and any other then applicable tender
offer rules, (ii) file the

                                       25


related Schedule TO (or any successor schedule, form or report) under the
Exchange Act, and (iii) otherwise comply with all federal and state securities
laws so as to permit the rights and obligations under Sections 3.08 and 3.09 to
be exercised in the time and in the manner specified in Sections 3.08 and 3.09.

      SECTION 3.14. Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company any cash that remains unclaimed as provided in
paragraph 16 of the Securities, together with interest, if any, thereon (subject
to the provisions of Section 7.01(f)), held by them for the payment of the
Purchase Price or Change in Control Purchase Price, as the case may be, or
contingent interest, if any; provided, however, that to the extent that the
aggregate amount of cash deposited by the Company pursuant to Section 3.11
exceeds the aggregate Purchase Price or Change in Control Purchase Price, as the
case may be, of, and the accrued and unpaid contingent interest with respect to,
the Securities or portions thereof which the Company is obligated to purchase as
of the Purchase Date or Change in Control Purchase Date, as the case may be,
then promptly after the Business Day following the Purchase Date or Change in
Control Purchase Date, as the case may be, the Trustee shall return any such
excess to the Company together with any interest, if any thereon (subject to the
provisions of Section 7.01(f)).

                                    ARTICLE 4

                                    COVENANTS

      SECTION 4.01. Payment of Securities. The Company shall promptly make all
payments in respect of the Securities on the dates and in the manner provided in
the Securities or pursuant to this Indenture. Any amounts to be given to the
Trustee or Paying Agent, shall be deposited with the Trustee or Paying Agent by
10:00 a.m. New York City time by the Company. Principal Amount at Maturity,
Restated Principal Amount, Initial Accreted Principal Amount plus accrued Issue
Discount, Redemption Price, Purchase Price, Change in Control Purchase Price,
contingent interest and interest, if any, shall be considered paid on the
applicable date due if on such date (or, in the case of a Purchase Price or
Change in Control Purchase Price, on the Business Day following the applicable
Purchase Date or Change in Control Purchase Date, as the case may be) the
Trustee or the Paying Agent holds, in accordance with this Indenture, money or
securities, if permitted hereunder, sufficient to pay all such amounts then due.

      The Company shall, to the extent permitted by law, pay interest on overdue
amounts at the rate per annum set forth in paragraph 1 of the Securities,
compounded semi-annually, which interest shall accrue from the date such overdue
amount was originally due to the date payment of such amount, including interest
thereon, has been made or duly provided for. All such interest shall be payable
on demand. The accrual of such interest on overdue amounts shall be in lieu of,
and not in addition to, the continued accrual of Issue Discount.

      SECTION 4.02. SEC and Other Reports. The Company shall file with the
Trustee, within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. In the event the Company is at any time
no longer subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, it shall continue to provide the Trustee with reports containing
substantially the same information as would have been required to be filed

                                       26

with the SEC had the Company continued to have been subject to such reporting
requirements. In such event, such reports shall be provided at the times the
Company would have been required to provide reports had it continued to have
been subject to such reporting requirements. The Company also shall comply with
the other provisions of TIA Section 314(a). Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of the same shall not constitute constructive notice of
any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).

      SECTION 4.03. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on December 31, 2004) an Officers'
Certificate and the Guarantor shall deliver to the Trustee within 120 days after
the end of each fiscal year (beginning with the fiscal year ending December 31,
2004) a Guarantor's Officers' Certificate, each such Certificate stating whether
or not to the best knowledge of the signers thereof, the Company or the
Guarantor, as the case may be, is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and if the
Company or the Guarantor, as the case may be, shall be in default, specifying
all such defaults and the nature and status thereof of which they may have
knowledge.

      SECTION 4.04. Further Instruments and Acts. Upon request of the Trustee,
each of the Company and the Guarantor will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purposes of this Indenture.

      SECTION 4.05. Maintenance of Office or Agency. The Company or the
Guarantor will maintain in the Borough of Manhattan, The City of New York, an
office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer, exchange, purchase, redemption
or conversion and where notices and demands to or upon the Company or the
Guarantor in respect of the Securities and this Indenture may be served. The
office of The Bank of New York, located at 101 Barclay Street, New York, New
York, 10286 (Attention: Corporate Trust Administration), shall initially be such
office or agency for all of the aforesaid purposes. The Company or the Guarantor
shall give prompt written notice to the Trustee of the location, and of any
change in the location, of any such office or agency (other than a change in the
location of the office of the Trustee). If at any time the Company or the
Guarantor shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 14.02.

      The Company or the Guarantor may also from time to time designate one or
more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company or the Guarantor of its obligation to maintain an
office or agency in the Borough of Manhattan, The City of New York, for such
purposes.

      SECTION 4.06. Delivery of Certain Information. At any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the
request of a Holder or any

                                       27

beneficial holder of Securities or shares of Common Stock issued upon conversion
thereof, the Company will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such Holder or any beneficial holder of
Securities or holder of shares of Common Stock issued upon conversion of
Securities, or to a prospective purchaser of any such security designated by any
such holder, as the case may be, to the extent required to permit compliance by
such Holder or holder with Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act") in connection with the resale of any such
security. "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act.

      SECTION 4.07. Tax Treatment. The Company agrees, and each Holder and any
beneficial holder of a Security shall be deemed to agree, for United States
federal income tax purposes, (a) to treat the Securities as debt instruments
that are subject to Section 1.1275-4(b) of the Treasury Regulations (the
"Contingent Debt Regulations") and, for purposes of the Contingent Debt
Regulations, to treat the cash and the fair market value of any stock
beneficially received upon any conversion of the Securities as a contingent
payment, (b) to accrue interest with respect to outstanding Securities as
original issue discount according to the "noncontingent bond method," set forth
in section 1.1275-4(b) of the Treasury Regulations, using a comparable yield of
6.53 percent per annum compounded semi-annually based on an issue price of
$741.37 on February 8, 2001 and the projected payment schedule attached as Annex
A to this Indenture, and (c) to be bound by the "comparable yield" and the
"projected payment schedule" within the meaning of the Contingent Debt
Regulations, as determined by the Company, in each case, except as required by
applicable law. A Holder or beneficial owner may obtain the issue price, Issue
Date, amount of Original Issue Discount, yield to maturity, comparable yield and
projected payment schedule for the Securities by submitting a written request
for such information to the Company at the address of the Company set forth in
Section 14.02. The Company shall file with the Trustee promptly at the end of
each calendar year (i) a written notice specifying the amount of Original Issue
Discount for United States federal income tax purposes (including daily rates
and accrual periods) accrued on outstanding Securities as of the end of such
year and (ii) such other specific information relating to such Original Issue
Discount as may then be relevant under the Internal Revenue Code of 1986, as
amended from time to time, including the amount of any adjustment made under the
noncontingent bond method to account for the amount of any difference between
the amount of an actual payment and the amount of a projected payment.

      The Company acknowledges and agrees, and each Holder and any beneficial
holder of a Security by its purchase thereof shall be deemed to acknowledge and
agree, that (i) the comparable yield and the schedule of projected payments are
determined on the basis of an assumption of linear growth of the stock price and
a constant dividend yield and are not determined for any purpose other than for
the determination of interest accruals and adjustments thereof in respect of the
Securities for United States federal income tax purposes and (ii) the comparable
yield and the schedule of projected payments do not constitute a projection or
representation regarding the amounts payable on the Securities.

      The Company may cause to be withheld from any payment hereunder any tax
withholding required by law or regulations, including, in the case of any
withholding obligation arising from income that does not give rise to any cash
or property from which any applicable withholding tax could be satisfied, set
off against any subsequent payment of cash or property hereunder.


                                   ARTICLE 5

                              SUCCESSOR CORPORATION

      SECTION 5.01. When Company May Merge or Transfer Assets. The Company shall
not consolidate with or merge with or into any other person or convey, transfer
or lease its properties and assets substantially as an entirety to any person,
unless:

                                       28


      (a) either (1) the Company shall be the continuing corporation or (2) the
person (if other than the Company) formed by such consolidation or into which
the Company is merged or the person which acquires by conveyance, transfer or
lease the properties and assets of the Company substantially as an entirety (i)
shall be organized and validly existing under the laws of the United States or
any State thereof or the District of Columbia, provided, however, that the
condition contained in this section 5.01(a)(2)(i) shall not apply if independent
counsel experienced in such matters delivers an opinion to the Company
concluding that, under then existing laws, there would be no adverse tax
consequences to the Holders if this condition were not satisfied, and (ii) shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture;

      (b) immediately after giving effect to such transaction, no Default shall
have occurred and be continuing; and

      (c) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with this Article 5 and that all conditions precedent herein provided for
relating to such transaction have been satisfied.

      (d) the Guarantor has delivered to the Trustee a Guarantor's Officers'
Certificate and an opinion of counsel, each stating that the Guarantor's
obligations hereunder shall remain in full force and effect thereafter.

      For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of the properties and assets of one or more Subsidiaries (other than
to the Company or another Subsidiary), which, if such assets were owned by the
Company, would constitute all or substantially all of the properties and assets
of the Company, shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company.

      The successor person formed by such consolidation or into which the
Company is merged or the successor person to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor had been named as the Company herein; and thereafter, except in
the case of a lease and obligations the Company may have under a supplemental
indenture pursuant to Section 11.15, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities. Subject to
Section 9.06, the Company, the Trustee and the successor person shall enter into
a supplemental indenture to evidence the succession and substitution of such
successor person and such discharge and release of the Company.

      SECTION 5.02. When Guarantor May Merge or Transfer Assets. The Guarantor
shall not consolidate with or merge with or into any other person or convey,
transfer or lease its properties and assets substantially as an entirety to any
person, unless:

      (a) either (1) the Guarantor shall be the continuing corporation or (2)
the person (if other than the Guarantor) formed by such consolidation or into
which the Guarantor is merged or the person which acquires by conveyance,
transfer or lease the properties and assets of the Guarantor substantially as an
entirety (i) shall be organized and validly existing under the laws of the
United

                                       29

States or any State thereof or the District of Columbia, provided, however, that
the condition contained in this section 5.02(a)(2)(i) shall not apply if
independent counsel experienced in such matters delivers an opinion to the
Guarantor concluding that, under then existing laws, there would be no adverse
tax consequences to the Holders if this condition were not satisfied, and (ii)
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all of the
obligations of the Guarantor under the Securities and this Indenture;

      (b) immediately after giving effect to such transaction, no Default shall
have occurred and be continuing; and

      (c) the Guarantor shall have delivered to the Trustee a Guarantor's
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article 5 and that all conditions precedent herein
provided for relating to such transaction have been satisfied.

      For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of the properties and assets of one or more Subsidiaries (other than
to the Guarantor or another Subsidiary), which, if such assets were owned by the
Guarantor, would constitute all or substantially all of the properties and
assets of the Guarantor, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Guarantor.

      The successor person formed by such consolidation or into which the
Guarantor is merged or the successor person to which such conveyance, transfer
or lease is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Guarantor under this Indenture with the same
effect as if such successor had been named as the Guarantor herein; and
thereafter the Guarantor shall be discharged from all obligations and covenants
under this Indenture and the Securities. Subject to Section 9.06, the Guarantor,
the Trustee and the successor person shall enter into a supplemental indenture
to evidence the succession and substitution of such successor person and such
discharge and release of the Guarantor.

      SECTION 5.03. Assumption by Guarantor. The Guarantor, or a Subsidiary
thereof, may directly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the Principal Amount at Maturity, Initial Accreted Principal
Amount plus accrued Issue Discount, Restated Principal Amount, Redemption Price,
Purchase Price, Change of Control Purchase Price, contingent interest, if any,
interest payable pursuant to Article 10, if any, and the cash and the cash
equivalent of the Common Stock, if any, due upon a conversion pursuant to
Article 11, with respect to the Securities and the performance of every covenant
of this Indenture on the part of the Company to be performed or observed. Upon
any such assumption, the Guarantor or such Subsidiary shall succeed to, and be
substituted for and may exercise every right and power of, the Company under
this Indenture with the same effect as if the Guarantor or such Subsidiary had
been named as the Company herein and the Company shall be released from its
liability as obligor on the Securities. No such assumption shall be permitted
unless the Guarantor has delivered to the Trustee a Guarantor's Officers'
Certificate and an Opinion of Counsel, each stating that such assumption and
supplemental indenture comply with this Article, and that all conditions
precedent herein provided for relating to such transaction have been complied
with and that, in the event of assumption by a Subsidiary, the Guarantees remain
in full force and effect.

                                       30

                                   ARTICLE 6

                              DEFAULTS AND REMEDIES

      SECTION 6.01. Events of Default. An "Event of Default" means any one of
the following events:

      (a) a default in payment of any contingent interest or of interest which
becomes payable after the Securities have been converted to semi-annual coupon
notes following the occurrence of a Tax Event, which default, in either case,
continues for 30 days;

      (b) a default in the payment of the Principal Amount at Maturity (or, if
the Securities have been converted to semi-annual coupon notes following a Tax
Event pursuant to Article 10, the Restated Principal Amount), Initial Accreted
Principal Amount plus accrued Issue Discount, Redemption Price, Purchase Price
or Change in Control Purchase Price on any Security when the same becomes due
and payable at its Stated Maturity, upon redemption, upon declaration, when due
for purchase or otherwise (whether or not any such payment shall be prohibited
by the terms of this Indenture);

      (c) the Company or the Guarantor fails to comply with any of its
agreements in the Securities or this Indenture (other than those referred to in
clauses (a) and (b) above) and such failure (or the failure to obtain a waiver
thereof) continues for 60 days after receipt by the Company of a Notice of
Default;

      (d) (1) failure of the Company or the Guarantor to make any payment by the
end of any applicable grace period after maturity of Debt in an amount (taken
together with amounts in (2) below) in excess of $50,000,000 and continuance of
such failure, or (2) the acceleration of Debt in an amount (taken together with
amounts in (1) above) in excess of $50,000,000 because of a default with respect
to such Debt without such Debt having been discharged or such acceleration
having been cured, waived, rescinded or annulled, in the case of (1) or (2)
above, for a period of 30 days after receipt by the Company or the Guarantor of
a Notice of Default; provided, however, that if any such failure or acceleration
referred to in (1) or (2) above shall cease or be cured, waived, rescinded or
annulled, then the Event of Default by reason thereof shall be deemed not to be
continuing;

      (e) the Company or the Guarantor pursuant to or under or within the
meaning of any Bankruptcy Law:

            (1) commences a voluntary case or proceeding;

            (2) consents to the entry of an order for relief against it in an
            involuntary case or proceeding or the commencement of any case
            against it;

            (3) consents to the appointment of a Custodian of it or for any
            substantial part of its property;

            (4) makes a general assignment for the benefit of its creditors;

            (5) files a petition in bankruptcy or answer or consent seeking
            reorganization or relief; or

                                       31


            (6) consents to the filing of such petition or the appointment of or
            taking possession by a Custodian; or

      (f) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:

            (1) is for relief against the Company or the Guarantor in an
            involuntary case or proceeding, or adjudicates the Company or the
            Guarantor insolvent or bankrupt;

            (2) appoints a Custodian of the Company or the Guarantor or for any
            substantial part of its property; or

            (3) orders the winding up or liquidation of the Company or the
            Guarantor;

and the order or decree remains unstayed and in effect for 60 days.

      "Bankruptcy Law" means Title 11, United States Code, or any similar
Federal or state law for the relief of debtors.

      "Custodian" means any receiver, trustee, assignee, liquidator, custodian
or similar official under any Bankruptcy Law.

      A Default under clause (c) or clause (d) above is not an Event of Default
until the Trustee notifies the Company or the Guarantor, as the case may be, or
the Holders of at least 25% in aggregate Principal Amount at Maturity of the
Securities at the time outstanding notify the Company or the Guarantor, as the
case may be, and the Trustee, of the Default and the Company or the Guarantor,
as the case may be, does not cure such Default (and such Default is not waived)
within the time specified in clause (c) or clause (d) above after actual receipt
of such notice. Any such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".

      The Company or the Guarantor, as the case may be, shall deliver to the
Trustee, within five (5) days after it becomes aware of the occurrence thereof,
written notice of any event which with the giving of notice or the lapse of
time, or both, would become an Event of Default under clause (c) or clause (d)
above, its status and what action the Company or the Guarantor, as the case may
be, is taking or proposes to take with respect thereto.

      SECTION 6.02. Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(e) or (f)) occurs and is continuing, the
Trustee by Notice to the Company and the Guarantor, or the Holders of at least
25% in aggregate Principal Amount at Maturity of the Securities at the time
outstanding by notice to the Company, the Guarantor and the Trustee, may declare
the Initial Accreted Principal Amount plus accrued Issue Discount through the
date of such declaration, and any accrued and unpaid interest (including
contingent interest) through the date of such declaration, on all the Securities
to be immediately due and payable. Upon such a declaration, such Initial
Accreted Principal Amount plus accrued Issue Discount, and such accrued and
unpaid interest (including contingent interest), if any, shall be due and
payable immediately. If an Event of Default specified in Section 6.01(e) or (f)
occurs and is continuing, the Initial Accreted Principal

                                       32



Amount plus accrued Issue Discount, and any accrued and unpaid interest
(including contingent interest), on all the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders. The Holders of a majority in aggregate
Principal Amount at Maturity of the Securities at the time outstanding, by
notice to the Trustee (and without notice to any other Securityholder) may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of the Initial Accreted Principal Amount
plus accrued Issue Discount and any accrued and unpaid interest (including
contingent interest) that have become due solely as a result of acceleration and
if all amounts due to the Trustee under Section 7.07 have been paid. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.

      SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the Initial Accreted Principal Amount plus accrued Issue Discount on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.

      The Trustee may maintain a proceeding even if the Trustee does not possess
any of the Securities or does not produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or acquiescence in, the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.

      SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
aggregate Principal Amount at Maturity of the Securities at the time
outstanding, by notice to the Trustee (and without notice to any other
Securityholder), may waive an existing Default and its consequences except (a)
an Event of Default described in Section 6.01(a) or (b), (b) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected or (c) a Default which constitutes a
failure to convert any Security in accordance with the terms of Article 11. When
a Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right. This Section 6.04
shall be in lieu of Section 316(a)1(B) of the TIA and such Section 316(a)1(B) is
hereby expressly excluded from this Indenture, as permitted by the TIA.

      SECTION 6.05. Control by Majority. The Holders of a majority in aggregate
Principal Amount at Maturity of the Securities at the time outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture or that the Trustee determines in good faith is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability unless the Trustee is offered indemnity
satisfactory to it. This Section 6.05 shall be in lieu of Section 316(a)1(A) of
the TIA and such Section 316(a)1(A) is hereby expressly excluded from this
Indenture, as permitted by the TIA.

      SECTION 6.06. Limitation on Suits. A Securityholder may not pursue any
remedy with respect to this Indenture or the Securities unless:

      (a) the Holder gives to the Trustee written notice stating that an Event
of Default is continuing;

                                       33


      (b) the Holders of at least 25% in aggregate Principal Amount at Maturity
of the Securities at the time outstanding make a written request to the Trustee
to pursue the remedy;

      (c) such Holder or Holders offer to the Trustee security or indemnity
satisfactory to the Trustee against any loss, liability or expense;

      (d) the Trustee does not comply with the request within 60 days after
receipt of such notice, request and offer of security or indemnity; and

      (e) the Holders of a majority in aggregate Principal Amount at Maturity of
the Securities at the time outstanding do not give the Trustee a direction
inconsistent with the request during such 60-day period.

      A Securityholder may not use this Indenture to prejudice the rights of any
other Securityholder or to obtain a preference or priority over any other
Securityholder.

      SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
the Principal Amount at Maturity (or if the Securities have been converted to
semi-annual coupon notes following a Tax Event pursuant to Article 10, the
Restated Principal Amount), Initial Accreted Principal Amount plus accrued Issue
Discount, Redemption Price, Purchase Price, Change in Control Purchase Price,
contingent interest or interest, if any, in respect of the Securities held by
such Holder, on or after the respective due dates expressed in the Securities or
any Redemption Date, and to convert the Securities in accordance with Article
11, or to bring suit for the enforcement of any such payment on or after such
respective dates or the right to convert, shall not be impaired or affected
adversely without the consent of such Holder.

      SECTION 6.08. Collection Suit by Trustee. If an Event of Default described
in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
and the Guarantor for the whole amount owing with respect to the Securities and
the amounts provided for in Section 7.07.

      SECTION 6.09. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or the Guarantor or of such other obligor or their creditors, the
Trustee (irrespective of whether the Principal Amount at Maturity, Initial
Accreted Principal Amount plus accrued Issue Discount, Redemption Price,
Purchase Price, Change in Control Purchase Price, contingent interest or
interest, if any, in respect of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company or the Guarantor for the
payment of any such amount) shall be entitled and empowered, by intervention in
such proceeding or otherwise,

            (a) to file and prove a claim for the whole amount of the Principal
      Amount at Maturity, Initial Accreted Principal Amount plus accrued Issue
      Discount, Redemption Price, Purchase Price, Change in Control Purchase
      Price, contingent interest or interest, if any, and to file such other
      papers or documents as may be necessary or advisable in order to have the
      claims of the Trustee (including any claim for the reasonable
      compensation, expenses,

                                       34


      disbursements and advances of the Trustee, its agents and counsel or any
      other amounts due the Trustee under Section 7.07) and of the Holders
      allowed in such judicial proceeding, and

            (b) to collect and receive any moneys or other property payable or
      deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.

      Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

      SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:

      FIRST: to the Trustee for amounts due under Section 7.07;

      SECOND: to Securityholders for amounts due and unpaid on the Securities
      for the Principal Amount at Maturity, Initial Accreted Principal Amount
      plus accrued Issue Discount, Redemption Price, Purchase Price, Change in
      Control Purchase Price, contingent interest or interest, if any, as the
      case may be, ratably, without preference or priority of any kind,
      according to such amounts due and payable on the Securities; and

      THIRD: the balance, if any, to the Company or the Guarantor.

      The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Securityholder and the Company a
notice that states the record date, the payment date and the amount to be paid.

      SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit of
an undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 or a suit by Holders of more than 10% in aggregate Principal Amount at
Maturity of the Securities at the time outstanding. This Section 6.11 shall be
in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly
excluded from this Indenture, as permitted by the TIA.

      SECTION 6.12. Waiver of Stay, Extension or Usury Laws. The Company and the
Guarantor covenant (to the extent that they may lawfully do so) that they will
not at any time insist

                                       35

upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury or other law wherever
enacted, now or at any time hereafter in force, which would prohibit or forgive
the Company or the Guarantor from paying all or any portion of the Principal
Amount at Maturity, Initial Accreted Principal Amount plus accrued Issue
Discount, Redemption Price, Purchase Price, Change in Control Purchase Price,
contingent interest, if any, interest payable pursuant to Article 10, delivering
Common Stock upon a conversion pursuant to Article 11 or paying the cash
equivalent thereof, in respect of Securities, or any interest on such amounts,
as contemplated herein, or which may affect the covenants or the performance of
this Indenture; and the Company and the Guarantor (to the extent that they may
lawfully do so) hereby expressly waive all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

                                   ARTICLE 7

                                     TRUSTEE

      SECTION 7.01. Duties of Trustee.

      (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs.

      (b) Except during the continuance of an Event of Default:

            (1) the Trustee need perform only those duties that are specifically
      set forth in this Indenture and no implied covenants or obligations shall
      be read into this Indenture against the Trustee; and

            (2) in the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, upon certificates or opinions furnished
      to the Trustee and conforming to the requirements of this Indenture, but
      in case of any such certificates or opinions which by any provision hereof
      are specifically required to be furnished to the Trustee, the Trustee
      shall examine the certificates and opinions to determine whether or not
      they conform to the requirements of this Indenture, but need not confirm
      or investigate the accuracy of mathematical calculations or other facts
      stated therein.

This Section 7.01(b) shall be in lieu of Section 315(a) of the TIA and such
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA.

      (c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:

            (1) this paragraph (c) does not limit the effect of paragraph (b) of
      this Section 7.01;

                                       36

            (2) the Trustee shall not be liable for any error of judgment made
      in good faith by a Responsible Officer unless it is proved that the
      Trustee was negligent in ascertaining the pertinent facts; and

            (3) the Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 6.05.

Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1),
315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and
315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the
TIA.

      (d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.

      (e) The Trustee may refuse to perform any duty or exercise any right or
power or expend or risk its own funds or otherwise incur any financial liability
unless it receives indemnity satisfactory to it against any loss, liability or
expense.

      (f) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee (acting in
any capacity hereunder) shall be under no liability for interest on any money
received by it hereunder unless otherwise agreed in writing with the Company.

      SECTION 7.02. Rights of Trustee. Subject to its duties and
responsibilities under the provisions of Section 7.01, and, except as expressly
excluded from this Indenture pursuant to said Section 7.01, under the TIA:

      (a) the Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;

      (b) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate or a Guarantor's Officers'
Certificate if such matter pertains to the Guarantor;

      (c) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;

      (d) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith which it believes to be authorized or
within its rights or powers conferred under this Indenture;

      (e) the Trustee may consult with counsel selected by it and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or

                                       37

suffered or omitted by it hereunder in good faith and in accordance with such
advice or opinion of Counsel;

      (f) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders, pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity satisfactory to
it against the costs, expenses and liabilities which may be incurred therein or
thereby;

      (g) any request or direction of the Company or the Guarantor, as the case
may be, mentioned herein shall be sufficiently evidenced by a Company Request or
Company Order or a Guarantor Request or Guarantor Order, as the case may be, and
any resolution of the Board of Directors of the Company or the Guarantor, as the
case may be, may be sufficiently evidenced by a resolution of such Board of
Directors;

      (h) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company and the Guarantor, personally or by
agent or attorney at the sole cost of the Company or the Guarantor, as the case
may be, and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation;

      (i) the Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Securities and this Indenture;

      (j) the rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder; and

      (k) the Trustee may request that the Company deliver an Officers'
Certificate and that the Guarantor deliver a Guarantor's Officers' Certificate
setting forth the names of individuals and/or titles of officers authorized at
such time to take specified actions pursuant to this Indenture, which Officers'
Certificate or Guarantor's Officers' Certificate may be signed by any person
authorized to sign such Officers' Certificate or Guarantor's Officers'
Certificate, including any person specified as so authorized in any such
certificate previously delivered and not superseded.

      SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates or the Guarantor or its
Affiliates with the same rights it would have if it were not Trustee. Any Paying
Agent, Registrar, Conversion Agent or co-registrar may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.

                                       38

      SECTION 7.04. Trustee's Disclaimer. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use or application of the proceeds from the
Securities, it shall not be responsible for any statement in the registration
statement for the Securities under the Securities Act or in the Indenture or the
Securities (other than its certificate of authentication), or the determination
as to which beneficial owners are entitled to receive any notices hereunder.

      SECTION 7.05. Notice of Defaults. If a Default occurs and if it is known
to the Trustee, the Trustee shall give to each Securityholder notice of the
Default within 90 days after it occurs unless such Default shall have been cured
or waived before the giving of such notice. Except in the case of a Default
described in Section 6.01(a) or (b), the Trustee may withhold the notice if and
so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Securityholders. The second
sentence of this Section 7.05 shall be in lieu of the proviso to Section 315(b)
of the TIA and such proviso is hereby expressly excluded from this Indenture, as
permitted by the TIA. The Trustee shall not be deemed to have knowledge of a
Default unless a Responsible Officer of the Trustee has received written notice
of such Default.

      SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each May
15 beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b).

      A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each securities exchange, if any, on which the
Securities are listed. The Company agrees to promptly notify the Trustee
whenever the Securities become listed on any securities exchange and of any
delisting thereof.

      SECTION 7.07. Compensation and Indemnity.

      The Company and the Guarantor agree:

            (a) to pay to the Trustee from time to time such compensation as the
      Company or the Guarantor and the Trustee shall from time to time agree in
      writing for all services rendered by it hereunder (which compensation
      shall not be limited (to the extent permitted by law) by any provision of
      law in regard to the compensation of a trustee of an express trust);

            (b) to reimburse the Trustee upon its request for all reasonable
      expenses, disbursements and advances incurred or made by the Trustee in
      accordance with any provision of this Indenture (including the reasonable
      compensation and the expenses, advances and disbursements of its agents
      and counsel), except any such expense, disbursement or advance as may be
      attributable to its negligence or bad faith; and

            (c) to indemnify the Trustee or any predecessor, Trustee and their
      agents for, and to hold them harmless against, any loss, damage, claim,
      liability, cost or expense (including attorney's fees and taxes (other
      than taxes based upon, measured by or determined by the income of the
      Trustee)) incurred without negligence or bad faith on its part, arising
      out of or in connection with the acceptance or administration of this
      trust, including the costs and expenses of defending itself against any
      claim (whether asserted by the Company, the

                                       39

      Guarantor or any Holder or any other Person) or liability in connection
      with the exercise or performance of any of its powers or duties hereunder.

      To secure the Company's or the Guarantor's payment obligations in this
Section 7.07, the Trustee shall have a lien prior to the Securities on all money
or property held or collected by the Trustee, except that held in trust to pay
the Principal Amount at Maturity, Initial Accreted Principal Amount plus accrued
Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase
Price, contingent interest, interest payable pursuant to Article 10, or
interest, if any, as the case may be, on particular Securities, or Common Stock
delivered upon a conversion pursuant to Article 11, or the cash equivalent
thereof.

      The Company's or the Guarantor's payment obligations pursuant to this
Section 7.07 shall survive the discharge of this Indenture and the resignation
or removal of the Trustee. When the Trustee incurs expenses after the occurrence
of a Default specified in Section 6.01(e) or (f), the expenses including the
reasonable charges and expenses of its counsel, are intended to constitute
expenses of administration under any Bankruptcy Law.

      SECTION 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company and the Guarantor; provided, however, no such resignation
shall be effective until a successor Trustee has accepted its appointment
pursuant to this Section 7.08. The Holders of a majority in aggregate Principal
Amount at Maturity of the Securities at the time outstanding may remove the
Trustee by so notifying the Trustee, the Company and the Guarantor. The Company
or the Guarantor shall remove the Trustee if:

      (a) the Trustee fails to comply with Section 7.10;

      (b) the Trustee is adjudged bankrupt or insolvent;

      (c) a receiver or public officer takes charge of the Trustee or its
property; or

      (d) the Trustee otherwise becomes incapable of acting.

      If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company or the Guarantor shall promptly appoint,
by resolution of its Board of Directors, a successor Trustee.

      A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee, the Company and the Guarantor satisfactory in form and
substance to the retiring Trustee, the Company and the Guarantor. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.

      If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, the
Guarantor or the Holders of a majority in aggregate Principal Amount at Maturity
of the Securities at the time outstanding may petition any court of competent
jurisdiction at the expense of the Company or the Guarantor for the appointment
of a successor Trustee.

                                       40

      If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

      SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee.

      SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The Trustee
(or its parent holding company) shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition. Nothing herein contained shall prevent the Trustee from filing with
the Commission the application referred to in the penultimate paragraph of TIA
Section 310(b).

      SECTION 7.11. Preferential Collection of Claims Against Company and
Guarantor. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.

                                    ARTICLE 8

                             DISCHARGE OF INDENTURE

      SECTION 8.01. Discharge of Liability on Securities. When (i) the Company
or the Guarantor delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable and the Company or the
Guarantor deposits with the Trustee cash or, if expressly permitted by the terms
of the Securities, Common Stock sufficient to pay all amounts due and owing on
all outstanding Securities (other than Securities replaced pursuant to Section
2.07), and if in either case the Company or the Guarantor pays all other sums
payable hereunder by the Company and the Guarantor, then this Indenture shall,
subject to Section 7.07, cease to be of further effect. The Trustee shall join
in the execution of a document prepared by the Company or the Guarantor
acknowledging satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and Opinion of Counsel and at
the cost and expense of the Company or on demand of the Guarantor accompanied by
a Guarantor's Officer's Certificate and Opinion of Counsel and at the cost and
expense of the Guarantor.

      SECTION 8.02. Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company or the Guarantor upon written request any money or
securities held by them for the payment of any amount with respect to the
Securities that remains unclaimed for two years, subject to applicable unclaimed
property law. After return to the Company or the Guarantor, Holders entitled to
the money or securities must look to the Company or the Guarantor for payment as
general creditors unless an applicable abandoned property law designates another
person and the Trustee and the Paying Agent shall have no further liability to
the Securityholders with respect to such money or securities for that period
commencing after the return thereof.

                                       41

                                   ARTICLE 9

                                   AMENDMENTS

      SECTION 9.01. Without Consent of Holders. The Company, the Guarantor and
the Trustee may amend this Indenture or the Securities without the consent of
any Securityholder:

      (a) to cure any ambiguity, omission, defect or inconsistency;

      (b) to comply with Article 5 or Section 11.15;

      (c) to secure the Company's obligations under the Securities and this
Indenture;

      (d) to add to the Company's or the Guarantors' covenants for the benefit
of the Securityholders or to surrender any right or power conferred upon the
Company or the Guarantor;

      (e) to make any change to comply with the TIA, or any amendment thereto,
or to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the TIA, or as necessary in connection with
the registration of the Securities under the Securities Act; or

      (f) to make any change that does not adversely affect the rights of any
Holders.

      SECTION 9.02. With Consent of Holders. With the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding, the Company, the Guarantor and the Trustee
may amend this Indenture or the Securities. However, without the consent of each
Securityholder affected, an amendment to this Indenture or the Securities may
not:

      (a) change the provisions of this Indenture that relate to modifying or
amending this Indenture;

      (b) make any change in the Stated Maturity, the manner or rate of accrual
in connection with Issue Discount, make any change in the manner of calculation
of, or that adversely affects the right to receive, contingent interest, reduce
the rate of interest referred to in paragraph 1 of the Securities, reduce the
rate of interest referred to in Section 10.01 upon the occurrence of a Tax
Event, or extend the time for payment of Issue Discount, contingent interest or
interest, if any, on any Security;

      (c) reduce the Principal Amount at Maturity, accrued Issue Discount,
Restated Principal Amount or the Initial Accreted Principal Amount of or extend
the Stated Maturity of any Security;

      (d) reduce the Redemption Price, Purchase Price or Change in Control
Purchase Price of any Security;

      (e) make any Security payable in money or securities other than that
stated in the Security;

      (f) make any change in Section 6.04 or this Section 9.02, except to
increase any percentage set forth therein;

                                       42

      (g) make any change that adversely affects the right to convert any
Security;

      (h) make any change that adversely affects the right to require the
Company to purchase the Securities in accordance with the terms thereof and this
Indenture;

      (i) make any change to the Guarantee that adversely affects the rights of
Holders of the Securities; or

      (j) impair the right to institute suit for the enforcement of any payment
with respect to, or conversion of, the Securities.

      It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.

      After an amendment under this Section 9.02 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment.

      SECTION 9.03. Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA.

      SECTION 9.04. Revocation and Effect of Consents, Waivers and Actions.
Until an amendment, waiver or other action by Holders becomes effective, a
consent thereto by a Holder of a Security hereunder is a continuing consent by
the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same obligation as the consenting Holder's Security,
even if notation of the consent, waiver or action is not made on the Security.
However, any such Holder or subsequent Holder may revoke the consent, waiver or
action as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date the amendment, waiver or
action becomes effective. After an amendment, waiver or action becomes
effective, it shall bind every Securityholder.

      SECTION 9.05. Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company or the Guarantor shall so determine, new
Securities so modified as to conform, in the opinion of the Board of Directors
of the Company or the Guarantor, to any such supplemental indenture may be
prepared and executed by the Company or the Guarantor and authenticated and
delivered by the Trustee in exchange for outstanding Securities.

      SECTION 9.06. Trustee to Sign Supplemental Indentures. The Trustee shall
sign any supplemental indenture authorized pursuant to this Article 9 if the
amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign such supplemental indenture. In signing such supplemental indenture
the Trustee shall receive, and (subject to the provisions of Section 7.01) shall
be fully protected in relying upon, an Officers' Certificate or a Guarantor's
Officers' Certificate and an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture.

      SECTION 9.07. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith,

                                       43

and such supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.

                                   ARTICLE 10

                          SPECIAL TAX EVENT CONVERSION

      SECTION 10.01. Optional Conversion to Semi-Annual Coupon Note Upon Tax
Event. Upon the occurrence of a Tax Event, the Company may elect to pay interest
on all the Securities in lieu of future Issue Discount at the rate of 1% per
annum on a restated principal amount per $1,000 original Principal Amount at
Maturity (the "Restated Principal Amount") equal to the Initial Accreted
Principal Amount plus Issue Discount accrued through the date of such election
(the "Option Exercise Date") and shall pay such interest in cash semi-annually
on February 8 and August 8 of each year (each an "Interest Payment Date") to
holders of record at the close of business on the 15th calendar day immediately
preceding such Interest Payment Date (each, a "Regular Record Date"). Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months and will accrue semi-annually from the most recent date on which interest
(other than contingent interest) has been paid or, in the case of the first
interest computation, from the Option Exercise Date. Within 15 days of the
occurrence of a Tax Event, the Company shall mail a written notice of such Tax
Event by facsimile and first-class mail to the Trustee and within 15 days of its
exercise of such option the Company shall mail a written notice of the Option
Exercise Date by facsimile and first-class mail to the Trustee and by first
class mail to the Holders of the Securities. From and after the Option Exercise
Date, (i) the Company shall be obligated to pay at Stated Maturity, in lieu of
the Principal Amount at Maturity of a Security, the Restated Principal Amount
thereof, (ii) "Initial Accreted Principal Amount and accrued Issue Discount,"
"Initial Accreted Principal Amount plus Issue Discount" or similar words, as
used herein, shall mean Restated Principal Amount plus accrued and unpaid
interest under this Article 10 with respect to any Security and (iii) contingent
interest shall cease to accrue on the Securities. Securities authenticated and
delivered after the Option Exercise Date may, and shall if required by the
Trustee, bear a notation in a form approved by the Trustee as to the conversion
of the Securities to semi-annual coupon notes.

                                   ARTICLE 11

                                   CONVERSION

      SECTION 11.01. Conversion Privilege. A Holder of a Security may convert
such Security into cash and Common Stock at any time during the period stated in
paragraph 9 of the Securities, subject to the provisions of this Article 11. The
combined value of the cash payment and the number of shares of Common Stock, if
any, issuable upon conversion of a Security per $1,000 of Principal Amount at
Maturity thereof (the "Conversion Rate") shall be determined in accordance with
the provisions of paragraph 9 of the Securities, subject to adjustment as set
forth herein and therein.

      A Holder may convert a portion of the Principal Amount at Maturity of a
Security if the portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to conversion of all of a Security also apply to
conversion of a portion of a Security.

      "Average Sale Price" means the average of the Sale Prices of the Common
Stock for the shortest of:

                                       44

      (i) 30 consecutive trading days ending on the last full trading day prior
      to the Time of Determination with respect to the rights, warrants or
      options or distribution in respect of which the Average Sale Price is
      being calculated,

      (ii) the period (x) commencing on the date next succeeding the first
      public announcement of (a) the issuance of rights, warrants or options or
      (b) the distribution, in each case, in respect of which the Average Sale
      Price is being calculated and (y) proceeding through the last full trading
      day prior to the Time of Determination with respect to the rights,
      warrants or options or distribution in respect of which the Average Sale
      Price is being calculated (excluding days within such period, if any,
      which are not trading days), and

      (iii) the period, if any, (x) commencing on the date next succeeding the
      Ex-Dividend Time with respect to the next preceding (a) issuance of
      rights, warrants or options or (b) distribution, in each case, for which
      an adjustment is required by the provisions of Section 11.06(d), 11.07 or
      11.08 and (y) proceeding through the last full trading day prior to the
      Time of Determination with respect to the rights, warrants or options or
      distribution in respect of which the Average Sale Price is being
      calculated (excluding days within such period, if any, which are not
      trading days).

      In the event that the Ex-Dividend Time (or in the case of a subdivision,
combination or reclassification, the effective date with respect thereto) with
respect to a dividend, subdivision, combination or reclassification to which
Section 11.06(a), (b), (c) or (e) applies occurs during the period applicable
for calculating "Average Sale Price" pursuant to the definition in the preceding
sentence, "Average Sale Price" shall be calculated for such period in a manner
determined by the Board of Directors of the Company to reflect the impact of
such dividend, subdivision, combination or reclassification on the Sale Price of
the Common Stock during such period.

      "Time of Determination" means the time and date of the earlier of (i) the
determination of stockholders entitled to receive rights, warrants or options or
a distribution, in each case, to which Section 11.07 or 11.08 applies and (ii)
the time ("Ex-Dividend Time") immediately prior to the commencement of
"ex-dividend" trading for the Common Stock with respect to which such
distribution will be made on the New York Stock Exchange or, if the Common Stock
is not listed on the New York Stock Exchange, on the principal other national or
regional securities exchange on which the Common Stock is then listed or, if the
Common Stock is not listed on a national or regional securities exchange, on the
National Association of Securities Dealers Automated Quotation System or, if the
Common Stock is not quoted on the National Association of Securities Dealers
Automated Quotation System, on the principal other market on which the Common
Stock is then traded.

      Notwithstanding any other provision of this Indenture, in no event shall
the Conversion Rate exceed the Maximum Conversion Rate.

      SECTION 11.02. Conversion Procedure. To convert a Security a Holder must
satisfy the requirements in paragraph 9 of the Securities. The date on which the
Holder satisfies all those requirements is the conversion date (the "Conversion
Date"). As soon as practicable after the Conversion Date, the Company shall
deliver to the Holder, through the Conversion Agent, cash and a certificate for
the number of full shares of Common Stock, if any, issuable upon the conversion
and cash in lieu of any fractional share determined pursuant to Section 11.03.
The person in whose name the certificate is registered shall be treated as a
stockholder of record on and after the Conversion Date; provided, however, that
no surrender of a Security on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the person or persons
entitled to receive the shares of Common Stock upon such conversion as the
record holder or holders of such shares of

                                       45

Common Stock on such date, but such surrender shall be effective to constitute
the person or persons entitled to receive such shares of Common Stock as the
record holder or holders thereof for all purposes at the close of business on
the next succeeding day on which such stock transfer books are open; such
conversion shall be for cash and Common Stock together valued at the Conversion
Rate in effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
Upon conversion of a Security, such person shall no longer be a Holder of such
Security.

      No payment or adjustment will be made for dividends on, or other
distributions with respect to, any Common Stock except as provided in this
Article 11. On conversion of a Security, that portion of accrued Original Issue
Discount and accrued Issue Discount (or interest, if the Company has exercised
its option provided for in Section 10.01) attributable to the period from the
Issue Date (or, if the Company has exercised the option provided for in Section
10.01, the later of (x) the date of such exercise by the Company and (y) the
date on which interest was last paid) of the Security through the Conversion
Date and (except as provided below) accrued contingent interest with respect to
the converted Security shall not be cancelled, extinguished or forfeited, but
rather shall be deemed to be paid in full to the Holder thereof through delivery
of the cash payment and the Common Stock, if any, in exchange for the Security
being converted pursuant to the provisions hereof; and such cash payment and the
fair market value of such shares of Common Stock, if any, shall be treated as
issued, to the extent thereof, first in exchange for Original Issue Discount and
Issue Discount (or interest, if the Company has exercised its option provided
for in Section 10.01) accrued through the Conversion Date and accrued contingent
interest, and the balance, if any, of such cash payment and such fair market
value of such Common Stock, if any, shall be treated as issued in exchange for
the Initial Accreted Principal Amount of the Security being converted pursuant
to the provisions hereof.

      If the Holder converts more than one Security at the same time, the cash
payment and the number of shares of Common Stock, if any, issuable upon the
conversion shall be based on the total Principal Amount at Maturity of the
Securities converted.

      If the last day on which a Security may be converted is a Legal Holiday,
the Security may be surrendered on the next succeeding Business Day that is not
a Legal Holiday; provided, however, the Security shall be deemed to have been
converted and surrendered as of such last day, notwithstanding the occurrence of
a Legal Holiday on such day.

      Upon surrender of a Security that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Security (having the Guarantee endorsed thereon) in an authorized denomination
equal in Principal Amount at Maturity to the unconverted portion of the Security
surrendered.

      SECTION 11.03. Fractional Shares. The Company will not issue a fractional
share of Common Stock upon conversion of a Security. Instead, the Company will
deliver cash for the current market value of the fractional share. The current
market value of a fractional share shall be determined, to the nearest 1/1,000th
of a share, by multiplying the Sale Price of the Common Stock, on the last
trading day prior to the Conversion Date, of a full share by the fractional
amount and rounding the product to the nearest whole cent.

      SECTION 11.04. Taxes on Conversion. If a Holder converts a Security, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
the issue of any shares of Common Stock upon the conversion. However, the Holder
shall pay any such tax which is due

                                       46

because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the cash payment and
the certificates representing the Common Stock being issued in a name other than
the Holder's name until the Conversion Agent receives a sum sufficient to pay
any tax which will be due because the cash payment is to be made to, or shares
are to be issued in a name other than, the Holder's name. Nothing herein shall
preclude any tax withholding required by law or regulations.

      SECTION 11.05. Company to Provide Stock. The Company shall, prior to
issuance of any Securities under this Article 11, and from time to time as may
be necessary, reserve out of its authorized but unissued Common Stock a
sufficient number of shares of Common Stock to permit the conversion of the
Securities.

      All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.

      The Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will list or cause to have quoted such
shares of Common Stock on each national securities exchange or in the
over-the-counter market or such other market on which the Common Stock is then
listed or quoted.

      SECTION 11.06. Adjustment for Change In Capital Stock. If, after the Issue
Date of the Securities, the Company:

      (a) pays a dividend or makes a distribution on its Common Stock in shares
of its Common Stock;

      (b) subdivides its outstanding shares of Common Stock into a greater
number of shares;

      (c) combines its outstanding shares of Common Stock into a smaller number
of shares;

      (d) pays a dividend or makes a distribution on its Common Stock in shares
of its Capital Stock (other than Common Stock or rights, warrants or options for
its Capital Stock); or

      (e) issues by reclassification of its Common Stock any shares of its
Capital Stock (other than rights, warrants or options for its Capital Stock),

then the conversion privilege and the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive in cash and Capital Stock the value of the
number of shares of Capital Stock of the Company which such Holder would have
owned immediately following such action if such Holder had converted the
Security immediately prior to such action.

      The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.

      If after an adjustment a Holder of a Security upon conversion of such
Security may receive shares of two or more classes of Capital Stock of the
Company, the Conversion Rate shall thereafter

                                       47

be subject to adjustment upon the occurrence of an action taken with respect to
any such class of Capital Stock as is contemplated by this Article 11 with
respect to the Common Stock, on terms comparable to those applicable to Common
Stock in this Article 11.

      SECTION 11.07. Adjustment for Rights Issue. If after the Issue Date of the
Securities, the Company distributes any rights, warrants or options to all
holders of its Common Stock entitling them, for a period expiring within 60 days
after the record date for such distribution, to purchase shares of Common Stock
at a price per share less than the Sale Price of the Common Stock as of the Time
of Determination, the Conversion Rate shall be adjusted in accordance with the
formula:

                   R'   =     R x            (O + N)
                                   ---------------------------
                                       (O + [(N x P)/M)]

      where:

      R' = the adjusted Conversion Rate.

      R = the current Conversion Rate.

      O = the number of shares of Common Stock outstanding on the record date
for the distribution to which this Section 11.07 is being applied.

      N = the number of additional shares of Common Stock offered pursuant to
the distribution.

      P = the offering price per share of the additional shares.

      M = the Average Sale Price, minus, in the case of (i) a distribution to
which Section 11.06(d) applies, (ii) a distribution to which Section 11.08
applies, or (iii) a distribution to which Section 11.09 applies, for which, in
each case, (x) the record date shall occur on or before the record date for the
distribution to which this Section 11.07 applies and (y) the Ex-Dividend Time
shall occur on or after the date of the Time of Determination for the
distribution to which this Section 11.07 applies, the fair market value (on the
record date for the distribution to which this Section 11.07 applies) of:

      (1) the Capital Stock of the Company distributed in respect of each share
of Common Stock in such Section 11.06(d) distribution;

      (2) the assets of the Company or debt securities or any rights, warrants
or options to purchase securities of the Company distributed in respect of each
share of Common Stock in such Section 11.08 distribution; and

      (3) the cash distributed in respect of each share of Common Stock in such
Section 11.09 distribution.

      The Board of Directors shall determine fair market values for the purposes
of this Section 11.07.

                                       48

      The adjustment shall become effective immediately after the record date
for the determination of shareholders entitled to receive the rights, warrants
or options to which this Section 11.07 applies. If all of the shares of Common
Stock subject to such rights, warrants or options have not been issued when such
rights, warrants or options expire, then the Conversion Rate shall promptly be
readjusted to the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such rights, warrants or options been made on
the basis of the actual number of shares of Common Stock issued upon the
exercise of such rights, warrants or options.

      No adjustment shall be made under this Section 11.07 if the application of
the formula stated above in this Section 11.07 would result in a value of R'
that is equal to or less than the value of R.

      SECTION 11.08. Adjustment for Asset Distributions.

      (a) Subject to 11.08(b), if, after the Issue Date of the Securities, the
Company distributes to all holders of its Common Stock any of its assets or debt
securities or any rights, warrants or options to purchase securities of the
Company (excluding (x) distributions of Capital Stock referred to in Section
11.06, (y) distributions of rights, warrants or options referred to in Section
11.07 and (z) any cash dividends or other cash distributions, including those
referred to in Section 11.09), the Conversion Rate shall be adjusted, subject to
the provisions of Section 11.08(c), in accordance with the formula:

                             R'         =       R x      M
                                                      -------
                                                       M - F
where:

      R' = the adjusted Conversion Rate.

      R  = the current Conversion Rate.

      M  = the Average Sale Price, minus, in the case of (i) a distribution to
which Section 11.06(d) applies, (ii) a distribution to which Section 11.07
applies or (iii) a distribution to which Section 11.09 applies, for which, in
each case, (i) the record date shall occur on or before the record date for the
distribution to which this Section 11.08 applies and (ii) the Ex-Dividend Time
shall occur on or after the date of the Time of Determination for the
distribution to which this Section 11.08 applies, the fair market value (on the
record date for the distribution to which this Section 11.08 applies) of:

      (1) any Capital Stock of the Company distributed in respect of each share
of Common Stock in such Section 11.06(d) distribution;

      (2) any rights, warrants or options in respect of each share of Common
Stock in such Section 11.07 distribution; and

      (3) any cash distributed in respect of each share of Common Stock in such
Section 11.09 distribution.

      F = the fair market value (on the record date for the distribution to
which this Section 11.08 applies) of the assets, securities, rights, warrants or
options to be distributed in respect of each share of Common Stock in the
distribution to which this Section 11.08 is being applied.

                                       49

      The Board of Directors shall determine fair market values for the purposes
of this Section 11.08.

      The adjustment shall become effective immediately after the record date
for the determination of shareholders entitled to receive the distribution to
which this Section 11.08 applies.

      (b) If, after the Issue Date of the Securities, the Company pays a
dividend or makes a distribution to all holders of its Common Stock consisting
of Capital Stock of any class or series, or similar equity interests, of or
relating to a Subsidiary or other business unit of the Company, the Conversion
Rate shall be adjusted in accordance with the formula:

                                      R' = R x (1 + F/M)

where:

      R' = the adjusted Conversion Rate.

      R  = the current Conversion Rate.

      M  = the average of the Sale Prices of the Common Stock for the 10 trading
days commencing on and including the fifth trading day after the date on which
"ex-dividend trading" commences for the Common Stock with respect to which such
dividend or distribution will be made on the New York Stock Exchange or, if the
Common Stock is not listed on the New York Stock Exchange, on the principal
other national or regional securities exchange on which the Common Stock is then
listed or, if the Common Stock is not listed on a national or regional
securities exchange, on the National Association of Securities Dealers Automated
Quotation System or, if the Common Stock is not quoted on the National
Association of Securities Dealers Automated Quotation System, on the principal
other market on which the Common Stock is then traded (the "Ex-Dividend Date").

      F = the fair market value of the Capital Stock or similar equity interests
distributed in respect of each share of Common Stock for which this Section
11.08(b) applies shall mean the number of shares of Capital Stock or similar
equity interests distributed in respect of each share of Common Stock multiplied
by the average of the Sale Prices of those shares of Capital Stock or similar
equity interests distributed for the 10 trading days commencing on and including
the fifth trading day after the effectiveness of the Ex-Dividend Date (or, in
the case of similar equity interests, the trading price for the principal
exchange on which such interests are listed or quoted and, if such equity
interests are not so traded or quoted, at the fair market value thereof as
determined by the Board of Directors).

      (c) In the event that, with respect to any distribution to which Section
11.08(a) would otherwise apply, the difference between "M-F" is less than $1.00
or "F" is equal to or greater than "M", then the adjustment provided by Section
11.08(a) shall not be made and in lieu thereof the provisions of Section 11.15
shall apply to such distribution.

      SECTION 11.09. Adjustment for Certain Cash Distributions. If, after the
Issue Date of the Securities, the Company distributes to all holders of its
Common Stock cash dividends or other cash distributions (excluding (x) any such
dividend or distribution in connection with liquidation, dissolution or winding
up of the Company and (y) any quarterly cash dividend on the Common Stock of the
Company to the extent that such quarterly cash dividend does not exceed, per
share of Common

                                       50


Stock of the Company, the Dividend Threshold Amount), the Conversion Rate shall
be adjusted, in accordance with the formula:

                               R'     =     R  x          M
                                                       -------
                                                        M - D
where:

      R' = the adjusted Conversion Rate.

      R = the current Conversion Rate.

      M = the average of the Sale Prices of the Common Stock for the 10 trading
days ending on the earlier of the date of calculation of such average or the day
before the Ex-Dividend Date for the distribution to which this Section 11.09
applies.

      D = the cash distributed in respect of each share of Common Stock for
which this Section 11.09 applies, which per share amount, in the case of a
quarterly dividend subject to this Section 11.09, shall be based on the amount
of cash distributed in excess of the Dividend Threshold Amount.

      The adjustment shall become effective immediately after the record date
for the determination of shareholders entitled to receive the distribution to
which this Section 11.09 applies.

      The "Dividend Threshold Amount" means $0.10 per share.

      The Dividend Threshold Amount shall be adjusted whenever the Conversion
Rate is adjusted by multiplying the Dividend Threshold Amount by a fraction, the
numerator of which is the Conversion Rate in effect immediately prior to the
adjustment thereof and the denominator of which is the Conversion Rate as so
adjusted, provided that no adjustment will be made to the Dividend Threshold
Amount for any adjustment made to the Conversion Rate pursuant to this Section
11.09.

      SECTION 11.10. When Adjustment May Be Deferred. No adjustment in the
Conversion Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Rate; provided that the Company will
carry forward any adjustments that are less than 1% of the conversion rate and
make such carried forward adjustments within one year of the first such
adjustment carried forward or upon notice of redemption, in either case,
regardless of whether the aggregate adjustment is less than 1%. Any adjustments
that are not made shall be carried forward and taken into account in any
subsequent adjustment.

      All calculations under this Article 11 shall be made to the nearest cent
or to the nearest 1/1,000th of a share, as the case may be.

      SECTION 11.11. When No Adjustment Required. No adjustment need be made for
a transaction referred to in Section 11.06, 11.07, 11.08, 11.09 or 11.15 if
Securityholders are to participate in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of Common Stock participate in the
transaction. Such participation by Securityholders may include participation
upon conversion

                                       51

provided that an adjustment shall be made at such time as the Securityholders
are no longer entitled to participate.

      No adjustment need be made for rights to purchase Common Stock pursuant to
a Company plan for reinvestment of dividends or interest.

      No adjustment need be made for a change in the par value or no par value
of the Common Stock.

      To the extent the Securities become convertible pursuant to this Article
11 into cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.

      SECTION 11.12. Notice of Adjustment. Whenever the Conversion Rate is
adjusted, the Company shall promptly mail to Securityholders a notice of the
adjustment. The Company shall file with the Trustee and the Conversion Agent
such notice and a certificate from the Company's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. The certificate shall be conclusive evidence that the adjustment is correct.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate except to exhibit the same
to any Holder desiring inspection thereof.

      SECTION 11.13. Voluntary Increase. The Company from time to time may
increase the Conversion Rate by any amount for any period of time. Whenever the
Conversion Rate is increased, the Company shall mail to Securityholders and file
with the Trustee and the Conversion Agent a notice of the increase. The Company
shall mail the notice at least 15 days before the date the increased Conversion
Rate takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.

        A voluntary increase of the Conversion Rate does not change or adjust
the Conversion Rate otherwise in effect for purposes of Section 11.06, 11.07,
11.08 or 11.09.

      SECTION 11.14. Notice of Certain Transactions. If:

      (a) the Company takes any action that would require an adjustment in the
Conversion Rate pursuant to Section 11.06, 11.07, 11.08 or 11.09 (unless no
adjustment is to occur pursuant to Section 11.11); or

      (b) the Company takes any action that would require a supplemental
indenture pursuant to Section 11.15; or

      (c) there is a liquidation or dissolution of the Company;

then the Company shall mail to Securityholders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, binding share exchange, transfer,
liquidation or dissolution. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in it
shall not affect the validity of the transaction.

      SECTION 11.15. Reorganization of Company; Special Distributions. If the
Company is a party to a transaction subject to Section 5.01 (other than a sale
of all or substantially all of the assets of the Company in a transaction in
which the holders of Common Stock immediately prior to such

                                       52

transaction do not receive securities, cash, property or other assets of the
Company or any other person) or a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock, the person obligated to
deliver securities, cash or other assets upon conversion of Securities shall
enter into a supplemental indenture. If the issuer of securities deliverable
upon conversion of Securities is an Affiliate of the successor Company, that
issuer shall join in the supplemental indenture.

      The supplemental indenture shall provide that the Holder of a Security may
convert it into cash and, in lieu of shares of Common Stock, the kind and amount
of securities, cash or other assets which such Holder would have received
immediately after the consolidation, merger, binding share exchange or transfer
that is equal in value to the shares of Common Stock, if any, such Holder would
have received if such Holder had converted the Security immediately before the
effective date of the transaction, assuming (to the extent applicable) that such
Holder (i) was not a constituent person or an Affiliate of a constituent person
to such transaction; (ii) made no election with respect thereto; and (iii) was
treated alike with the plurality of non-electing Holders. The supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as
may be practical to the adjustments provided for in this Article 11. The
successor Company shall mail to Securityholders a notice briefly describing the
supplemental indenture.

      If this Section applies, neither Section 11.06 nor 11.07 applies.

      If the Company makes a distribution to all holders of its Common Stock of
any of its assets, or debt securities or any rights, warrants or options to
purchase securities of the Company that, but for the provisions of Section
11.08(b), would otherwise result in an adjustment in the Conversion Rate
pursuant to the provisions of Section 11.08, then, from and after the record
date for determining the holders of Common Stock entitled to receive the
distribution, a Holder of a Security that converts such Security in accordance
with the provisions of this Indenture shall upon such conversion be entitled to
receive, in addition to the cash and the shares of Common Stock, if any, into
which the Security is convertible, the kind and amount of securities, cash or
other assets comprising the distribution that such Holder would have received if
such Holder had converted the Security immediately prior to the record date for
determining the holders of Common Stock entitled to receive the distribution.

      SECTION 11.16. Company Determination Final. Any determination that the
Company or the Board of Directors must make pursuant to Section 11.03, 11.06,
11.07, 11.08, 11.09, 11.10, 11.11, 11.15 or 11.18 is conclusive.

      SECTION 11.17. Trustee's Adjustment Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article 11 should be made, how it should
be made or what it should be. The Trustee has no duty to determine whether a
supplemental indenture under Section 11.15 need be entered into or whether any
provisions of any supplemental indenture are correct. The Trustee shall not be
accountable for and makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities. The Trustee shall not
be responsible for the Company's failure to comply with this Article 11. Each
Conversion Agent shall have the same protection under this Section 11.17 as the
Trustee.

      SECTION 11.18. Simultaneous Adjustments. In the event that this Article 11
requires adjustments to the Conversion Rate under more than one of Sections
11.06(d), 11.07, 11.08 or 11.09, and the record dates for the distributions
giving rise to such adjustments shall occur on the same date,

                                       53

then such adjustments shall be made by applying, first, the provisions of
Section 11.06, second, the provisions of Section 11.08 , third, the provisions
of Section 11.09, and, fourth, the provisions of Section 11.07.

      SECTION 11.19. Successive Adjustments. After an adjustment to the
Conversion Rate under this Article 11, any subsequent event requiring an
adjustment under this Article 11 shall cause an adjustment to the Conversion
Rate as so adjusted.

      SECTION 11.20. Rights Issued in Respect of Common Stock Issued Upon
Conversion. Each share of Common Stock issued upon conversion of Securities
pursuant to this Article 11 shall be entitled to receive the appropriate number
of common stock or preferred stock purchase rights, as the case may be (the
"Rights"), if any, and the certificates representing the Common Stock issued
upon such conversion shall bear such legends, if any, in each case as may be
provided by the terms of any shareholder rights agreement adopted by the
Company, as the same may be amended from time to time (in each case, a "Rights
Agreement"). Provided that such Rights Agreement requires that each share of
Common Stock issued upon conversion of Securities at any time prior to the
distribution of separate certificates representing the Rights be entitled to
receive such Rights, then, notwithstanding anything else to the contrary in this
Article 11, there shall not be any adjustment to the conversion privilege or
Conversion Rate as a result of the issuance of Rights, the distribution of
separate certificates representing the Rights, the exercise or redemption of
such Rights in accordance with any such Rights Agreement, or the termination or
invalidation of such Rights.

                                   ARTICLE 12

                               PAYMENT OF INTEREST

      SECTION 12.01. Interest Payments. If applicable, semi-annual or contingent
interest on any Security that is payable, and is punctually paid or duly
provided for, on any applicable payment date shall be paid to the person in
whose name that Security is registered at the close of business on the Regular
Record Date or accrual date, as the case may be, for such interest at the office
or agency of the Company maintained for such purpose. Each installment of
semi-annual or contingent interest on any Security shall be paid in same-day
funds by transfer to an account maintained by the payee located inside the
United States. In the case of a permanent Global Security, semi-annual or
contingent interest payable on any applicable payment date will be paid to the
Depositary, with respect to that portion of such permanent Global Security held
for its account by Cede & Co. for the purpose of permitting such party to credit
the interest received by it in respect of such permanent Global Security to the
accounts of the beneficial owners thereof.

      SECTION 12.02. Defaulted Interest. Except as otherwise specified with
respect to the Securities, any semi-annual or contingent interest on any
Security that is payable, but is not punctually paid or duly provided for,
within 30 days following any applicable payment date (herein called "Defaulted
Interest", which term shall include any accrued and unpaid interest that has
accrued on such defaulted amount in accordance with paragraph 1 of the
Securities), shall forthwith cease to be payable to the registered Holder
thereof on the relevant Regular Record Date or accrual date, as the case may be,
by virtue of having been such Holder, and such Defaulted Interest may be paid by
the Company or the Guarantor, as the case may be, at its election in each case,
as provided in clause (a) or (b) below:

                                       54

            (a) The Company or the Guarantor may elect to make payment of any
      Defaulted Interest to the persons in whose names the Securities are
      registered at the close of business on a special record date for the
      payment of such Defaulted Interest, which shall be fixed in the following
      manner. The Company or the Guarantor shall notify the Trustee in writing
      of the amount of Defaulted Interest proposed to be paid on each Security
      and the date of the proposed payment (which shall not be less than 20 days
      after such notice is received by the Trustee), and at the same time the
      Company or the Guarantor shall deposit with the Trustee an amount of money
      equal to the aggregate amount proposed to be paid in respect of such
      Defaulted Interest or shall make arrangements satisfactory to the Trustee
      for such deposit on or prior to the date of the proposed payment, such
      money when deposited to be held in trust for the benefit of the persons
      entitled to such Defaulted Interest as in this clause provided. Thereupon
      the Trustee shall fix a special record date (the "Special Record Date")
      for the payment of such Defaulted Interest which shall be not more than 15
      days and not less than 10 days prior to the date of the proposed payment
      and not less than 10 days after the receipt by the Trustee of the notice
      of the proposed payment. The Trustee shall promptly notify the Company or
      the Guarantor of such Special Record Date and, in the name and at the
      expense of the Company or the Guarantor, shall cause notice of the
      proposed payment of such Defaulted Interest and the Special Record Date
      therefor to be mailed, first-class postage prepaid, to each Holder of
      Securities at his address as it appears on the list of Securityholders
      maintained pursuant to Section 2.05 not less than 10 days prior to such
      Special Record Date. Notice of the proposed payment of such Defaulted
      Interest and the Special Record Date therefor having been mailed as
      aforesaid, such Defaulted Interest shall be paid to the persons in whose
      names the Securities are registered at the close of business on such
      Special Record Date and shall no longer be payable pursuant to the
      following clause (2).

            (b) The Company or the Guarantor may make payment of any Defaulted
      Interest on the Securities in any other lawful manner not inconsistent
      with the requirements of any securities exchange on which such Securities
      may be listed, and upon such notice as may be required by such exchange,
      if, after notice given by the Company or the Guarantor to the Trustee of
      the proposed payment pursuant to this clause, such manner of payment shall
      be deemed practicable by the Trustee.

      SECTION 12.03. Interest Rights Preserved. Subject to the foregoing
provisions of this Article 12 and Section 2.06, each Security delivered under
this Indenture upon registration of transfer of or in exchange for or in lieu of
any other Security shall carry the rights to semi-annual and contingent interest
accrued and unpaid, and to accrue, which were carried by such other Security.

                                   ARTICLE 13

                             GUARANTEE OF SECURITIES

      SECTION 13.01. Unconditional Guarantee. The Guarantor hereby
unconditionally guarantees to each Holder of a Security authenticated and
delivered by the Trustee the due and punctual payment of the Principal Amount at
Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal
Amount, Redemption Price, Purchase Price, Change of Control Purchase Price,
contingent interest, if any, and interest payable pursuant to Article 10, if
any, and the cash and the cash equivalent of the Common Stock, if any, due upon
a conversion pursuant to Article 11, with respect to the Securities, when and as
the same shall become due and payable, whether at maturity, by acceleration,
redemption or otherwise, in accordance with the terms of such Security and

                                       55

of this Indenture, regardless of any defense, right of set-off or counterclaim
which the Company may have or assert, other than the defense of payment. The
Guarantor's obligations under the Guarantee are several and independent of the
obligations of the Company with respect to the Securities. In case of the
failure of the Company punctually to pay any Principal Amount at Maturity,
Initial Accreted Principal Amount, Issue Discount, Restated Principal Amount,
Redemption Price, Purchase Price, Change of Control Purchase Price, contingent
interest, if any, interest payable pursuant to Article 10, if any, and the cash
and the cash equivalent of the Common Stock, if any, due upon a conversion
pursuant to Article 11, the Guarantor hereby agrees to cause any such payment to
be made punctually when and as the same shall become due and payable, whether at
maturity, upon acceleration, redemption or otherwise, and as if such payment
were made by the Company.

      The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of such Security or this Indenture, any failure
to enforce the provisions of any such Security or this Indenture, or any waiver,
modification, consent or indulgence granted to the Company with respect thereto
by the Holder of such Security or the Trustee, the recovery of any judgment
against the Company or any action to enforce the same, or any other
circumstances which may otherwise constitute a legal or equitable discharge of a
surety or guarantor. The Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of merger, insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest or notice with respect to any such Security or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that the Guarantee
will not be discharged except by payment in full of the Principal Amount at
Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal
Amount, Redemption Price, Purchase Price, Change of Control Purchase Price,
contingent interest, if any, interest payable pursuant to Article 10, if any,
and the cash and the cash equivalent of the Common Stock, if any, due upon a
conversion pursuant to Article 11, and the complete performance of all other
obligations contained in the Securities.

      The Guarantor shall be subrogated to all rights of the Holder of any
Security against the Company in respect of any amounts paid to such Holder by
the Guarantor pursuant to the provisions of the Guarantee; provided, however,
that the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation until the Principal
Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated
Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase
Price, contingent interest, if any, interest payable pursuant to Article 10, if
any, and the cash and the cash equivalent of the Common Stock, if any, due upon
a conversion pursuant to Article 11, required with respect to, all Securities of
the same series shall have been paid in full.

      Notwithstanding anything to the contrary contained herein, if following
any payment of amounts due under the Security by the Company to the Holders
thereof it is determined by a final decision of a court of competent
jurisdiction that such payment shall be avoided by a trustee in bankruptcy
(including any debtor-in-possession) as a preference under 11 U.S.C. Section 547
and such payment is paid by such holder to such trustee in bankruptcy, then and
to the extent of such repayment the obligations of the Guarantor hereunder shall
remain in full force and effect.

      SECTION 13.02. Execution, Authentication and Delivery. To evidence the
Guarantee to the Holders specified in Section 13.01, the Guarantor hereby agrees
to execute a Guarantee on each Security authenticated and delivered by the
Trustee. The Guarantee shall be executed on behalf

                                       56

of the Guarantor by its Chairman of the Board, the President or any Executive
Managing Director, Senior Managing Director, Managing Director or one of its
Vice Presidents, under its corporate seal reproduced thereon, and attested by
its Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Guarantees may be manual or facsimile.

      A Guarantee bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Guarantor shall bind the Guarantor
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Guarantee or did not
hold such offices at the date of such Guarantee. The delivery by the Trustee of
a Security with such a Guarantee endorsed thereon shall, after the
authentication of such Security hereunder, constitute due delivery of such
Guarantee on behalf of the Guarantor.

      No Guarantee endorsed on any Security shall be entitled to any benefit
under this Indenture or be valid or obligatory for any purpose unless there
appears on the Security on which such Guarantee is endorsed a certificate of
authentication substantially in the form provided for herein executed by the
Trustee by manual signature.

                                   ARTICLE 14

                                  MISCELLANEOUS

      SECTION 14.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.

      SECTION 14.02. Notices. Any request, demand, authorization, notice,
waiver, consent or communication shall be in writing and delivered in person or
mailed by first-class mail, postage prepaid, addressed as follows or transmitted
by facsimile transmission (confirmed by guaranteed overnight courier) to the
following facsimile numbers:

      if to the Company:

                              Countrywide Financial Corporation
                              4500 Park Granada
                              Calabasas, CA 91302

                              Telephone No. (818) 225-3000
                              Facsimile No. (818) 225-4055
                              Attention: Sandor E. Samuels, Esq., Chief Legal
                                         Officer


      if to the Guarantor:

                              Countrywide Home Loans, Inc.
                              4500 Park Granada
                              Calabasas, CA 91302

                              Telephone No. (818) 225-3000
                              Facsimile No. (818) 225-4055


                                       57

                              Attention: Sandor E. Samuels, Esq., Chief Legal
                                         Officer

      if to the Trustee:

                              The Bank of New York
                              101 Barclay Street
                              New York, New York 10286

                              Telephone No. (212) 815-3036
                              Facsimile No. (212) 815-5704
                              Attention: Corporate Trust Administration

      The Company, the Guarantor or the Trustee by notice given to the other in
the manner provided above may designate additional or different addresses for
subsequent notices or communications.

      Any notice or communication given to a Securityholder shall be mailed to
the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.

      Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.

      If the Company or the Guarantor mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying
Agent, Conversion Agent or co-registrar.

      SECTION 14.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar, the Paying Agent, the
Conversion Agent and anyone else shall have the protection of TIA Section
312(c).

      SECTION 14.04. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company or the Guarantor to the Trustee to
take any action under this Indenture, the Company and the Guarantor shall
furnish to the Trustee:

      (a) an Officers' Certificate of the Company and the Guarantor stating
that, in the opinion of the signers, all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with;
and

      (b) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.

      SECTION 14.05. Statements Required in Certificate or Opinion. Each
Officers' Certificate, Guarantor's Officers' Certificate or Opinion of Counsel
with respect to compliance with a covenant or condition provided for in this
Indenture shall include:

      (a) a statement that each person making such Officers' Certificate,
Guarantor's Officers' Certificate or Opinion of Counsel has read such covenant
or condition;

                                       58

      (b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such Officers'
Certificate, Guarantor's Officers' Certificate or Opinion of Counsel are based;

      (c) a statement that, in the opinion of each such person, he has made such
examination or investigation as is necessary to enable such person to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and

      (d) a statement that, in the opinion of such person, such covenant or
condition has been complied with.

      SECTION 14.06. Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

      SECTION 14.07. Rules by Trustee, Paying Agent, Conversion Agent and
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.

      SECTION 14.08. Calculations. The calculation of the Purchase Price, Change
in Control Purchase Price, Conversion Rate, Market Price, Sale Price of the
Common Stock and each other calculation to be made hereunder (other than the
Securities Market Price) shall be the obligation of the Company. All
calculations made by the Company as contemplated pursuant to this Section 14.08
shall be final and binding on the Company, the Guarantor and the Holders absent
manifest error. The Trustee, Paying Agent, Conversion Agent and Bid Solicitation
Agent shall not be obligated to recalculate, recompute or confirm any such
calculations.

      SECTION 14.09. Legal Holidays. A "Legal Holiday" is any day other than a
Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no Issue Discount or interest, if any, shall accrue
for the intervening period.

      SECTION 14.10. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS INDENTURE AND THE SECURITIES.

      SECTION 14.11. No Recourse Against Others. A director, officer, employee
or stockholder, as such, of the Company or the Guarantor shall not have any
liability for any obligations of the Company or the Guarantor under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.

      SECTION 14.12. Successors. All agreements of the Company or the Guarantor
in this Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successor.


                                       59

      SECTION 14.13. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.





                                       60

      IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.

                                        COUNTRYWIDE FINANCIAL CORPORATION



                                        By: _______________________________
                                              Name:
                                              Title:



                                        COUNTRYWIDE HOME LOANS, INC.



                                        By: _______________________________
                                              Name:
                                              Title:




                                        THE BANK OF NEW YORK



                                        By: _______________________________
                                              Name:
                                              Title

                                   EXHIBIT A-1

                        [FORM OF FACE OF GLOBAL SECURITY]

      FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THIS
SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE DISCOUNT FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS FEBRUARY 8, 2001,
AND THE COMPARABLE YIELD FOR PURPOSES OF ACCRUING ORIGINAL ISSUE DISCOUNT IS
6.53% PER ANNUM.

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

      TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE
BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.



                                      A-1

                        COUNTRYWIDE FINANCIAL CORPORATION
                          Convertible Security due 2031

                                                          
No. R-                                                       CUSIP: ________________
Issue Date: September __, 2004                               Issue Discount: $________
Initial Accreted Principal Amount: $________                 (for each $1,000 Principal Amount at Maturity)
(for each $1,000 Principal Amount at Maturity)



      COUNTRYWIDE FINANCIAL CORPORATION, a Delaware corporation, promises to pay
to Cede & Co. or registered assigns, the Principal Amount at Maturity of
_______________ DOLLARS ($_____________________) on February 8, 2031.

      This Security shall not bear interest except as specified on the other
side of this Security. Issue Discount will accrue as specified on the other side
of this Security. This Security is convertible as specified on the other side of
this Security.

      Additional provisions of this Security are set forth on the other side of
this Security.

Dated: September __, 2004
                                               COUNTRYWIDE FINANCIAL CORPORATION



                                               By: _____________________________
                                                   Title:



TRUSTEE'S CERTIFICATE OF
  AUTHENTICATION

THE BANK OF NEW YORK, as Trustee,
certifies that this is one of the
Securities referred to in the
within-mentioned Indenture.



By: _________________________
    Authorized Signatory

Dated: _______________________


                                      A-2


                 [FORM OF REVERSE SIDE OF CONVERTIBLE SECURITY]
                          Convertible Security due 2031

1. Interest.

      This Security shall not bear interest, except as specified in this
paragraph or in paragraphs 5 and 12, hereof. If the Principal Amount at Maturity
hereof or any portion of such Principal Amount at Maturity is not paid when due
(whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the
date set for payment of the Redemption Price pursuant to paragraph 6 hereof,
upon the date set for payment of the Purchase Price or Change in Control
Purchase Price pursuant to paragraph 7 hereof or upon the Stated Maturity of
this Security) or if interest (including contingent interest, if any) due hereon
or any portion of such interest is not paid when due in accordance with
paragraph 5 or 12 hereof, then in each such case the overdue amount shall, to
the extent permitted by law, bear interest at the rate of 1.00% per annum,
compounded semi-annually, which interest shall accrue from the date such overdue
amount was originally due to the date payment of such amount, including interest
thereon, has been made or duly provided for. All such interest shall be payable
on demand. The accrual of such interest on overdue amounts shall be in lieu of,
and not in addition to, the continued accrual of Issue Discount.

      Issue Discount (the difference between the Initial Accreted Principal
Amount and the Principal Amount at Maturity of the Security), in the period
during which a Security remains outstanding, shall accrue at 1% per annum, on a
semi-annual bond equivalent basis using a 360-day year composed of twelve 30-day
months, from the Issue Date of this Security.

2. Method of Payment.

      Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of Redemption Prices, Purchase Prices, Change in
Control Purchase Prices and at Stated Maturity to Holders who surrender
Securities to a Paying Agent to collect such payments in respect of the
Securities. The Company will pay cash amounts in money of the United States that
at the time of payment is legal tender for payment of public and private debts.
However, the Company may make such cash payments by check payable in such money.

3. Paying Agent, Conversion Agent, Registrar and Bid Solicitation Agent.

      Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent, Conversion Agent, Registrar and Bid
Solicitation Agent. The Company may appoint and change any Paying Agent,
Conversion Agent, Registrar or co-registrar or Bid Solicitation Agent without
notice, other than notice to the Trustee except that the Company will maintain
at least one Paying Agent in the State of New York, City of New York, Borough of
Manhattan, which shall initially be an office or agency of the Trustee. The
Company or any of its Subsidiaries or any of their Affiliates may act as Paying
Agent, Conversion Agent, Registrar or co-registrar. None of the Company, any of
its Subsidiaries or any of their Affiliates shall act as Bid Solicitation Agent.


                                      A-3

4. Indenture.

      The Company issued the Securities under an Indenture dated as of September
__, 2004 (the "Indenture"), among the Company, the Guarantor and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Securities themselves and the Trust
Indenture Act of 1939, as in effect from time to time (the "TIA"). Terms used
herein that are defined in the Indenture and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Securityholders are referred to the Indenture and the TIA for a
statement of those terms.

      The Securities are unsecured and unsubordinated obligations of the Company
limited to $675,000,000 aggregate Principal Amount at Maturity (subject to
Section 2.07 of the Indenture) and will rank equally in right of payment to all
the Company's future unsecured and unsubordinated indebtedness. The Indenture
does not limit other indebtedness of the Company, secured or unsecured.

5. Contingent Interest.

      Subject to the accrual and record date provisions specified in this
paragraph 5, the Company shall pay contingent interest to the Holders during any
six-month period (a "Contingent Interest Period") from February 8 to August 7
and from August 8 to February 7, with the initial six-month period commencing
after February 8, 2006, if the average Securities Market Price for the Five-Day
Period with respect to such Contingent Interest Period equals 120% or more of
the sum of the Initial Accreted Principal Amount and the Issue Discount accrued
thereon to the trading day immediately preceding the first day of the relevant
Contingent Interest Period.

      The amount of contingent interest payable per $1,000 Principal Amount at
Maturity hereof in respect of any Contingent Interest Period shall equal the
greater of (x) 0.125% of the average Securities Market Price for the Five-Day
Period with respect to such Contingent Interest Period and (y) a Fixed Amount
multiplied by the Conversion Rate as of the accrual date for such contingent
interest. The Fixed Amount shall be equal to $0.20 and shall be adjusted
whenever the Conversion Rate is adjusted by multiplying the then-current Fixed
Amount by a fraction, the numerator of which is the Conversion Rate in effect
immediately prior to the adjustment thereof and the denominator of which is the
Conversion Rate as so adjusted.

      Contingent interest, if any, will accrue and be payable to Holders as of
the 15th day (whether or not a Business Day) preceding the last day of the
relevant Contingent Interest Period. Such payments shall be paid on the last day
of the relevant Contingent Interest Period. Issue Discount will continue to
accrue at 1% per annum whether or not contingent interest is paid.

      "Five-Day Period" means, with respect to any Contingent Interest Period,
the five trading days ending on the second trading day immediately preceding the
first day of such Contingent Interest Period; provided, however, if the Company
shall have declared a Regular Cash Dividend on its Common Stock that is payable
during such Contingent Interest Period but for which the record date for
determining stockholders entitled thereto precedes the first day of such
Contingent Interest Period, then "Five-Day Period" shall mean, with respect to
such Contingent Interest Period, the five trading days ending on the second
trading day immediately preceding such record date.


                                      A-4


      "Securities Market Price" means, as of any date of determination, the
average of the secondary market bid quotations per $1,000 Principal Amount at
Maturity obtained by the Bid Solicitation Agent for $10,000,000 Principal Amount
at Maturity of Securities at approximately 3:30 p.m., New York City time, on
such determination date from three recognized securities dealers in The City of
New York (none of which shall be an Affiliate of the Company) selected by the
Company; provided, however, if (a) at least three such bids are not obtained by
the Bid Solicitation Agent or (b) in the Company's reasonable judgment, the bid
quotations are not indicative of the secondary market value of the Securities as
of such determination date, then the Securities Market Price for such
determination date shall equal the product of (i) the Conversion Rate in effect
as of such determination date multiplied by (ii) the average Sale Price of the
Common Stock for the five trading days ending on such determination date,
appropriately adjusted to take into account the occurrence, during the period
commencing on the first of such trading days during such five trading day period
and ending on such determination date, of any event described in Section 11.06,
11.07, 11.08 or 11.09 (subject to the conditions set forth in Sections 11.10 and
11.11) of the Indenture.

      Upon determination that Holders will be entitled to receive contingent
interest which may become payable during a Contingent Interest Period, on or
prior to the first day of such Contingent Interest Period, the Company shall
issue a press release and publish such information on its web site or by other
appropriate means.

6. Redemption at the Option of the Company.

      No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below, provided that the
Securities are not redeemable prior to February 8, 2006.

      The table below shows Redemption Prices of a Security per $1,000 Principal
Amount at Maturity on the dates shown below and at Stated Maturity, which prices
reflect the Initial Accreted Principal Amount plus accrued Issue Discount
calculated to each such date. The Redemption Price of a Security redeemed
between such dates shall include an additional amount reflecting the additional
Issue Discount accrued since the preceding date in the table.



                REDEMPTION DATE                    REDEMPTION PRICE
                ---------------                    ----------------
                                                
February 8:
2006........................................       $     779.28
2007........................................             787.10
2008 .......................................             794.99
2009 .......................................             802.96
2010 .......................................             811.01
2011 .......................................             819.14
2012 .......................................             827.35
2013 .......................................             835.64
2014 .......................................             844.02



                                      A-5

                                                    
2015 .......................................             852.48
2016 .......................................             861.03
2017 .......................................             869.66
2018 .......................................             878.38
2019 .......................................             887.18
2020 .......................................             896.08
2021 .......................................             905.06
2022 .......................................             914.14
2023 .......................................             923.30
2024 .......................................             932.56
2025 .......................................             941.90
2026 .......................................             951.35
2027 .......................................             960.88
2028 .......................................             970.52
2029 .......................................             980.25
2030........................................             990.07
At Stated Maturity .........................           1,000.00



      If this Security has been converted to a semi-annual coupon note following
the occurrence of a Tax Event, the Redemption Price will be equal to the
Restated Principal Amount plus accrued and unpaid interest from the date of such
conversion to the Redemption Date.

      In addition to the Redemption Price payable with respect to all Securities
or portions thereof to be redeemed as of a Redemption Date, the Holders of such
Securities (or portions thereof) shall be entitled to receive accrued and unpaid
contingent interest, if any, with respect thereto, which contingent interest
shall be paid in cash on the Redemption Date.

7. Purchase by the Company at the Option of the Holder.

      Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, the Securities held
by such Holder on the following Purchase Dates and at the following Purchase
Prices per $1,000 Principal Amount at Maturity, upon delivery of a Purchase
Notice containing the information set forth in the Indenture, at any time from
the opening of business on the date that is at least 20 Business Days prior to
such Purchase Date until the close of business on the Business Day immediately
preceding such Purchase Date and upon delivery of the Securities to the Paying
Agent by the Holder as set forth in the Indenture.



Purchase Date                                             Purchase Price
- -------------                                             --------------
                                                       
February  8,  2006                                          $  779.28
February  8,  2011                                          $  819.14
February  8,  2016                                          $  861.03
February  8,  2021                                          $  905.06
February  8,  2026                                          $  951.35


      The Purchase Price (equal to the Initial Accreted Principal Amount plus
accrued Issue Discount to the Purchase Date) shall be paid in cash.


                                      A-6

      If prior to a Purchase Date this Security has been converted at the option
of the Company to a semi-annual coupon note following the occurrence of a Tax
Event, the Purchase Price will be equal to the Restated Principal Amount plus
accrued and unpaid interest from the date of conversion to the Purchase Date.

      At the option of the Holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to purchase all or a portion of
the Securities in integral multiples of $1,000 Principal Amount at Maturity held
by such Holder no later than 35 Business Days after the occurrence of a Change
in Control of the Company or the Guarantor occurring on or prior to February 8,
2006 for a Change in Control Purchase Price for each $1,000 Principal Amount at
Maturity for such Securities equal to the Initial Accreted Principal Amount plus
accrued Issue Discount to the Change in Control Purchase Date, which Change in
Control Purchase Price shall be paid in cash. If prior to a Change in Control
Purchase Date this Security has been converted at the option of the Company to a
semi-annual coupon note following the occurrence of a Tax Event, the Change in
Control Purchase Price shall be equal to the Restated Principal Amount plus
accrued and unpaid interest from the date of conversion to the Change in Control
Purchase Date.

      In addition to the Purchase Price or Change in Control Purchase Price, as
the case may be, payable with respect to all Securities or portions thereof to
be purchased as of the Purchase Date or the Change in Control Purchase Date, as
the case may be, the Holders of such Securities (or portions thereof) shall be
entitled to receive accrued and unpaid contingent interest, if any, with respect
thereto, which contingent interest shall be paid in cash promptly following the
later of the Purchase Date or the Change in Control Purchase Date, as the case
may be and the time of delivery of such Securities to the Paying Agent pursuant
to the Indenture.

      Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the Indenture.

      If cash sufficient to pay the Purchase Price or Change in Control Purchase
Price, as the case may be, of, together with any accrued and unpaid contingent
interest, with respect to all Securities or portions thereof to be purchased as
of the Purchase Date or the Change in Control Purchase Date, as the case may be,
is deposited with the Paying Agent on the Purchase Date or the Change in Control
Purchase Date, as the case may be, Issue Discount and interest (including
contingent interest), if any, shall cease to accrue on such Securities (or
portions thereof) immediately after such Purchase Date or Change in Control
Purchase Date, as the case may be, and the Holder thereof shall have no other
rights as such (other than the right to receive the Purchase Price or Change in
Control Purchase Price, as the case may be, and accrued and unpaid contingent
interest, if any, upon surrender of such Security).

8. Notice of Redemption.

      Notice of redemption will be mailed at least 30 days but not more than 60
days before the Redemption Date to each Holder of Securities to be redeemed at
the Holder's registered address. If money sufficient to pay the Redemption Price
of, and accrued and unpaid contingent interest, if any, with respect to, all
Securities (or portions thereof) to be redeemed on the Redemption Date is
deposited with the Paying Agent prior to or on the Redemption Date, immediately
after such Redemption Date, Issue Discount and interest (including contingent
interest), if any, shall cease to accrue on such Securities or portions thereof.
Securities in denominations larger than $1,000 of


                                      A-7

Principal Amount at Maturity may be redeemed in part but only in integral
multiples of $1,000 of Principal Amount at Maturity.

9. Conversion.

      Subject to the provisions of this paragraph 9 and the terms of the
Indenture and notwithstanding the fact that any other condition to conversion
has not been satisfied, Holders may convert the Securities into cash and Common
Stock on a Conversion Date in any calendar quarter (and only during such
calendar quarter) if, as of the last day of the preceding calendar quarter, the
Sale Price of the Common Stock for at least 20 trading days in a period of 30
consecutive trading days ending on the last trading day of such preceding
calendar quarter is greater than the conversion trigger price. The "conversion
trigger price" for any calendar quarter shall be a reference percentage,
beginning at 132.27%, and declining 0.21% per quarter thereafter, of the
accreted conversion price per share of Common Stock on the last trading day of
such preceding calendar quarter. The "accreted conversion price" per share of
Common Stock as of any day equals the quotient of: the Initial Accreted
Principal Amount plus accrued Issue Discount to that day, divided by the
Conversion Rate.

      For illustrative purposes only, the table below shows the conversion
trigger price per share of Common Stock in respect of each of the first 20
calendar quarters. These prices reflect the accreted conversion price per share
of Common Stock (assuming that no events occurred requiring an adjustment to the
initial Conversion Rate of 46.2820 shares of Common Stock per $1,000 Principal
Amount of Maturity) multiplied by the applicable percentage for the respective
calendar quarter. Thereafter, the accreted conversion price per share of Common
Stock increases each calendar quarter by the accrued Issue Discount for the
quarter and the applicable percentage declines by 0.21% per quarter. The
conversion trigger price (subject to adjustment) for the calendar quarter
beginning January 1, 2031 is $23.73.



                                               ACCRETED
                                              CONVERSION        APPLICABLE        CONVERSION
                                                PRICE           PERCENTAGE      TRIGGER PRICE
                       QUARTER                   (1)               (2)             (1)X(2)
                       -------                   ---               ---             -------
                                                                    
2004        Third Quarter...............        $16.57            132.27            $21.92
            Fourth Quarter..............        $16.61            132.06            $21.94
2005        First Quarter...............        $16.65            131.85            $21.96
            Second Quarter..............        $16.69            131.64            $21.98
            Third Quarter...............        $16.74            131.43            $22.00
            Fourth Quarter..............        $16.78            131.22            $22.02
2006        First Quarter...............        $16.82            131.01            $22.04
            Second Quarter..............        $16.86            130.80            $22.06
            Third Quarter...............        $16.90            130.59            $22.08
            Fourth Quarter..............        $16.95            130.38            $22.10
2007        First Quarter...............        $16.99            130.17            $22.11
            Second Quarter..............        $17.03            129.96            $22.13
            Third Quarter...............        $17.07            129.75            $22.15
            Fourth Quarter..............        $17.12            129.54            $22.17
2008        First Quarter...............        $17.16            129.33            $22.19
            Second Quarter..............        $17.20            129.12            $12.21



                                      A-8

                                                                    
            Third Quarter...............        $17.25            128.91            $22.23
            Fourth Quarter..............        $17.29            128.70            $22.25
2009        First Quarter...............        $17.33            128.49            $22.27
            Second Quarter..............        $17.38            128.28            $22.29



      Subject to the provisions of this paragraph 9 and the Indenture and
notwithstanding the fact any other condition to conversion has not been
satisfied, Holders may convert the Securities into cash and Common Stock on a
Conversion Date during any period in which the credit rating assigned to the
Securities by a Rating Agency falls below the Applicable Rating. "Rating Agency"
means (1) Moody's Investors Service, Inc. and its successors ("Moody's"), (2)
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies
Inc., and its successors ("Standard & Poor's") or (3) if Moody's or Standard &
Poor's or both of them are not making ratings of the Securities publicly
available, a nationally recognized U.S. rating agency or agencies, as the case
may be, selected by the Company, which will be substituted for Moody's or
Standard & Poor's or both, as the case may be. "Applicable Rating" means (1)
Baa, in the case of Moody's (or its equivalent under any successor ratings
categories of Moody's), (2) BBB, in the case of Standard & Poor's (or its
equivalent, under any successor ratings categories of Standard & Poor's) or (3)
the equivalent in respect of ratings categories of any Rating Agencies
substituted for Moody's or Standard & Poor's.

      Subject to the provisions of this paragraph 9 and the Indenture and
notwithstanding the fact that any other condition to conversion has not been
satisfied, a Holder may convert into cash and Common Stock a Security or portion
of a Security which has been called for redemption pursuant to paragraph 6
hereof, even if the Security, or any portion thereof is not subject to
conversion by the Holder, but such Securities may be surrendered for conversion
until the close of business on the second Business Day immediately preceding the
Redemption Date.

      Subject to the provisions of this paragraph 9 and the Indenture and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event the Company declares a dividend or distribution
described in Section 11.07, Section 11.08 or Section 11.09 of the Indenture,
where the fair market value of such dividend or distribution per share of Common
Stock, as determined in the Indenture, exceeds 15% of the Sale Price of the
Common Stock on the Business Day immediately preceding the date of declaration
for such dividend or distribution, the Securities may be surrendered for
conversion beginning on the date the Company gives notice to the Holders of such
right, which shall not be less than 20 days prior to the Ex-Dividend Time for
such dividend or distribution, and Securities may be surrendered for conversion
at any time thereafter until the close of business on the Business Day prior to
the Ex-Dividend Time or until the Company announces that such dividend or
distribution will not take place.

      Subject to the provisions of this paragraph 9 and the Indenture and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event that the Company is a party to a consolidation, merger
or binding share exchange pursuant to which the Common Stock would be converted
into cash, securities or other property as set forth in Section 11.15 of the
Indenture, the Securities may be surrendered for conversion at any time from and
after the date which is 15 days prior to the date of the anticipated effective
time of such transaction announced by the Company until 15 days after the actual
effective date of such transaction, and at the effective time of such


                                      A-9

transaction the right to convert a Security into Common Stock will be deemed to
have changed into a right to convert it into the kind and amount of cash,
securities or other property which the holder would have received if the holder
had converted its Security immediately prior to the transaction.

      Subject to the provisions of this paragraph 9 and the Indenture and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event that the Guarantor is a party to any transaction in
which at least a majority of the total voting power in the aggregate of all
classes of Capital Stock of the Guarantor is owned by a party other than the
Company, the Company's Subsidiaries or any of their respective employee benefit
plans, the Securities may be surrendered for conversion at any time from and
after the date which is 15 days prior to the date of the anticipated effective
time of such transaction announced by the Guarantor until 15 days after the
actual effective date of such transaction; provided that a merger or
consolidation of the Company and the Guarantor with one another only shall not
cause any Security to become convertible.

      A Security in respect of which a Holder has delivered a Purchase Notice or
Change in Control Purchase Notice exercising the option of such Holder to
require the Company to purchase such Security may be converted only if such
notice of exercise is withdrawn in accordance with the terms of the Indenture.

      The initial Conversion Rate is 46.2820 shares of Common Stock per $1,000
Principal Amount at Maturity (but payable in cash and Common Stock), subject to
adjustment for certain events described in the Indenture or this paragraph 9;
provided that in no event shall the Conversion Rate exceed the Maximum
Conversion Rate. Except as otherwise described in this paragraph 9, upon
conversion, the Company will deliver cash (the "Cash Amount") in an amount
equal to the lesser of (a) the Initial Accreted Principal Amount and Issue
Discount accrued thereon and (b) the product of Conversion Rate times the
average of the Sale Price of the Common Stock on each of the 20 trading days
prior to the Conversion Date (the "Settlement Stock Price") and a number of
shares of Common Stock equal to (x) the product of the Conversion Rate
multiplied by the Settlement Stock Price minus (y) the Cash Amount, all divided
by (z) the Settlement Stock Price. In addition, the Company will deliver cash in
lieu of any fractional shares of Common Stock.

      "Maximum Conversion Rate" means 81.1688 shares of Common Stock of the
Company, subject to adjustment.

      In the event the Company exercises its option pursuant to Section 10.01 of
the Indenture to have interest in lieu of Issue Discount accrue on the Security
following a Tax Event, the Holder will be entitled on conversion to receive the
same cash payment and number of shares of Common Stock, if any, such Holder
would have received if the Company had not exercised such option.

      Accrued and unpaid interest in lieu of Issue Discount and contingent
interest will not be paid on Securities that are converted; provided, however
that Securities surrendered for conversion during the period, in the case of
interest in lieu of Issue Discount, from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date or, in the case of contingent interest, from the
close of business on any date on which contingent interest accrues to the
opening of business on the date on which such contingent interest is payable,
shall be entitled to receive such interest, in lieu of Issue Discount or
contingent interest, as the case may be, payable on such Securities on the
corresponding Interest Payment Date or the date on which such contingent
interest is payable and (except Securities with respect to which the Company has
mailed a notice of redemption) Securities surrendered for conversion during such
periods must be accompanied by payment of an amount equal to the interest in
lieu of Issue Discount or contingent interest with respect thereto that the
registered Holder is to receive.


                                      A-10

      To convert a Security, a Holder must (1) complete and manually sign the
conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the
Security to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (4) pay any transfer or similar tax, if required.

      A Holder may only convert a portion of a Security pursuant to the terms of
this paragraph 9 and in accordance with the Indenture if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. No payment
or adjustment will be made for dividends on the Common Stock except as provided
herein and in the Indenture. On conversion of a Security, that portion of
accrued Original Issued Discount, accrued Issue Discount (or interest if the
Company has exercised its option provided for in paragraph 12 hereof)
attributable to the period from the Issue Date (or, if the Company has exercised
the option referred to in paragraph 12 hereof, the later of (x) the date of such
exercise and (y) the date on which interest was last paid) through the
Conversion Date and (except as provided above) accrued contingent interest with
respect to the converted Security shall not be cancelled, extinguished or
forfeited, but rather shall be deemed to be paid in full to the Holder thereof
through the delivery of the cash payment and the Common Stock, if any, in
exchange for the Security being converted pursuant to the terms hereof; and the
fair market value of such cash payment and such shares of Common Stock shall be
treated as issued, to the extent thereof, first in exchange for Original Issued
Discount and Issue Discount (or interest, if the Company has exercised its
option provided for in paragraph 12 hereof) accrued through the Conversion Date
and accrued contingent interest, and the balance, if any, of such fair market
value of such cash payment and such Common Stock, if any, shall be treated as
issued in exchange for the Initial Accreted Principal Amount of the Security
being converted pursuant to the provisions hereof.

      The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock; subdivisions,
combinations or certain reclassifications of Common Stock; distributions to all
holders of Common Stock of certain rights to purchase Common Stock for a period
expiring within 60 days at less than the Sale Price of the Common Stock at the
Time of Determination; and distributions to such holders of assets or debt
securities of the Company or certain rights to purchase securities of the
Company; and certain cash dividends or distributions. However, no adjustment
need be made if Securityholders may participate in the transaction or in certain
other cases. The Company from time to time may voluntarily increase the
Conversion Rate.

      If the Conversion Rate is adjusted pursuant to Article 11 of the
Indenture, then the Maximum Conversion Rate shall be adjusted by the same
proportion as the Conversion Rate except that the Maximum Conversion Rate shall
not be adjusted as a result of any adjustments to the Conversion Rate made
solely for quarterly cash dividends pursuant to Section 11.09 of the Indenture.

      If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Security into cash and Common Stock may be changed into a right to convert it
into securities, cash or other assets of the Company or another person.

      The Conversion Rate will not be adjusted for accrued Issue Discount or any
contingent interest.

10. Conversion Arrangement on Call for Redemption.

      Any Securities called for redemption, unless surrendered for conversion
before the close of business on the Redemption Date, may be deemed to be
purchased from the Holders of such Securities at an amount not less than the
Redemption Price, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Securities from the Holders, to


                                      A-11



convert them into Common Stock of the Company and to make payment for such
Securities to the Trustee in trust for such Holders.

11. Tax Treatment.

      The Company agrees, and each Holder and any beneficial holder of a
Security shall be deemed to agree, for United States federal income tax
purposes, (1) to treat the Securities as debt instruments that are subject to
the Contingent Debt Regulations and, for purposes of the Contingent Debt
Regulations, to treat the cash and the fair market value of any stock
beneficially received upon any conversion of the Securities as a contingent
payment, (2) to accrue interest with respect to outstanding Securities as
original issue discount according to the "noncontingent bond method," set forth
in section 1.1275-4(b) of the Treasury Regulations, using a comparable yield of
6.53 percent per annum compounded semi-annually based on an issue price of
$709.40 on February 8, 2001 and the projected payment schedule attached as Annex
A to this Indenture, and (3) to be bound by the "comparable yield" and the
"projected payment schedule" within the meaning of the Contingent Debt
Regulations, as determined by the Company, in each case, except as required by
applicable law. A Holder or beneficial owner may obtain the issue price, Issue
Date, amount of Original Issue Discount, yield to maturity, comparable yield and
projected payment schedule for the Securities by submitting a written request
for such information to the Company at the address of the Company set forth in
Section 14.02 of the Indenture.

12. Tax Event.

      (a) Upon the occurrence of a Tax Event, the Company may elect to pay
interest on all the Securities in lieu of future Issue Discount at the rate of
1% per annum on a restated principal amount per $1,000 original Principal Amount
at Maturity (the "Restated Principal Amount") equal to the Initial Accreted
Principal Amount plus Issue Discount accrued through the date of such election
(the "Option Exercise Date") and shall pay such interest in cash semi-annually
on February 8 and August 8 of each year (each an "Interest Payment Date") to
holders of record at the close of business on the 15th calendar day immediately
preceding such Interest Payment Date (each, a "Regular Record Date"). Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months and will accrue semi-annually from the most recent date to which interest
has been paid or, if no interest has been paid, from the Option Exercise Date.

      (b) Interest on any Security that is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the person in
whose name that Security is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company maintained
for such purpose. Each installment of interest on any Security shall be paid in
same-day funds by transfer to an account maintained by the payee located inside
the United States.

      (c) From and after the Option Exercise Date, contingent interest provided
for in paragraph 5 hereof shall cease to accrue on this Security.

13. Defaulted Interest.

      Except as otherwise specified with respect to the Securities, any
Defaulted Interest on any Security shall forthwith cease to be payable to the
registered Holder thereof on the relevant Regular Record Date or accrual date,
as the case may be, by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company as provided for in Section 12.02 of the
Indenture.


                                      A-12

14. Denominations; Transfer; Exchange.

      The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount at Maturity and integral multiples
of $1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not transfer
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities in respect of which a Purchase Notice or Change in Control
Purchase Notice has been given and not withdrawn (except, in the case of a
Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before the mailing of a
notice of redemption of Securities to be redeemed.

15. Persons Deemed Owners.

      The registered Holder of this Security may be treated as the owner of this
Security for all purposes.

16. Unclaimed Money or Securities.

      The Trustee and the Paying Agent shall return to the Company upon written
request any money or securities held by them for the payment of any amount with
respect to the Securities that remains unclaimed for two years, subject to
applicable unclaimed property laws. After return to the Company, Holders
entitled to the money or securities must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
person.

17. Amendment; Waiver.

      Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding and (ii) certain Defaults may be waived with
the written consent of the Holders of a majority in aggregate Principal Amount
at Maturity of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 or Section 11.15 of the Indenture, to secure the Company's
obligations under this Security or to add to the Company's covenants for the
benefit of the Securityholders or to surrender any right or power conferred, or
to comply with any requirement of the SEC in connection with the qualification
of the Indenture under the TIA, or as necessary in connection with the
registration of the Securities under the Securities Act.

18. Defaults and Remedies.

      Under the Indenture, Events of Default include (i) default in the payment
of contingent interest when the same becomes due and payable or of interest
which becomes due and payable upon exercise by the Company of its option
provided for in paragraph 12 hereof and Article 10 of the Indenture which
default in either case continues for 30 days; (ii) default in payment of the
Principal Amount at Maturity (or, if the Securities have been converted to
semi-annual coupon notes pursuant to paragraph 12 hereof and Section 10.01 of
the Indenture following a Tax Event, the Restated


                                      A-13

Principal Amount), Initial Accreted Principal Amount plus accrued Issue
Discount, Redemption Price, Purchase Price or Change in Control Purchase Price,
as the case may be, in respect of the Securities when the same becomes due and
payable; (iii) failure by the Company or the Guarantor to comply with any of its
other agreements in the Indenture or the Securities, subject to notice and lapse
of time; (iv) (a) failure of the Company or the Guarantor to make any payment by
the end of any applicable grace period after maturity of Debt in an amount
(taken together with amounts in (b) below) in excess of $50,000,000, or (b) the
acceleration of Debt in an amount (taken together with amounts in (a) above) in
excess of $50,000,000 because of a default with respect to such Debt without
such Debt having been discharged or such acceleration having been cured, waived,
rescinded or annulled, subject to notice and lapse of time; provided, however,
that if any such failure or acceleration referred to in (a) or (b) above shall
cease or be cured, waived, rescinded or annulled, then the Event of Default by
reason thereof shall be deemed not to be continuing; and (v) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate Principal Amount at
Maturity of the Securities at the time outstanding, may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities becoming
due and payable immediately upon the occurrence of such Events of Default.

      Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives indemnity or security reasonably satisfactory
to it. Subject to certain limitations, Holders of a majority in aggregate
Principal Amount at Maturity of the Securities at the time outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of amounts specified in clause (i) or (ii) above) if it determines
that withholding notice is in their interests.

19. Trustee Dealings with the Company and the Guarantor.

      Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company, the Guarantor or their respective Affiliates and may
otherwise deal with the Company, the Guarantor or their respective Affiliates
with the same rights it would have if it were not Trustee.

20. No Recourse Against Others.

      A director, officer, employee or stockholder, as such, of the Company or
the Guarantor shall not have any liability for any obligations of the Company or
the Guarantor under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.

21. Authentication.

      This Security (including the Guarantee attached hereto) shall not be valid
until an authorized signatory of the Trustee manually signs the Trustee's
Certificate of Authentication on the other side of this Security.

22. Abbreviations.


                                      A-14

      Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

23. GOVERNING LAW.

      THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.


                                      A-15

                    GUARANTEE OF COUNTRYWIDE HOME LOANS, INC.

      FOR VALUE RECEIVED, Countrywide Home Loans, Inc., a corporation duly
organized and existing under the laws of the State of New York (the
"Guarantor"), hereby unconditionally guarantees to the Holder of the attached
Convertible Security due 2031 (the "Security") of Countrywide Financial
Corporation (the "Company"), issued under the Indenture (the "Indenture"), dated
as of September __, 2004, among the Company, the Guarantor, and The Bank of New
York (the "Trustee"), authenticated and delivered by the Trustee, the due and
punctual payment of the Principal Amount at Maturity, Initial Accreted Principal
Amount, Issue Discount, Restated Principal Amount, Redemption Price, Purchase
Price, Change of Control Purchase Price, contingent interest, if any, and
interest payable pursuant to paragraph 1 or paragraph 12 of the Security, if
any, and the cash and the cash equivalent of the Common Stock, if any, due upon
a conversion pursuant to paragraph 9 of the Security, with respect to the
Security, when and as the same shall become due and payable, whether at
maturity, by acceleration, redemption or otherwise, in accordance with the terms
of the Security and of the Indenture. In case of the failure of Countrywide
Financial Corporation (the "Company") punctually to pay any Principal Amount at
Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal
Amount, Redemption Price, Purchase Price, Change of Control Purchase Price,
contingent interest, if any, interest payable pursuant to paragraph 1 or
paragraph 12 of the Security, if any, and the cash and the cash equivalent of
the Common Stock, if any, due upon a conversion pursuant to paragraph 9 of the
Security, the Guarantor hereby agrees to cause any such payment to be made
punctually when and as the same shall become due and payable, whether at
maturity, upon acceleration, redemption or otherwise, and as if such payment
were made by the Company.

      The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of the Security or the Indenture, any failure
to enforce the provisions of any the Security or the Indenture, or any waiver,
modification, consent or indulgence granted to the Company with respect thereto
by the Holder of the Security or the Trustee, the recovery of any judgment
against the Company or any action to enforce the same, or any other
circumstances which may otherwise constitute a legal or equitable discharge of a
surety or guarantor. The Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of merger, insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest or notice with respect to any the Security or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that the Guarantee
will not be discharged except by payment in full of the Principal Amount at
Maturity, Initial Accreted Principal Amount, Issue Discount, Restated Principal
Amount, Redemption Price, Purchase Price, Change of Control Purchase Price,
contingent interest, if any, interest payable pursuant to paragraph 1 or
paragraph 12 of the Security, if any, and the cash and the cash equivalent of
the Common Stock, if any, due upon a conversion pursuant to paragraph 9 of the
Security, and the complete performance of all other obligations contained in the
Security.

      This Guarantee will rank equally in right of payment to all the
Guarantor's future unsecured and unsubordinated indebtedness.

      The Guarantor shall be subrogated to all rights of the Holder of the
Security against the Company in respect of any amounts paid to such Holder by
the Guarantor pursuant to the provisions of the Guarantee; provided, however,
that the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation until the Principal
Amount at Maturity, Initial Accreted Principal Amount, Issue Discount, Restated
Principal Amount, Redemption Price, Purchase Price, Change of Control Purchase
Price, contingent interest, if any, interest payable pursuant to paragraph 1 or
paragraph 12 of the Security, if any, and the cash and the cash equivalent of


                                      A-16



the Common Stock, if any, due upon a conversion pursuant to paragraph 9 of the
Security, required with respect to, all Securities of the same series shall have
been paid in full.

      Notwithstanding anything to the contrary contained herein, if following
any payment of amounts due under the Security by the Company to the Holder
thereof it is determined by a final decision of a court of competent
jurisdiction that such payment shall be avoided by a trustee in bankruptcy
(including any debtor-in-possession) as a preference under 11 U.S.C. Section 547
and such payment is paid by such holder to such trustee in bankruptcy, then and
to the extent of such repayment the obligations of the Guarantor hereunder shall
remain in full force and effect.

      This Guarantee shall not be valid or become obligatory for any purpose
with respect to the Security until the certificate of authentication of the
Security shall have been signed by the Trustee or on its behalf by the Trustee's
authenticating agent.

      This Guarantee shall be governed by the laws of the State of New York.

      All capitalized but undefined terms used in this Guarantee shall have the
respective meanings ascribed thereto in the Indenture.

Dated: September __, 2004

                                      COUNTRYWIDE HOME LOANS, INC.


                                      By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                      A-17


      The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture which has in it the text of this Security
in larger type. Requests may be made to:

                Countrywide Financial Corporation
                4500 Park Granada
                Calabasas, CA 91302
                Att: Sandor E. Samuels, Esq., Chief Legal Officer

                                           ASSIGNMENT FORM


To assign this Security, fill in the form below:

I or we assign and transfer this Security to

- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax ID no.)

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)

and irrevocably appoint
___________________________________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.

                                CONVERSION NOTICE

To convert this Security into cash and Common Stock of the Company, check the
box:

                                       [ ]

To convert only part of this Security, state the Principal Amount at Maturity to
be converted (which must be $1,000 or an integral multiple of $1,000):

$
  --------------------

If you want the stock certificate made out in another person's name, fill in the
form below:

- --------------------------------------------------------------------------------
(Insert other person's soc. sec. or tax ID no.)

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)

- --------------------------------------------------------------------------------

Date:                                           Your Signature:
     ------------------------------------------                 ----------------


                                      A-18

     (Sign exactly as your name appears on the other side of this Security)

Signature Guarantee:
                    -----------------------

                               SIGNATURE GUARANTEE

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.


                                      A-19

                                     ANNEX A
                          Projected Payment Schedule*



Semi-annual Period Ending                                    Projected Payment per Security
- -------------------------                                    ------------------------------
                                                          
      August 8, 2001                                               $            -
      February 8, 2002                                             $            -
      August 8, 2002                                               $            -
      February 8, 2003                                             $            -
      August 8, 2003                                               $            -
      February 8, 2004                                             $            -
      August 8, 2004                                               $            -
      February 8, 2005                                             $            -
      August 8, 2005                                               $            -
      February 8, 2006                                             $            -
      August 8, 2006                                               $            -
      February 8, 2007                                             $            -
      August 8, 2007                                               $            -
      February 8, 2008                                             $            -
      August 8, 2008                                               $            -
      February 8, 2009                                             $       3.9739
      August 8, 2009                                               $       4.1105
      February 8, 2010                                             $       4.2518
      August 8, 2010                                               $       4.3979
      February 8, 2011                                             $       4.5491
      August 8, 2011                                               $       4.7055
      February 8, 2012                                             $       4.8672
      August 8, 2012                                               $       5.0345
      February 8, 2013                                             $       5.2076
      August 8, 2013                                               $       5.3866
      February 8, 2014                                             $       5.5718
      August 8, 2014                                               $       5.7633
      February 8, 2015                                             $       5.9614
      August 8, 2015                                               $       6.1663
      February 8, 2016                                             $       6.3783
      August 8, 2016                                               $       6.5975
      February 8, 2017                                             $       6.8243
      August 8, 2017                                               $       7.0589
      February 8, 2018                                             $       7.3016
      August 8, 2018                                               $       7.5526
      February 8, 2019                                             $       7.8122
      August 8, 2019                                               $       8.0807
      February 8, 2020                                             $       8.3585
      August 8, 2020                                               $       8.6458
      February 8, 2021                                             $       8.9430
      August 8, 2021                                               $       9.2504
      February 8, 2022                                             $       9.5684
      August 8, 2022                                               $       9.8973


- ----------
*     The comparable yield and the schedule of projected payments are determined
      on the basis of an assumption of linear growth of the stock price and a
      constant dividend yield and are not determined for any purpose other than
      for the determination of interest accruals and adjustments thereof in
      respect of the Securities for United States federal income tax purposes.
      The comparable yield and the schedule of projected payments do not
      constitute a projection or representation regarding the amounts payable on
      Securities.


                                   Annex A-1




Semi-annual Period Ending                                    Projected Payment per Security
- -------------------------                                    ------------------------------
                                                          
      February 8, 2023                                             $      10.2376
      August 8, 2023                                               $      10.5895
      February 8, 2024                                             $      10.9535
      August 8, 2024                                               $      11.3300
      February 8, 2025                                             $      11.7195
      August 8, 2025                                               $      12.1224
      February 8, 2026                                             $      12.5391
      August 8, 2026                                               $      12.9701
      February 8, 2027                                             $      13.4159
      August 8, 2027                                               $      13.8771
      February 8, 2028                                             $      14.3541
      August 8, 2028                                               $      14.8476
      February 8, 2029                                             $      15.3579
      August 8, 2029                                               $      15.8859
      February 8, 2030                                             $      16.4319
      August 8, 2030                                               $      16.9968
      February 8, 2031                                             $   4,350.4332



                                   Annex A-2

EX-23.1

                                                                    EXHIBIT 23.1



            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated February 27, 2004, accompanying the consolidated
financial statements and schedules of Countrywide Financial Corporation and
Subsidiaries appearing in the 2003 Annual Report of the Company on Form 10-K for
the year ended December 31, 2003, which is incorporated by reference in this
Registration Statement on Form S-4/A (the "Registration Statement"). We consent
to the incorporation by reference in the Registration Statement of the
aforementioned report and to the use of our name as it appears under the caption
"Experts."


/s/ GRANT THORNTON LLP

Los Angeles, California
August 17, 2004

EX-23.2

                                                                    EXHIBIT 23.2



            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated February 6, 2004, accompanying the financial
statements and schedules of Countrywide Securities Corporation appearing in the
Current Report on Form 8-K of Countrywide Financial Corporation dated February
27, 2004, which is incorporated by reference in this Registration Statement on
Form S-4/A (the "Registration Statement"). We consent to the incorporation by
reference in the Registration Statement of the aforementioned report and to the
use of our name as it appears under the caption "Experts."


/s/ GRANT THORNTON LLP

Los Angeles, California
August 17, 2004

EX-99.1

exv99w1

EX-99.2

exv99w2

EX-99.3

exv99w3