-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B+pXbGPYo0POQ63QAQnxX4v7iDv89t1EVEm7w8K7Pyv7tis+kOqjPBXhRsaAvqLF aJPNGPOfu5UFlUjdQpsplQ== 0000950130-96-001791.txt : 19960518 0000950130-96-001791.hdr.sgml : 19960518 ACCESSION NUMBER: 0000950130-96-001791 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 REFERENCES 429: 033-59559 REFERENCES 429: 033-59559-01 FILED AS OF DATE: 19960515 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUNTRYWIDE CREDIT INDUSTRIES INC CENTRAL INDEX KEY: 0000025191 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 132641992 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-03835 FILM NUMBER: 96568366 BUSINESS ADDRESS: STREET 1: 155 NORTH LAKE AVE CITY: PASADENA STATE: CA ZIP: 91101-1857 BUSINESS PHONE: 8183048400 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUNTRYWIDE FUNDING CORP CENTRAL INDEX KEY: 0000814509 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 954083087 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-03835-01 FILM NUMBER: 96568367 BUSINESS ADDRESS: STREET 1: 155 N LAKE AVE CITY: PASADENA STATE: CA ZIP: 91109-7137 BUSINESS PHONE: 8183048400 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1996 REGISTRATION NOS. 333- AND 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM S-3 AND POST-EFFECTIVE AMENDMENT NO. 1 TO FORM S-3 (REGISTRATION NOS. 33-59559 AND 33-59559-01) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- COUNTRYWIDE HOME LOANS, INC. COUNTRYWIDE CREDIT INDUSTRIES, INC. (EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS) -------------- NEW YORK DELAWARE (STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION) 13-2631719 13-2641992 (I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.) 155 NORTH LAKE AVENUE PASADENA, CA 91101 (818) 304-8400 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES) DAVID S. LOEB DIRECTOR COUNTRYWIDE HOME LOANS, INC. AND PRESIDENT AND CHAIRMAN OF THE BOARD COUNTRYWIDE CREDIT INDUSTRIES, INC. 155 NORTH LAKE AVENUE PASADENA, CA 91101 (818) 304-8400 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) -------------- COPIES TO: KENNETH R. BLACKMAN EDWARD J. FINE FRIED, FRANK, HARRIS, SHRIVER & BROWN & WOOD JACOBSON ONE WORLD TRADE CENTER ONE NEW YORK PLAZA NEW YORK, NEW YORK 10048 NEW YORK, NEW YORK 10004 (212) 839-5300 (212) 859-8000 -------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement, as determined by market conditions. -------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] (Continued on next page) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subject to Completion, Dated May 15, 1996 PROSPECTUS SUPPLEMENT (To Prospectus Dated , 1996) U.S. $1,000,000,000 COUNTRYWIDE HOME LOANS, INC. MEDIUM-TERM NOTES, SERIES E DUE NINE MONTHS OR MORE FROM DATE OF ISSUE PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST UNCONDITIONALLY GUARANTEED BY [LOGO]COUNTRYWIDE/SM/ --------------------- CREDIT INDUSTRIES, INC. -------------- Countrywide Home Loans, Inc. (formerly known as Countrywide Funding Corporation) ("CHL") may offer from time to time its Medium-Term Notes, Series E (the "Notes"), each of which will be unconditionally guaranteed as to payment of principal, premium, if any, and interest by Countrywide Credit Industries, Inc. (the "Guarantor" or "CCI"). Each Note will mature nine months or more from the date of issue, as selected by the purchaser and agreed to by CHL and may be subject to redemption or repayment prior to maturity. The aggregate initial offering price of the Notes to be offered will not exceed U.S. $1,000,000,000 or its equivalent in foreign currencies or currency units. The Notes may be denominated in U.S. dollars or in such foreign currencies or currency units (the "Specified Currency") as may be designated by CHL. Unless otherwise specified in the applicable Pricing Supplement, each Note will bear interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case of certain Notes issued at a price representing a substantial discount from the principal amount payable upon maturity, or at a floating rate (a "Floating Rate Note"). Unless otherwise specified in the applicable Pricing Supplement, the Interest Payment Dates for each Fixed Rate Note will be January 15 and July 15 of each year and at maturity or such date of earlier redemption or repayment. The Interest Payment Dates for each Floating Rate Note will be established on the date of issue of such Note and will be set forth in the applicable Pricing Supplement. Interest rates and interest rate formulas are subject to change by CHL, but no change will affect any Note already issued or as to which an offer to purchase has been accepted by CHL. Each Note will be represented by either a global security registered in the name of a nominee of The Depository Trust Company, as depositary (a "Book-Entry Note"), or a certificate issued in definitive form (a "Certificated Note"), as set forth in the applicable Pricing Supplement. Beneficial interests in Book- Entry Notes will be shown on, and transfers thereof will be effected only through, records maintained by the Depositary (with respect to interests of its participants) and by its participants (with respect to beneficial owners' interests). Book-Entry Notes will not be issuable as Certificated Notes, except under the limited circumstances described herein. The Specified Currency, any applicable interest rate or interest rate formula, the Stated Maturity Date, the Interest Payment Dates, if any, and any redemption or repayment provisions for each Note and whether such Note will be a Book-Entry Note or a Certificated Note will be established at the time of issuance of such Note and set forth therein and in the applicable Pricing Supplement. The indenture pursuant to which the Notes will be issued does not contain any restrictions on the ability of the Guarantor, CHL or any of their respective affiliates to incur additional indebtedness (secured or unsecured). As of February 29, 1996, the Guarantor did not have any secured indebtedness outstanding, and CHL had $990,275,609 aggregate principal amount of secured indebtedness outstanding, all of which was short-term indebtedness. As of such date, CHL had $4,907,242,373 aggregate principal amount of unsecured and unsubordinated indebtedness outstanding, which indebtedness ranked pari passu in right of payment with CHL's other unsecured and unsubordinated indebtedness and will rank pari passu in right of payment with the Notes. See "Description of Debt Securities and Guarantees--General" in, and Note D to CCI's Consolidated Financial Statements incorporated by reference into, the accompanying Prospectus. FOR A DESCRIPTION OF CERTAIN RISK FACTORS RELATING TO INVESTMENTS IN THE NOTES, SEE "RISK FACTORS" ON PAGE S-2 OF THIS PROSPECTUS SUPPLEMENT. ---------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS, OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Price to Agents' Commission or Proceeds to Public(1)(2) Discount(2)(3) Company(2)(3)(4) - ------------------------------------------------------------------------------------------------ Per Note................ % %- % %- % - ------------------------------------------------------------------------------------------------ Total................... U.S. $1,000,000,000 U.S. $ -$ U.S. $ -$ - ------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- (1) Unless otherwise specified in the applicable Pricing Supplement, the Price to Public will be 100% of the principal amount of the Notes being issued. (2) Or the equivalent thereof in a Specified Currency other than U.S. dollars. (3) CHL will pay to Lehman Brothers, Lehman Brothers Inc., Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., NationsBanc Capital Markets, Inc. and Salomon Brothers Inc (each, an "Agent," and collectively, the "Agents") a commission, which may be in the form of a discount, ranging from % to % of the principal amount of any Note (or, in the case of any Original Issue Discount Security (as defined herein), the price to public), depending on its maturity, sold through such Agent, except that the commission payable by CHL to the Agents with respect to Notes with maturities of greater than 30 years will be negotiated at the time of the sale thereof. Unless otherwise specified in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price equal to 100% of the principal amount thereof less a percentage of the principal amount equal to the commission applicable to an agency sale of a Note of identical maturity and may be resold by such Agent to one or more investors or other purchasers at varying prices related to prevailing market prices at the time of such resale, as determined by such Agent, or if so agreed, at a fixed public offering price. CHL has agreed to indemnify the Agents against certain liabilities, including liabilities under the Securities Act of 1933, as amended. (4) Before deducting other expenses payable by CHL estimated at U.S. $1,175,000. ---------- The Notes are being offered on a continuous basis by CHL through the Agents, each of which has agreed to use its reasonable best efforts to solicit purchases of the Notes. CHL also may sell Notes to any Agent acting as principal for resale to one or more investors or other purchasers or may sell Notes directly to investors on its own behalf. Unless otherwise specified in the applicable Pricing Supplement, the Notes will not be listed on any securities exchange, and there can be no assurance that the Notes offered by this Prospectus Supplement and the accompanying Prospectus will be sold or that there will be a secondary market for the Notes. CHL reserves the right to withdraw, cancel or modify the offer made hereby without notice. CHL and the Agents may reject any offer to purchase Notes in whole or in part. See "Plan of Distribution of Notes" herein. ---------- LEHMAN BROTHERS GOLDMAN, SACHS & CO. MERRILL LYNCH & CO. J.P. MORGAN & CO. NATIONSBANC CAPITAL MARKETS, INC. SALOMON BROTHERS INC , 1996 IN CONNECTION WITH THE DISTRIBUTION OF NOTES UNDERWRITTEN BY AN AGENT ACTING AS PRINCIPAL ON A FIXED PRICE BASIS, SUCH AGENT MAY OVER-ALLOT OR EFFECT TRANSACTIONS IN THE NOTES WITH A VIEW TO STABILIZING OR MAINTAINING THE MARKET PRICE OF THE NOTES AT LEVELS OTHER THAN THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. RISK FACTORS INDEX RISK An investment in the Notes indexed, as to principal, premium, if any, or interest, to one or more currencies or currency units (including exchange rates and swap indices between currencies or currency units), commodities, interest rates or other indices entails significant risks that are not associated with similar investments in a conventional fixed rate or floating rate debt security. Such risks include, without limitation, the possibility that such index or indices may be subject to significant changes, that the resulting interest rate will be less than that payable on a conventional fixed rate or floating rate debt security issued at the same time, that the repayment of principal or premium, if any, can occur at a time other than that expected by the investor, and that the investor could lose all or a substantial portion of principal or premium, if any, payable on the Maturity Date (as defined below). Such risks depend on a number of interrelated factors, including economic, financial and political events, over which CHL and the Guarantor have no control. Additionally, if the formula used to determine the amount of principal, premium, if any, or interest payable with respect to such Notes contains a multiple or leverage factor, the effect of any change in the applicable index or indices will be magnified. In recent years, values of certain indices have been highly volatile and such volatility may be expected to continue in the future. Fluctuations in the value of any particular index that have occurred in the past are not necessarily indicative, however, of fluctuations in such value that may occur in the future. The secondary market for such Notes will be affected by a number of factors independent of the creditworthiness of CHL and the value of the applicable index or indices, including the complexity and volatility of such index or indices, the method of calculating the principal, premium, if any, and interest in respect of such Notes, the time remaining to the maturity of such Notes, the outstanding amount of such Notes and market interest rates generally. The credit ratings assigned to CHL's medium-term note program may not reflect the potential impact of all risks related to structure and other factors on the market value of the Notes. Accordingly, prospective investors should consult their own financial and legal advisors as to the risks entailed by an investment in the Notes and the suitability of such Notes in light of their particular circumstances. FOREIGN CURRENCY RISKS Governing Laws and Judgments. The Notes will be governed by and construed in accordance with the laws of the State of New York. Courts in the United States have not customarily rendered judgments for money damages denominated in any currency or currency unit other than U.S. dollars. The Judiciary Law of the State of New York provides, however, that an action based upon an obligation denominated in a currency or currency unit other than U.S. dollars will be rendered in the foreign currency or currency unit of the underlying obligation and converted into U.S. dollars at a rate of exchange prevailing on the date of the entry of the judgment or decree. Exchange Rates and Exchange Controls. An investment in Notes that are denominated in a foreign currency or currency unit entails significant risks that are not associated with a similar investment in a security denominated in U.S. dollars. Such risks include, without limitation, the possibility of significant changes in rates of exchange between the U.S. dollar and the various foreign currencies or currency units and the possibility of the imposition or modification of exchange controls by either the United States or S-2 foreign governments. Such risks generally depend on economic and political events and on the supply of and demand for the relevant currencies, factors over which CHL and the Guarantor have no control. In recent years, rates of exchange between the U.S. dollar and foreign currencies and currency units have been highly volatile and such volatility may be expected in the future. Fluctuations in any particular exchange rate that have occurred in the past are not necessarily indicative, however, of fluctuations in such rate that may occur during the term of any Note. Depreciation of the applicable foreign currency or currency unit against the U.S. dollar would result in a decrease in the effective yield of such Note, in the value of the principal and premium, if any, payable on the Maturity Date of such Note and, generally, in the market value of such Note. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE ALL OF THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED AND/OR PAYABLE IN A FOREIGN CURRENCY OR CURRENCY UNIT, AND CHL AND THE GUARANTOR DISCLAIM ANY RESPONSIBILITY TO ADVISE PROSPECTIVE INVESTORS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED AND/OR PAYABLE IN CURRENCIES OR CURRENCY UNITS OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS. Unless otherwise specified in the applicable Pricing Supplement, Notes denominated in a Specified Currency other than U.S. dollars or ECU (as defined below) will not be sold in, or to residents of, the country of the Specified Currency in which particular Notes are denominated. The information set forth in this Prospectus Supplement is directed to prospective investors who are United States residents, and CHL and the Guarantor disclaim any responsibility to advise prospective investors who are residents of countries other than the United States with respect to any matters that may affect the purchase, holding or receipt of payments of principal of, or premium, if any, or interest on, the Notes. Such persons should consult their own advisors with regard to such matters. Governments or monetary authorities have imposed from time to time, and may in the future impose, exchange controls which could affect exchange rates as well as the availability of the Specified Currency on the applicable Interest Payment Date or Maturity Date of a Note. Even if there are no actual exchange controls, it is possible that on such Interest Payment Date or Maturity Date the Specified Currency for such Note would not be available to CHL due to circumstances beyond the control of CHL. In that event, CHL will make the required payments in U.S. dollars on the basis of the Exchange Rate (as defined below) two Business Days (as defined below) prior to the Interest Payment Date or the Maturity Date, as the case may be (or, if no rate is quoted for such Specified Currency on such date, the last date such rate is quoted). See "Description of Notes--Payment Currency." Currency Exchange. Purchasers are required to pay for the Notes in the currency or currency unit in which such Notes are denominated (the "Specified Currency"), unless otherwise provided in the applicable Pricing Supplement. Currently, there are limited facilities in the United States for conversion of U.S. dollars into foreign currencies or currency units and vice versa, and many banks do not offer non-U.S. dollar denominated checking or savings account facilities in the United States. Upon request, the Agents will arrange for the conversion of U.S. dollars into a Specified Currency other than U.S. dollars to enable purchasers to pay for the Notes. Such request must be made on the trade date. Each such conversion will be made by the Agents on such terms and subject to such conditions, limitations and charges as the Agents may from time to time establish in accordance with their regular foreign exchange practice. All costs of exchange will be borne by the investors in the Notes. References herein to "U.S. dollars," "dollar," "U.S. $" or "$" are to the currency of the United States of America. S-3 DESCRIPTION OF NOTES The following description of the particular terms of the Notes offered hereby supplements, and to the extent inconsistent therewith, replaces, the description of the general terms and provisions of the Debt Securities set forth in the accompanying Prospectus, to which description reference is hereby made. Unless otherwise specified in a Pricing Supplement, the terms of the Notes will be as set forth below. GENERAL The Notes are to be issued as a series of Debt Securities limited to U.S. $1,000,000,000, or its equivalent in one or more foreign currencies or currency units, aggregate initial offering price under an Indenture dated as of January 1, 1992, as amended, supplemented or modified from time to time, including Supplemental Indenture No. l thereto dated as of June 15, 1995 (collectively, the "Indenture"), among CHL, the Guarantor and The Bank of New York, as trustee (the "Trustee"), which is described more fully under "Description of Debt Securities and Guarantees" in the accompanying Prospectus. The statements herein concerning the Notes and the Indenture do not purport to be complete and are qualified in their entirety by reference to the provisions of the Indenture, including the definitions of certain terms used herein without definition. The Notes will be offered on a continuous basis and will mature on any day nine months or more from their dates of issue, as specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, interest-bearing Notes will be either Fixed Rate Notes or Floating Rate Notes, as specified in the applicable Pricing Supplement. Notes also may be issued that do not bear any interest currently or that bear interest at a below market rate. Each Note will be represented by either a global security registered in the name of a nominee of The Depository Trust Company, New York, New York ("DTC"), as depositary (a "Book-Entry Note"), or a certificate issued in definitive form (a "Certificated Note"), as set forth in the applicable Pricing Supplement. Beneficial interests in Book-Entry Notes will be shown on, and transfers thereof will be effected only through, records maintained by DTC (with respect to interests of its Participants (as defined below)) and by its Participants (with respect to interests of beneficial owners (as defined below)). Book-Entry Notes will not be issuable as Certificated Notes, except under the limited circumstances described herein. Unless otherwise specified in the applicable Pricing Supplement, the minimum denomination of Notes will be $1,000 or the equivalent thereof in the Specified Currency (if other than U.S. dollars), and integral multiples of $1,000 in excess thereof or the equivalent thereof in such Specified Currency. Interest rates offered by CHL with respect to the Notes may differ depending upon, among other things, the principal amount of the Notes the applicable Agent expects to sell to an investor in a single transaction and the price at which such Agent purchases such Notes from CHL (or, in connection with agent sales, such Agent's commission). Notes with similar terms but different interest rates may be offered concurrently to different investors. Notes with different variable terms also may be offered concurrently to different investors. Unless otherwise specified herein or in the applicable Pricing Supplement, "Exchange Rate" means, with respect to a Specified Currency (other than European Currency Units ("ECU")), the noon Dollar buying rate for such Specified Currency for cable transfers quoted by the Exchange Rate Agent (as specified in the applicable Pricing Supplement) in The City of New York on the Record Date or Special Record Date (each as defined below) or the fifteenth day immediately preceding the Maturity Date or on such other date provided in the applicable Note or in the Indenture, as the case may be, as certified for customs purposes by the Federal Reserve Bank of New York. With respect to ECU, "Exchange Rate" means the exchange rate between U.S. dollars and ECU reported by the Council of the European Communities on the applicable Record Date or Special Record Date with respect to an Interest Payment Date or the fifteenth day immediately preceding the Maturity Date or on such other date as provided in the applicable Note or in the Indenture, as the case may be. S-4 Certificated Notes may be presented for registration of transfer or exchange at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of New York. Registration of transfers or exchanges of Book-Entry Notes may be effected only through a participating member of the Depositary (as defined below). The Notes will constitute unsecured and unsubordinated indebtedness of CHL and will rank pari passu in right of payment with CHL's other unsecured and unsubordinated indebtedness. As of February 29, 1996, the Guarantor did not have any secured indebtedness outstanding, and CHL had $990,275,609 aggregate principal amount of secured indebtedness outstanding, all of which was short- term indebtedness. As of such date, CHL had $4,907,242,373 aggregate principal amount of unsecured and unsubordinated indebtedness outstanding, which indebtedness ranked pari passu in right of payment with CHL's other unsecured and unsubordinated indebtedness and will rank pari passu in right of payment with the Notes. See "Description of Debt Securities and Guarantees--General" and "--Guarantees" in the accompanying Prospectus. A substantial portion of the assets of CHL may be pledged under various credit agreements among CHL and various lending institutions. See Note D to CCI's Consolidated Financial Statements incorporated by reference into the accompanying Prospectus. The Indenture does not contain any provisions that would limit the ability of CHL, the Guarantor or any of their respective affiliates to incur indebtedness (secured or unsecured) or that would afford Holders of the Notes protection in the event of a highly leveraged transaction, restructuring, change in control, merger or similar transaction involving CHL or the Guarantor that may adversely affect Holders of the Notes. If so specified in the applicable Pricing Supplement, the Notes will be redeemable at the option of CHL or repayable at the option of the Holder prior to maturity. See "--Redemption and Repayment" below. The Notes will not be subject to any sinking fund. "Business Day" means (A) any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (i) New York, New York or Los Angeles, California, or (ii) if the Specified Currency specified in the applicable Pricing Supplement is other than U.S. dollars, the Principal Financial Center (as defined below), and (B) with respect to Floating Rate Notes as to which LIBOR (as defined below) is an applicable Base Rate, a London Banking Day (as defined below). "Principal Financial Center" means the capital city of the country issuing the related Specified Currency, except that with respect to Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECU, the "Principal Financial Center" shall be Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. "London Banking Day" means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. The "Maturity Date" means the earlier of the date on which the principal of a Note is redeemed (the "Redemption Date") or repaid (the "Repayment Date") or the date on which the Note will mature (the "Stated Maturity Date"). Unless otherwise specified in the applicable Pricing Supplement, all percentages resulting from any calculation of the rate of interest on Floating Rate Notes will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculation on Floating Rate Notes will be rounded to the nearest cent (with one-half cent being rounded upward). The Pricing Supplement relating to each Note will describe the following terms: (1) the Specified Currency; (2) whether such Note is a Fixed Rate Note, a Floating Rate Note or such other Note as is specified in such Pricing Supplement; (3) if other than 100%, the price (expressed as a percentage of the aggregate principal amount thereof) at which such Note will be issued to the public (the "Issue Price"); (4) the trade date; (5) the date on which such Note will be issued (the "Issue Date"); (6) the Stated Maturity Date and whether the Stated Maturity Date may be extended by CHL, and if so, the Extension Periods and Final S-5 Maturity Date (each as defined below); (7) if such Note is a Fixed Rate Note, the rate per annum at which such Note will bear interest, if any, and the Interest Payment Dates (as defined below) and whether such rate may be reset by CHL prior to the Stated Maturity Date and, if so, the date(s) and basis or formula therefor; (8) if such Note is a Floating Rate Note, whether it is a "Floating Rate/Fixed Rate Note" and, if so, the Fixed Rate Commencement Date and Fixed Interest Rate (each as defined below), as well as the Base Rate, the Initial Interest Rate, the Interest Determination Dates, the Interest Reset Dates, the Interest Payment Dates, the Index Maturity, the Maximum Interest Rate and/or the Minimum Interest Rate, if any, and the Spread and/or Spread Multiplier, if any (each as defined below), and any other terms relating to the particular method of calculating the interest rate for such Note, and whether the Spread and/or Spread Multiplier may be reset by CHL prior to the Stated Maturity Date and, if so, the date(s) and basis or formula therefor; (9) whether such Note may be redeemed at the option of CHL, or repaid at the option of the Holder, prior to maturity, and if so, the earliest date of redemption (the "Initial Redemption Date") and optional date(s) of repayment (each, an "Optional Repayment Date") and the other provisions relating to such redemption or repayment; (10) whether such Note will be issued initially as a Book-Entry Note or a Certificated Note; and (11) any other terms of such Note not inconsistent with the provisions of the Indenture. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST Principal, premium, if any, and interest will be paid by CHL in the Specified Currency. If and as specified in the applicable Pricing Supplement, at the request of a Holder of a Note payable in a Specified Currency other than U.S. dollars, payments of principal, premium, if any, and interest in respect of such Note will be paid in U.S. dollars. Under such circumstances, CHL will be required to tender payment in U.S. dollars at the Exchange Rate, and any costs associated with such conversion would be borne by such Holder through deduction from such payments. Such Holder may elect to receive payments in U.S. dollars by delivering a written request to the Trustee not later than the close of business on the Record Date immediately preceding the Interest Payment Date or the fifteenth day immediately preceding the Maturity Date, as the case may be. Such election will remain in effect until revoked by written notice from such Holder to the Trustee, but written notice of any such revocation must be received by the Trustee not later than the close of business on the Record Date immediately preceding the Interest Payment Date or the fifteenth day immediately preceding the Maturity Date, as the case may be. Upon request, the Trustee will mail a copy of a form of request to any Holder. Unless otherwise specified in the applicable Pricing Supplement, interest on the certificated Notes due on any Interest Payment Date other than the Maturity Date will be paid, except as provided below, by mailing a check in the Specified Currency (from an account at a bank located outside of the United States if such check is payable in a Specified Currency other than U.S. dollars) to the Holder at the address of such Holder appearing on the Security Register on the applicable Record Date. Unless otherwise specified in the applicable Pricing Supplement, the first payment of interest on any Note originally issued between a Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next Record Date to the Holder on such next Record Date. Notwithstanding the foregoing, on any Interest Payment Date other than the Maturity Date, a Holder of U.S. $10,000,000 (or the equivalent thereof in a Specified Currency other than U.S. dollars) or more in aggregate principal amount of Notes (whether or not having identical terms and provisions) shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive such payment by wire transfer of immediately available funds to an account maintained by the payee with a bank located in the United States, but only if appropriate wire transfer instructions have been received in writing by the Trustee not later than the Record Date immediately preceding such Interest Payment Date, and (ii) if the Specified Currency is other than U.S. dollars, to receive such payment by wire transfer of immediately available funds to an account maintained by the payee with a bank located in a jurisdiction in which payment in such Specified Currency is then lawful. CHL will pay any administrative costs imposed by banks in connection with making payments by wire transfer, but any tax, assessment or other governmental charge imposed upon payments will be borne by the Holders of the Notes in respect of which payments are made. Beneficial owners of Global Notes (as defined below) will be paid in accordance with the procedures of the Depositary and its Participants in effect from time to time as described under "--Book-Entry Notes" below. S-6 Unless otherwise specified in the applicable Pricing Supplement, payments of principal, premium, if any, and interest on the Maturity Date will be made in immediately available funds in the Specified Currency upon presentation and surrender of Notes at the Corporate Trust Office of the Trustee. In the case of such payments in a Specified Currency other than U.S. dollars, Notes shall be presented and surrendered to the Trustee in time for the Trustee to make such payments in accordance with its normal procedures. If any Interest Payment Date other than the Maturity Date for any Floating Rate Note would otherwise fall on a day that is not a Business Day, such Interest Payment Date shall be postponed to the next Business Day, except that if interest thereon is determined by reference to LIBOR and such next Business Day falls in the next calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity Date for any Fixed Rate Note or Floating Rate Note or the Interest Payment Date for any Fixed Rate Note falls on a day which is not a Business Day, payment of principal, premium, if any, and interest with respect to such Note will be made on the next Business Day with the same force and effect as if made on such date, and no interest on such payment will accrue to such next Business Day. Any interest not punctually paid or duly provided for with respect to a Note ("Defaulted Interest") will forthwith cease to be payable to the Holder thereof on the applicable Record Date and may either be paid to the person in whose name such Note is registered at the close of business on a special record date (the "Special Record Date") for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to the Holder of such Note not less than ten days prior to such Special Record Date, or may be paid at any time in any other lawful manner, all as more completely provided in the Indenture. Unless otherwise specified in the applicable Pricing Supplement, the "Record Date" with respect to any Interest Payment Date for Floating Rate Notes shall be the fifteenth day immediately preceding such Interest Payment Date, and for Fixed Rate Notes shall be the December 31 or June 30 immediately preceding such Interest Payment Date, in each case whether or not such date shall be a Business Day. PAYMENT CURRENCY If any payment of principal, premium, if any, or interest in respect of any Note is to be made in a Specified Currency other than U.S. dollars and such Specified Currency is not available to CHL for making such payment due to the imposition of exchange controls or other circumstances beyond the control of CHL, CHL will be entitled to satisfy its obligations to the Holder of such Note by making such payment in U.S. dollars on the basis of the Exchange Rate (as defined below) two Business Days prior to the Interest Payment Date or the Maturity Date, as the case may be (or, if no rate is quoted for such Specified Currency on such date, the last date such Exchange Rate is quoted). Any payment made under such circumstances in U.S. dollars where the required payment is in a Specified Currency other than U.S. dollars will not constitute an Event of Default under the Indenture. For purposes of this section, the "Exchange Rate" for a foreign currency or ECU will be the noon Dollar selling rate for such foreign currency or ECU for cable transfers quoted by the Exchange Rate Agent in The City of New York, as certified for customs purposes by the Federal Reserve Bank of New York. If payment on any Note is required to be made in ECU and ECU is unavailable due to the imposition of exchange controls or other circumstances beyond the control of CHL, or is no longer used in the European Monetary System, all payments due on that Interest Payment Date or Maturity Date with respect to such Note shall be made in U.S. dollars. The amount so payable on any date in ECU shall be converted into U.S. dollars, at a rate determined by the Exchange Rate Agent as of the second Business Day prior to the date on which such payment is due on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts which were components of the ECU as of the last date on which the ECU was used in the European Monetary System. The equivalent of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Components. The U.S. dollar equivalent of each of the Components shall be determined by the Exchange Rate Agent on the basis of the most recently available Exchange Rate. S-7 If the official unit of any component currency is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies (in appropriate proportions), the sum of which shall be equal to the amount of the former component currency. All determinations referred to above made by an Exchange Rate Agent shall be at its sole discretion (except to the extent expressly provided that any determination is subject to approval) and, in the absence of manifest error, shall be conclusive for all purposes and binding on the Holder of such Note and such Exchange Rate Agent shall have no liability therefor. FIXED RATE NOTES Each Fixed Rate Note will bear interest from its Issue Date at the rate per annum stated on the face thereof until the principal amount thereof is paid or made available for payment. Unless otherwise specified in the applicable Pricing Supplement, interest on each Fixed Rate Note will be payable semi- annually in arrears on each January 15 and July 15 (each, an "Interest Payment Date") and on the Maturity Date. Each payment of interest shall include interest accrued from and including the Issue Date or the most recent Interest Payment Date to which interest has been paid or duly provided for, as the case may be, to, but excluding, the applicable Interest Payment Date or the Maturity Date, as the case may be (each, an "Interest Period"). Unless otherwise specified in the applicable Pricing Supplement, interest on the Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-day months. FLOATING RATE NOTES Each Floating Rate Note will bear interest at a rate determined by reference to an interest rate basis (each, a "Base Rate"), which may be adjusted by a Spread and/or Spread Multiplier. The applicable Pricing Supplement will designate one or more of the following Base Rates as applicable to each Floating Rate Note: (a) the Commercial Paper Rate (as defined below), (b) LIBOR, (c) the Certificate of Deposit Rate (as defined below), (d) the Federal Funds Rate (as defined below), (e) the Prime Rate (as defined below), (f) the Treasury Rate (as defined below), (g) the CMT Rate (as defined below), (h) the 11th District Cost of Funds Rate (as defined below) or (i) such other interest rate basis or formula as is set forth in such Pricing Supplement and in such Floating Rate Note. The "Index Maturity" for any Floating Rate Note is the period of maturity of the instrument or obligation from which the Base Rate is calculated. Unless otherwise specified in the applicable Pricing Supplement, the interest rate on each Floating Rate Note will be calculated by reference to the specified Base Rate, or the lowest, highest or average of two or more specified Base Rates, (a) plus or minus the Spread, if any, and/or (b) multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one basis point equals one-hundredth of a percentage point) specified in the applicable Pricing Supplement as being applicable to the interest rate for such Floating Rate Note, and the "Spread Multiplier" is the percentage specified in the applicable Pricing Supplement as being applicable to the interest rate for such Floating Rate Note. If a Floating Rate Note is designated as a "Floating Rate/Fixed Rate Note," unless otherwise specified in the applicable Pricing Supplement, the interest rate will be calculated in the same manner as any other Floating Rate Note until a designated date when the interest rate will become fixed (the "Fixed Rate Commencement Date"). The interest rate in effect for the period commencing on the Fixed Rate Commencement Date and continuing until the Maturity Date will be the rate per annum specified in the applicable Pricing Supplement as the "Fixed Interest Rate" or, if no Fixed Interest Rate is specified, the interest rate in effect on the day immediately preceding the Fixed Rate Commencement Date. Unless S-8 otherwise specified herein or in the applicable Pricing Supplement, the Fixed Rate Commencement Date shall also constitute an Interest Payment Date for purposes of calculating and paying interest. Unless otherwise specified herein or in the applicable Pricing Supplement, the Floating Rate/Fixed Rate Note shall be treated as a Floating Rate Note until the Fixed Rate Commencement Date and as a Fixed Rate Note from the Fixed Rate Commencement Date and thereafter. As specified in the applicable Pricing Supplement, a Floating Rate Note may also have either or both of the following: (i) a maximum limitation, or ceiling, on the rate of interest which may accrue during any Interest Period ("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the rate of interest which may accrue during any Interest Period ("Minimum Interest Rate"). In addition to any Maximum Interest Rate which may be applicable to any Floating Rate Note pursuant to the above provisions, the interest rate on a Floating Rate Note will in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application. Except as provided below, the rate of interest on each Floating Rate Note will be reset daily, weekly, monthly, quarterly, semi-annually or annually, as specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Interest Reset Date" will be, in the case of Floating Rate Notes which reset (a) daily, each Business Day; (b) weekly, the Wednesday of each week (with the exception of weekly reset Floating Rate Notes as to which the Treasury Rate is an applicable Base Rate, which will reset the Tuesday of each week, except as specified below); (c) monthly, the third Wednesday of each month (with the exception of monthly reset Floating Rate Notes as to which the 11th District Cost of Funds Rate is an applicable Base Rate, which will reset on the first calendar day of each month); (d) quarterly, the third Wednesday of March, June, September and December; (e) semi-annually, the third Wednesday of the two months specified in the applicable Pricing Supplement; and (f) annually, the third Wednesday of the month specified in the applicable Pricing Supplement. If an Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next Business Day, except that if interest thereon is determined by reference to LIBOR and such next Business Day falls in the next calendar month, such Interest Reset Date shall be the immediately preceding Business Day. The interest rate in effect on each day will be (i) if such day is an Interest Reset Date, the interest rate determined as of the Interest Determination Date (as defined below) immediately preceding such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the interest rate determined as of the Interest Determination Date immediately preceding the most recent Interest Reset Date. The "Interest Determination Date" means the Commercial Paper Rate Determination Date, the LIBOR Determination Date, the CD Rate Determination Date, the Federal Funds Rate Determination Date, the Prime Rate Determination Date, the Treasury Rate Determination Date, the CMT Rate Determination Date or the 11th District Rate Determination Date (each as defined below), as the case may be. If interest on a Floating Rate Note is determined by reference to two or more Base Rates, the "Interest Determination Date" means the most recent Business Day which is at least two Business Days prior to the applicable Interest Reset Date on which each Base Rate shall be determinable. Each Base Rate shall be determined and compared as of such date, and the applicable interest rate shall take effect on the related Interest Reset Date. Interest on Floating Rate Notes will be payable on the Interest Payment Dates specified in the applicable Pricing Supplement (each, an "Interest Payment Date") and on the Maturity Date. Unless otherwise specified in the applicable Pricing Supplement, interest payments shall be the amount of interest accrued from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for, from and including the Issue Date to but excluding the applicable Interest Payment Date or the Maturity Date, as the case may be (each, an "Interest Period"). With respect to a Floating Rate Note, accrued interest shall be calculated by multiplying the principal amount of such Floating Rate Note by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factor calculated for each day in the Interest Period for which accrued interest is being calculated. The interest factor for each such day is computed by dividing the interest rate S-9 applicable to such day by 360, if an applicable Base Rate is the Commercial Paper Rate, Certificate of Deposit Rate, Federal Funds Rate, Prime Rate, 11th District Cost of Funds Rate or LIBOR, or by the actual number of days in the year, if an applicable Base Rate is the Treasury Rate or CMT Rate. If more than one Base Rate is applicable to a Floating Rate Note, the interest factor will be calculated in the same manner as if only the Base Rate specified for such purpose in the applicable Pricing Supplement applied. Unless otherwise specified in the applicable Pricing Supplement, The Bank of New York will be the calculation agent (the "Calculation Agent") with respect to the Floating Rate Notes. Upon the request of the Holder of any Floating Rate Note, the Calculation Agent will provide the interest rate then in effect and, if determined, the interest rate which will become effective on the next Interest Reset Date with respect to such Floating Rate Note. The "Calculation Date," if applicable, pertaining to a Floating Rate Note will be the earlier of (i) the 10th day after the Interest Determination Date pertaining to a Base Rate or, if such day is not a Business Day, the next Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or the Maturity Date, as the case may be. The interest rate in effect with respect to a Floating Rate Note from the Issue Date to the first Interest Reset Date (the "Initial Interest Rate") will be specified in the applicable Pricing Supplement. The interest rate for each subsequent Interest Reset Date, except in the case of a Floating Rate/Fixed Rate Note for the period subsequent to the Fixed Rate Commencement Date, will be determined by the Calculation Agent as follows. COMMERCIAL PAPER RATE Unless otherwise specified in the applicable Pricing Supplement, the "Commercial Paper Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a "Commercial Paper Rate Determination Date") and will be the Money Market Yield (as defined below) on such date of the rate for commercial paper having the Index Maturity specified in the applicable Pricing Supplement as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or any successor publication ("H.15(519)"), under the heading "Commercial Paper." In the event that such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date, then the Commercial Paper Rate will be the Money Market Yield on such Commercial Paper Rate Determination Date of the rate for commercial paper of the specified Index Maturity as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Governmental Securities" ("Composite Quotations") under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the Commercial Paper Rate will be the Money Market Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York City time, on such Commercial Paper Rate Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the specified Index Maturity, placed for an industrial issuer whose bond rating is "AA," or the equivalent, from a nationally recognized statistical rating agency; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the Commercial Paper Rate for such Interest Reset Date will be the Commercial Paper Rate in effect on such Commercial Paper Rate Determination Date. "Money Market Yield" will be a yield (expressed as a percentage) calculated in accordance with the following formula: D X 360 Money Market Yield = ------------- X 100 360 - (D X M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal and "M" refers to the actual number of days in the Interest Period for which interest is being calculated corresponding to the Index Maturity specified in the applicable Pricing Supplement. S-10 LIBOR Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for each applicable Interest Reset Date will be determined by the Calculation Agent as follows: (i) If "LIBOR Reuters" is specified in the applicable Pricing Supplement, on the second London Banking Day prior to the applicable Interest Reset Date (a "LIBOR Determination Date"), the Calculation Agent will determine LIBOR as the arithmetic mean of the offered rates for deposits in U.S. dollars for the period of the Index Maturity which appear on the "Reuters Screen LIBO Page" at approximately 11:00 A.M., London time, on such LIBOR Determination Date. "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuter Monitor Money Rates Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). If "LIBOR Telerate" is specified in the applicable Pricing Supplement or if no other method is specified in such Pricing Supplement as the method for determining LIBOR, on the LIBOR Determination Date, the Calculation Agent will determine LIBOR as the rate for deposits in U.S. dollars for the period of the Index Maturity which appears on "Telerate Page 3750" at approximately 11:00 A.M., London time, on such LIBOR Determination Date. "Telerate Page 3750" means the display page so designated on the Dow Jones Telerate Service (or such other page as may replace such page on that service for the purpose of displaying London interbank offered rates of major banks). (ii) If LIBOR Reuters is specified in the applicable Pricing Supplement and fewer than two offered rates for the applicable Index Maturity appear on the Reuters Screen LIBO Page or if LIBOR Telerate is applicable for determining LIBOR and no rate appears on Telerate Page 3750, as applicable, the Calculation Agent will request the principal London offices of each of four major banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in U.S. dollars for the period of the Index Maturity commencing on the second London Banking Day following such LIBOR Determination Date to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such LIBOR Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that is representative of a single transaction in such market at such time. If at least two such quotations are provided, LIBOR will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR in respect of that LIBOR Determination Date will be the arithmetic mean of rates quoted by three major banks in The City of New York selected by the Calculation Agent at approximately 11:00 A.M., New York City time, on such LIBOR Determination Date for loans in U.S. dollars to leading European banks, for the period of the Index Maturity designated in the applicable Pricing Supplement commencing on the second London Banking Day following such LIBOR Determination Date and in the principal amount equal to an amount of not less than U.S. $1,000,000 that is representative for a single transaction in such market at such time; provided, however, that if fewer than three banks selected as aforesaid by the Calculation Agent are quoting rates as mentioned in this sentence, LIBOR in effect for such Interest Reset Date will be LIBOR in effect on such LIBOR Determination Date. CERTIFICATE OF DEPOSIT RATE Unless otherwise specified in the applicable Pricing Supplement, the "Certificate of Deposit Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date (a "CD Rate Determination Date") and will be the rate for negotiable certificates of deposit having the Index Maturity designated in the applicable Pricing Supplement as published in H.15(519) under the heading "CDs (Secondary Market)." In the event that such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to such CD Rate Determination Date, then the Certificate of Deposit Rate will be the rate on such CD Rate Determination Date for negotiable certificates of deposit of the Index Maturity designated in the applicable Pricing Supplement as published in Composite Quotations under the heading "Certificates of Deposit." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the S-11 Certificate of Deposit Rate will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on such CD Rate Determination Date of three leading non-bank dealers (which may include one or more of the Agents or their affiliates) in negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major United States money center banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity designated in the applicable Pricing Supplement in a denomination of U.S. $5,000,000; provided, however, that if the dealers selected as aforesaid by such Calculation Agent are not quoting offered rates as mentioned in this sentence, the Certificate of Deposit Rate for such Interest Reset Date will be the Certificate of Deposit Rate in effect on such CD Rate Determination Date. FEDERAL FUNDS RATE Unless otherwise specified in the applicable Pricing Supplement, the "Federal Funds Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a "Federal Funds Rate Determination Date") and will be the rate on such Federal Funds Rate Determination Date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)." In the event that such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to such Federal Funds Rate Determination Date, the Federal Funds Rate will be the rate on such Federal Funds Rate Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the Federal Funds Rate will be calculated by the Calculation Agent and will be the arithmetic mean of the rates for transactions in overnight Federal Funds arranged by three leading brokers of Federal Funds transactions in The City of New York selected by the Calculation Agent as of 9:00 A.M., New York City time, on such Federal Funds Rate Determination Date; provided, however, that if the three brokers selected as aforesaid by the Calculation Agent are not quoting rates as mentioned in this sentence, the Federal Funds Rate for such Interest Reset Date will be the Federal Funds Rate in effect on such Federal Funds Rate Determination Date. PRIME RATE Unless otherwise specified in the applicable Pricing Supplement, the "Prime Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a "Prime Rate Determination Date") and will be the rate on such date as such rate is published in H.15(519) under the heading "Bank Prime Loan." If such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to such Prime Rate Determination Date, then the Calculation Agent shall determine the Prime Rate as the arithmetic mean of the rates of interest publicly announced by each bank that appears on the "Reuters Screen USPRIME1 Page" as such bank's prime rate or base lending rate as in effect for such Prime Rate Determination Date. "Reuters Screen USPRIME1 Page" means the display designated as page "USPRIME1" on the Reuter Monitor Money Rates Service (or such other page as may replace the USPRIME1 Page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). If fewer than four such rates but more than one such rate appear on the Reuters Screen USPRIME1 Page for such Prime Rate Determination Date, the Calculation Agent shall determine the Prime Rate as the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business in The City of New York on such Prime Rate Determination Date by three major money center banks in The City of New York selected by the Calculation Agent. If fewer than two such rates appear on the Reuters Screen USPRIME1 Page, the Calculation Agent shall determine the Prime Rate as the arithmetic mean on the basis of the prime rates quoted as of the close of business in The City of New York on such Prime Rate Determination Date by three substitute banks or trust companies that are organized and doing business under the laws of the United States or any state thereof, have total equity capital of at least U.S. $500,000,000 and are subject to supervision or examination by Federal or state authorities; provided, however, that if fewer S-12 than three such substitute banks or trust companies are quoting prime rates as mentioned in this sentence, the Prime Rate for such Interest Reset Date will be the Prime Rate in effect on such Prime Rate Determination Date. TREASURY RATE Unless otherwise specified in the applicable Pricing Supplement, the "Treasury Rate" means, with respect to any Treasury Rate Determination Date (as defined below), the rate for the auction held on such Treasury Rate Determination Date of direct obligations of the United States ("Treasury bills") having the Index Maturity designated in the applicable Pricing Supplement as published in H.15(519) under the heading "Treasury bills--auction average (investment)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Treasury Rate Determination Date, the auction average rate (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the Index Maturity designated in the applicable Pricing Supplement are not published or reported as provided above by 3:00 P.M., New York City time, on such Calculation Date or if no such auction is held on such Treasury Rate Determination Date, then the Treasury Rate will be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Treasury Rate Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity designated in the applicable Pricing Supplement; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, the Treasury Rate for such Interest Reset Date will be the Treasury Rate in effect on such Treasury Rate Determination Date. The "Treasury Rate Determination Date" will be the day of the week in which the applicable Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday; provided, however, that if such auction is held on the preceding Friday, such Friday will be the Treasury Rate Determination Date pertaining to the Interest Reset Date occurring in the next week; and, provided, further that if an auction falls on an Interest Reset Date, then such Interest Reset Date will be the first Business Day following such auction. Treasury Rate Notes, like other Notes, are not obligations of the United States government and are not guaranteed by the United States government. CMT RATE Unless otherwise specified in the applicable Pricing Supplement, the "CMT Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (the "CMT Rate Determination Date"), and will be the rate displayed on the Designated CMT Telerate Page (as defined below) under the caption ". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as applicable, ended immediately preceding the week or the month, as applicable, in which the applicable CMT Rate Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Rate Determination Date, then the CMT Rate for such CMT Rate Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published in the relevant H.15(519), or if not published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Rate Determination Date, then the CMT Rate for S-13 such CMT Rate Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Rate Determination Date, then the CMT Rate for such CMT Rate Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on such CMT Rate Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT Rate Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 P.M., New York City time, on such CMT Rate Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least U.S. $100,000,000. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference Dealers selected by the Calculation Agent are quoting as described herein, the CMT Rate for such Interest Reset Date will be the CMT Rate in effect on such CMT Rate Determination Date. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page specified in the applicable Pricing Supplement (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as published in H.15(519)), for the purpose of displaying Treasury Constant Maturities as published in H.15(519). If no such page is specified in the applicable Pricing Supplement, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the Treasury Notes (either one, two, three, five, seven, ten, twenty or thirty years) specified in the applicable Pricing Supplement with respect to which the CMT Rate will be calculated. If no such maturity is specified in the applicable Pricing Supplement, the Designated CMT Maturity Index shall be two years. 11TH DISTRICT COST OF FUNDS RATE Unless otherwise specified in the applicable Pricing Supplement, the "11th District Cost of Funds Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the last Business Day of the month prior to such Interest Reset Date (the "11th District Rate Determination Date"), and will be the rate equal to the monthly weighted average cost of funds for the calendar month preceding such 11th District Rate Determination Date as set forth under the caption "11th District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such 11th District Rate Determination Date. If such rate does not appear S-14 on Telerate Page 7058 on any related 11th District Rate Determination Date, the 11th District Cost of Funds Rate for such 11th District Rate Determination Date shall be the monthly weighted average cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank District that was most recently announced by the Federal Home Loan Bank ("FHLB") of San Francisco as such cost of funds for the calendar month preceding the date of such announcement. If the FHLB of San Francisco fails to announce such rate for the calendar month next preceding such 11th District Rate Determination Date, then the 11th District Cost of Funds Rate for such Interest Reset Date will be the 11th District Cost of Funds Rate in effect on such 11th District Rate Determination Date. RESET NOTES The Pricing Supplement relating to each Note will indicate whether CHL has the option with respect to such Note to reset the interest rate, in the case of a Fixed Rate Note, or to reset the Spread and/or Spread Multiplier, in the case of a Floating Rate Note (in each case, a "Reset Note"), and, if so, (i) the date or dates on which such interest rate or such Spread and/or Spread Multiplier, as the case may be, may be reset (each an "Optional Interest Reset Date") and (ii) the basis or formula, if any, for such resetting. CHL may exercise such option with respect to a Note by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to an Optional Interest Reset Date for such Note. If the Company so notifies the Trustee of such exercise, not later than 40 calendar days prior to such Optional Interest Reset Date the Trustee will send by telegram, telex, facsimile transmission or letter (first class, postage prepaid) to the Holder of such Note a notice (the "Reset Notice") indicating (i) that CHL has elected to reset the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, (ii) such new interest rate or such new Spread and/or Spread Multiplier, as the case may be, and (iii) the provisions, if any, for redemption by CHL during the period from such Optional Interest Reset Date to the next Optional Interest Reset Date or, if there is no such next Optional Interest Reset Date, to the Stated Maturity Date of such Note (each such period, a "Subsequent Interest Period"), including the date or dates on which, or the period or periods during which, and the price or prices at which such redemption may occur during such Subsequent Interest Period. Notwithstanding the foregoing, not later than 20 calendar days prior to an Optional Interest Reset Date for a Note, CHL may, at its option, revoke the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, provided for in the Reset Notice and establish a higher interest rate, in the case of a Fixed Rate Note, or a higher Spread and/or Spread Multiplier, in the case of a Floating Rate Note, for the Subsequent Interest Period commencing on such Optional Interest Reset Date by causing the Trustee to send by telegram, telex, facsimile transmission or letter (first class, postage prepaid) notice of such higher interest rate or higher Spread and/or Spread Multiplier, as the case may be, to the Holder of such Note. Such notice shall be irrevocable. All Notes with respect to which the interest rate or Spread and/or Spread Multiplier is reset on an Optional Interest Reset Date, and with respect to which Holders of such Notes have not surrendered such Notes for repayment (or have validly revoked any such surrender) pursuant to the next paragraph, will bear such higher interest rate, in the case of a Fixed Rate Note, or higher Spread and/or Spread Multiplier, in the case of a Floating Rate Note. If CHL elects prior to an Optional Interest Reset Date to reset the interest rate or the Spread and/or Spread Multiplier of a Note, the Holder of such Note will have the option to elect repayment of such Note by CHL on such Optional Interest Reset Date at a price equal to the principal amount thereof plus any accrued interest to such Optional Interest Reset Date. In order to obtain repayment of such Note to be so repaid on such Optional Interest Reset Date, the Holder thereof must follow the procedures set forth below under "Redemption and Repayment" for optional repayment, except that the period for delivery of such Note or notification to the Trustee shall be at least 25 but not more than 35 calendar days prior to such Optional Interest Reset Date. A Holder who has tendered a Note for repayment following receipt of a Reset Notice may revoke such tender for repayment by written notice to the Trustee received prior to 5:00 P.M., New York City time, on the 10th calendar day prior to such Optional Interest Reset Date. S-15 EXTENSION OF MATURITY The Pricing Supplement relating to each Note will indicate whether CHL has the option to extend the Stated Maturity Date of such Note for one or more periods of one to five whole years (each such period, an "Extension Period") up to but not beyond the date (the "Final Stated Maturity Date") set forth in such Pricing Supplement. CHL may exercise such option with respect to a Note by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to the Stated Maturity Date of such Note in effect prior to the exercise of such option (the "Current Stated Maturity Date"). If CHL so notifies the Trustee of such exercise, not later than 40 calendar days prior to the Current Stated Maturity Date the Trustee will send by telegram, telex, facsimile transmission or letter (first class, postage prepaid) to the Holder of such Note a notice (the "Extension Notice") relating to such Extension Period, indicating (i) that CHL has elected to extend the Current Stated Maturity Date of such Note, (ii) the new Stated Maturity Date and the Final Stated Maturity Date, (iii) in the case of a Fixed Rate Note, the interest rate applicable to the Extension Period or, in the case of a Floating Rate Note, the Spread and/or Spread Multiplier applicable to the Extension Period, and (iv) the provisions, if any, for redemption by CHL during the Extension Period, including the date or dates on which, or the period or periods during which, and the price or prices at which such redemption may occur during the Extension Period. Upon the sending by the Trustee of an Extension Notice to the Holder of a Note, the Current Stated Maturity Date of such Note shall be extended automatically, and, except as modified by the Extension Notice and as described in the next two paragraphs, such Note will have the same terms as prior to the sending of such Extension Notice. Notwithstanding the foregoing, not later than 20 calendar days prior to the Current Stated Maturity Date of a Note, CHL may, at its option, revoke the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, provided for in the Extension Notice and establish a higher interest rate, in the case of a Fixed Rate Note, or a higher Spread and/or Spread Multiplier, in the case of a Floating Rate Note, for the Extension Period by causing the Trustee to send by telegram, telex, facsimile transmission or letter (first class, postage prepaid) notice of such higher interest rate or higher Spread and/or Spread Multiplier, as the case may be, to the Holder of such Note. Such notice shall be irrevocable. All Notes with respect to which the Current Stated Maturity Date is extended, and with respect to which the Holders of such Notes have not surrendered such Notes for repayment (or have validly revoked any such surrender) pursuant to the next paragraph, will bear such higher interest rate, in the case of a Fixed Rate Note, or higher Spread and/or Spread Multiplier, in the case of a Floating Rate Note, for the Extension Period. If CHL elects to extend the Current Stated Maturity Date of a Note, the Holder of such Note will have the option to elect repayment of such Note by CHL on the Current Stated Maturity Date at a price equal to the principal amount thereof plus any accrued interest to the Current Stated Maturity Date. In order for a Note to be so repaid on the Current Stated Maturity Date, the Holder thereof must follow the procedures set forth below under "Redemption and Repayment" for optional repayment, except that the period for delivery of such Note or notification to the Trustee shall be at least 25 but not more than 35 calendar days prior to the Current Stated Maturity Date. A Holder who has tendered a Note for repayment following receipt of an Extension Notice may revoke such tender for repayment by written notice to the Trustee received prior to 5:00 P.M., New York City time on the 10th calendar day prior to the Current Stated Maturity Date. RENEWABLE NOTES If so indicated in the applicable Pricing Supplement, the term of all or any portion of a Note may be renewed beyond the Stated Maturity Date by the Holder in accordance with the procedures described in such Pricing Supplement. S-16 COMBINATION OF PROVISIONS If so specified in the applicable Pricing Supplement, any Note may be subject to all of the provisions, or any combination of the provisions, described above under "--Reset Notes," "--Extension of Maturity" and "-- Renewable Notes." BOOK-ENTRY NOTES Upon issuance, all Book-Entry Notes having the same Specified Currency, Issue Date, Stated Maturity Date, redemption and/or repayment provisions, if any, reset and/or extension provisions, if any, Interest Payment Dates, if any, and, in the case of Fixed Rate Notes, interest rate or, in the case of Floating Rate Notes, Base Rate or Rates, Initial Interest Rate, Index Maturity, Interest Reset Dates, Spread and/or Spread Multiplier, if any, Minimum Interest Rate, if any, and/or Maximum Interest Rate, if any, will be represented by one or more global securities (each, a "Global Note"). Each Global Note representing Book-Entry Notes will be deposited with, or on behalf of, DTC, or such other depositary as is specified in the Pricing Supplement (the "Depositary"), and registered in the name of a nominee of such Depositary. Global Notes may not be transferred except as a whole by the applicable Depositary to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any nominee to a successor of such Depositary or a nominee of such successor. Book-Entry Notes will not be exchangeable for Certificated Notes and, except under the limited circumstances described below, will not otherwise be issuable in definitive form. DTC has advised CHL and the Agents as follows: DTC will initially act as securities depositary for the Global Notes. The Global Notes will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully registered Global Note will be issued with respect to each $200,000,000 of principal amount of Notes. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds securities that its participants ("Participants") deposit with it. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to DTC's system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of securities under DTC's system must be made by or through Direct Participants, which will receive a credit for the securities on DTC's records. The ownership interest of each actual purchaser of each security (a "beneficial owner") is in turn recorded on the Direct Participant's and Indirect Participant's records. Beneficial owners will not receive written confirmation from DTC of their purchase, but such beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct Participant or Indirect Participant through which the beneficial owner entered into the transaction. Transfers of ownership interests in the securities are to be accomplished by entries made on the books of Participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership S-17 interests in securities, except in the event that use of the book-entry system for the securities is discontinued. To facilitate subsequent transfers, all securities deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such securities are credited, which may or may not be the beneficial owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to beneficial owners is governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to securities. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium, if any, and interest payments on the securities will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the applicable Paying Agent, or CHL, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of CHL or the applicable Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the beneficial owners shall be the responsibility of Direct Participants and Indirect Participants. DTC may discontinue providing its services as securities depositary with respect to the Global Notes at any time by giving reasonable notice to CHL, the Trustee or the applicable Paying Agent. Under such circumstances, in the event that a successor securities depositary is not obtained, the Global Notes are required to be printed and delivered. CHL may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depositary). In that event, the Global Notes will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that CHL believes to be reliable, but CHL takes no responsibility for the accuracy thereof. So long as the Depositary for a Global Note, or its nominee, is the registered owner of such Global Note, such Depositary or such nominee, as the case may be, will be considered the sole owner or Holder of the Book-Entry Notes represented by such Global Note for all purposes under the Indenture governing such Book-Entry Notes. Except as set forth below, owners of beneficial interests in such Global Notes will not be entitled to have Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Notes and will not be considered the owners or Holders thereof under the Indenture. Accordingly, each person owning a beneficial interest in a Global Note must rely on the procedures of the Depositary and, if such person is not a Participant, those of the Participant S-18 through which such person owns its interests, in order to exercise any rights of a Holder under the Indenture or such Note. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Note. Principal, premium, if any, and interest payments on Notes registered in the name of or held by the Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner or the Holder of the Global Note representing such Book-Entry Notes. None of CHL, the Guarantor, the Trustee, the Calculation Agent, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note for such Book-Entry Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. If the Depositary is at any time unwilling, unable or ineligible to continue as Depositary and a successor Depositary is not appointed by CHL within 60 days or if an Event of Default under the Indenture has occurred and is continuing, CHL will issue Certificated Notes in exchange for the Global Note or Notes representing such Book-Entry Notes. In addition, CHL may at any time and in its sole discretion determine not to have any Notes in registered form represented by one or more Global Notes and, in such event, will issue Certificated Notes in exchange for all Global Notes representing such Notes. In any such instance, an owner of a beneficial interest in a Global Note will be entitled to physical delivery of Certificated Notes represented by such Global Note equal in principal amount to such beneficial interest and to have such Notes registered in its name. REDEMPTION AND REPAYMENT If so specified in the applicable Pricing Supplement, CHL may at its option on and after the Initial Redemption Date, if any, set forth in a Note redeem such Note in whole or, from time to time, in part in increments of $1,000 (provided that any remaining principal amount thereof shall not be less than $100,000 (or such other amount in a foreign currency or currency unit as is specified in the applicable Pricing Supplement), or, if another minimum denomination is set forth in the applicable Pricing Supplement, then such minimum denomination) at the sum of (i) 100% of the unpaid principal amount thereof or the portion thereof redeemed (or, if such Note is an Original Issue Discount Security (as defined below), the Amortized Face Amount (as defined below) determined as of the Redemption Date as provided below), plus (ii) the Initial Redemption Percentage specified in the applicable Pricing Supplement (as adjusted by the Annual Redemption Percentage Reduction, if applicable) multiplied by the unpaid principal amount or the portion thereof redeemed (or, if such Note is an Original Issue Discount Security, the Issue Price thereof, net of any portion of such Issue Price which has been deemed paid prior to redemption (by reason of any payments, other than a payment of qualified stated interest, in excess of the original issue discount accrued to the date of such payment), or the portion of such Issue Price (or such net amount) proportionate to the portion of the unpaid principal amount of the Note redeemed), plus (iii) accrued interest to the Redemption Date (or, if such Note is an Original Issue Discount Security, any accrued interest to the Redemption Date the payment of which would constitute qualified stated interest payments within the meaning of Treasury Regulation Section 1.1273-1(c) under the Internal Revenue Code of 1986, as amended (the "Code"), as in effect on the date hereof). Such Initial Redemption Percentage shall decline at each anniversary of the Initial Redemption Date by an amount equal to the Annual Redemption Percentage Reduction, if any, specified in the applicable Pricing Supplement, until the Initial Redemption Percentage equals zero percent. CHL may exercise such option by causing the Trustee to mail a notice of such redemption to the Holder of such Note not less than 30 but not more than 60 days prior to the Redemption Date. In the event of redemption of such Note in part only, a new Note or Notes for the unredeemed portion thereof shall be issued in the name of the Holder thereof upon the cancellation thereof. If less than all of the Notes with like tenor and terms to such Note are to be redeemed, the Notes to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate. S-19 An "Original Issue Discount Security" means any Note that has been issued at an Issue Price lower, by an amount that equals or exceeds a de minimis amount (as determined under United States Federal income tax rules applicable to original issue discount instruments), than the principal amount thereof. The "Amortized Face Amount" of such Note shall be the amount equal to the sum of (a) the Issue Price plus (b) the aggregate of the portions of the original issue discount (the excess of the amounts considered as part of the "stated redemption price at maturity" of such Note within the meaning of Section 1273(a)(2) of the Code, whether denominated as principal or interest, over the Issue Price of such Note) which shall theretofore have accrued pursuant to Section 1272 of the Code (without regard to Section 1272(a)(7) of the Code) from the Issue Date of such Note to the date of determination, minus (c) any amount considered as part of the "stated redemption price at maturity" of such Note which has been paid on such Note from the Issue Date to the date of determination. If a Note is an Original Issue Discount Security, the amount payable in the event of acceleration of the maturity thereof shall be the Amortized Face Amount, plus accrued but unpaid qualified stated interest as defined in clause (iii) of the first sentence of the preceding paragraph. If so specified in the applicable Pricing Supplement, the Notes will be repayable by CHL in whole or in part at the option of Holders thereof on their respective Optional Repayment Dates specified in such Pricing Supplement. If no Optional Repayment Date is specified with respect to a Note, such Note will not be repayable at the option of the Holder thereof prior to the Stated Maturity Date. Any repayment in part will be in increments of $1,000 (provided that any remaining principal amount thereof shall be at least the minimum denomination). Unless otherwise specified in the applicable Pricing Supplement, the repayment price for any Note to be repaid means an amount equal to the sum of (i) 100% of the unpaid principal amount thereof or the portion to be repaid thereof plus (ii) accrued interest to the Repayment Date. For any Note to be repaid, such Note must be received, together with the form thereon entitled "Option to Elect Repayment" duly completed, by the Trustee at its Corporate Trust Office (or such other address of which CHL shall from time to time notify the Holders) not more than 60 nor less than 30 days prior to the Repayment Date. Exercise of such repayment option by the Holder will be irrevocable, except as otherwise provided above under "--Reset Notes" and "--Extension of Maturity." While the Book-Entry Notes are represented by the Global Notes held by or on behalf of the Depositary, and registered in the name of the Depositary or the Depositary's nominee, the option for repayment may be exercised by the Depositary, acting on behalf of each applicable Participant who is, in turn, acting on behalf of the beneficial owners of the Global Note or Notes representing such Book-Entry Notes, by delivering a written notice substantially similar to the above mentioned form to the Trustee at its Corporate Trust Office (or such other address of which CHL shall from time to time notify the Holders), not more than 60 nor less than 30 days prior to the Repayment Date. Notices of elections from the Depositary must be received by the Trustee by 5:00 P.M., New York City time, on the last day for giving such notice. In order to ensure that a notice is received by the Trustee on a particular day, the beneficial owner of the Global Note or Notes representing such Book-Entry Notes must so direct the applicable Participant before such Participant's deadline for accepting instructions for that day. Different firms may have different deadlines for accepting instructions from their customers. Accordingly, beneficial owners of the Global Note or Notes representing Book- Entry Notes should consult the Participants through which they own their interest therein for the respective deadlines for such Participants. All instructions given to Participants from beneficial owners of Global Notes relating to the option to elect repayment shall be irrevocable, except as otherwise provided above under "--Reset Notes" and "--Extension of Maturity." In addition, at the time such instructions are given, such beneficial owners shall cause the applicable Participant to transfer such beneficial owner's interest in the Global Note or Notes representing the related Book-Entry Notes, on the Depositary's records, to the Trustee. See "--Book-Entry Notes" above. CHL or CCI may purchase Notes in the open market by tender or contract. Notes so purchased may be held, resold or surrendered to the Trustee for cancellation. If applicable, CHL will comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended, and any other securities laws or regulations in connection with any such repayment. S-20 GUARANTEES The Notes will be unconditionally guaranteed by CCI as to payment of principal, premium, if any, and interest, when and as the same shall become due and payable, whether at maturity or upon redemption or repayment or otherwise. See "Description of Debt Securities and Guarantees" in the accompanying Prospectus. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following is a general summary of certain of the anticipated United States Federal income tax consequences of the purchase, ownership and disposition of Notes. The summary is for general information only and is based on the Code, the Treasury Regulations promulgated or proposed thereunder, and judicial and administrative interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or to different interpretations. Holders of Notes should be aware that on December 15, 1994, the Internal Revenue Service released proposed amendments to the Treasury Regulations with respect to the treatment of debt instruments providing for contingent payments. If adopted, these amendments would generally be effective for debt instruments issued 60 days or more after the date on which such proposed amendments are finalized. The tax treatment of a holder of the Notes may vary depending upon the particular situation of the holder. The summary is limited to investors who will hold the Notes as "capital assets" within the meaning of Section 1221 of the Code and does not deal with holders in special tax situations (including, but not limited to, insurance companies, tax-exempt organizations, financial institutions, dealers in securities or currencies, holders whose functional currency is not the U.S. dollar, or holders who will hold Notes as a hedge against currency risks or as a position in a "straddle" for tax purposes), who may be subject to special rules not discussed below. The summary does not apply to holders that are not United States Holders (defined below). The summary is applicable to initial purchasers of Notes only and does not address subsequent purchasers. The discussion below also does not address the effect of any state, local or foreign tax law on a holder of Notes. As used herein, the term "United States Holder" means an individual who is a citizen or resident of the United States, a partnership, corporation or other entity organized in or under the laws of the United States or any state thereof, or an estate or trust that is subject to United States Federal income taxation without regard to the source of its income. The summary does not constitute, and should not be considered as, legal or tax advice to prospective holders of Notes. Each prospective holder of Notes should consult a tax advisor as to the particular tax consequences of holding Notes to such holder, including the applicability and effect of any state, local or foreign tax laws. PAYMENTS OF INTEREST Interest on a Note, other than interest on a Discount Note (defined below under "Original Issue Discount") that is not a "qualified stated interest" payment (also as defined under "Original Issue Discount"), will be taxable to a holder as ordinary interest income at the time it is accrued or is received in accordance with the holder's method of accounting for tax purposes. If interest is paid in a Specified Currency other than U.S. dollars ("Foreign Currency"), the amount of interest income realized by a holder will be the U.S. dollar value of (a) in the case of a cash basis holder, the Foreign Currency received (based on the spot rate in effect on the date of receipt), or (b) in the case of an accrual basis holder, the Foreign Currency accrued during an interest accrual period, or partial interest accrual period (based on (i) the average exchange rate in effect during the accrual period, (ii) the spot rate on the last day of the accrual period or (iii) the spot rate on the payment date, if such date is within five business days of the last day of the accrual period), in each case, regardless of whether the payment is in fact converted into U.S. dollars. In the case of an accrual basis holder, S-21 at the time the interest accrued is received, the holder will realize exchange gain or loss, taxable as ordinary income or loss, equal to the difference, if any, between the amount of Foreign Currency received with respect to such accrual period (translated into U.S. dollars at the spot rate in effect on the date the interest is received) and the amount of interest on the Note included in income. The Federal income tax consequences of the disposition of Foreign Currency received as interest are described below under "--Exchange of Amounts in Foreign Currency." ORIGINAL ISSUE DISCOUNT General. A Note will be treated as issued at an original issue discount (a "Discount Note") if the excess of the "stated redemption price at maturity" of the Note over its issue price (defined as the first price at which a substantial amount of Notes of the same issue is sold to the public) equals or exceeds a de minimis amount (generally 1/4 of 1 percent of the Note's stated redemption price at maturity multiplied by the number of complete years from the issue date to maturity). "Stated redemption price at maturity" is the total of all payments provided by the Note that are not payments of "qualified stated interest." A "qualified stated interest" payment is a payment of stated interest that is unconditionally payable in cash or property (other than debt instruments of CHL) at least annually during the entire term of the Note, including short periods, with respect to a Floating Rate Note, at certain specified types of variable rates (as discussed below) or, with respect to a Fixed Rate Note, at a single fixed rate. Interest is payable at a single fixed rate only if the rate appropriately takes into account the length of the intervals between payments. Stated interest that exceeds qualified stated interest is included in the Note's stated redemption price at maturity. Holders of Discount Notes having a maturity of more than one year from their date of issue will be required to include original issue discount in income as it accrues, which can result in recognition of income before the receipt of cash attributable to such income. The amount of original issue discount includable in income by the holder of such a Discount Note is the sum of the daily portions of original issue discount with respect to the Discount Note for each day during the taxable year or portion of the taxable year in which it holds such Discount Note ("accrued original issue discount"). The daily portion is determined by allocating to each day in any "accrual period" a pro rata portion of the original issue discount that accrued in such period (the excess of (a) the product of the Discount Note's adjusted issue price at the beginning of the accrual period and its yield to maturity, appropriately adjusted for the length of the period, over (b) the sum of the qualified stated interest payments, if any, payable during the accrual period). The "accrual period" for a Discount Note may be of any length and may vary in length over the term of a Note, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs either on the first day or the last day of an accrual period. The "adjusted issue price" of a Discount Note at the start of any accrual period is the sum of the issue price of the Note plus the accrued original issue discount for each prior accrual period minus any prior payments on the Note that were not qualified stated interest payments. Holders of Notes with a de minimis amount of original issue discount must include a proportionate amount of each payment of stated principal received in respect of the Notes in income as capital gain. Floating Rate Notes. If a Floating Rate Note that otherwise qualifies as a "variable rate debt instrument" under the applicable Treasury Regulations provides for stated interest at a single "qualified floating rate" or a single "objective rate" (each as defined in the Treasury Regulations) that is unconditionally payable in cash or property (other than debt instruments of CHL), or that will be constructively received, at least annually, then all payments of stated interest with respect to such Note will be "qualified stated interest." The amount of original issue discount (if any) with which such a Note is issued will be determined under the rules discussed above by assuming that the Floating Rate Note pays stated interest at the appropriate fixed rate substitute (generally, the value, as of the Issue Date, of the floating rate, or in the case of certain Floating Rate Notes, a fixed rate that reflects the yield that is reasonably expected for such Notes). The Treasury Regulations provide additional rules for a Floating Rate Note that qualifies as a variable rate debt instrument and that provides for stated interest at more than one floating rate or at a fixed rate for a portion of its term. In certain cases, such a Floating Rate Note that is not issued at a discount may be S-22 deemed to bear original issue discount for Federal income tax purposes, with the result that inclusion of original issue discount in gross income for Federal income tax purposes may vary from the cash payments of interest received on such Note, generally accelerating income for cash method taxpayers. For example, under the Treasury Regulations, a Floating Rate Note may be a Discount Note where (a) it bears interest at a floating rate followed by another floating rate and, as of the Issue Date, the values of the two floating rates differ, or (b) it bears interest at a fixed rate followed by a floating rate (or vice versa) and, as of the Issue Date, the value of the floating rate differs from the fixed rate. The tax treatment of a United States Holder of a Floating Rate Note ultimately will depend upon the precise terms of the Notes offered; consequently, the proper tax treatment of such Notes will be more fully described in the applicable Pricing Supplement. A Floating Rate Note that does not qualify as a variable rate debt instrument under the Treasury Regulations will be treated as a contingent payment obligation. For example, a Floating Rate Note will not qualify as a variable rate debt instrument under the Treasury Regulations if, among other things, it provides for either a minimum rate of interest or a maximum rate of interest that, in either case, is not fixed throughout its term and is reasonably expected, as of the Issue Date, to cause the yield on the Note to be significantly more or less than the yield determined without regard to the minimum or maximum rate of interest. The Treasury Regulations governing the treatment of contingent payment obligations currently are only in proposed form. The tax treatment of a Floating Rate Note that is treated as a contingent payment obligation will be more fully described in the applicable Pricing Supplement. Any determination of the type described above made by CHL when a Note is issued may be subject to subsequent changes and clarifications of applicable law or to challenge by the Internal Revenue Service. Optional Redemption. An unconditional option of CHL or a Holder to redeem a Note prior to the Maturity Date will be presumed to be exercised if, by utilizing any date on which the Note may be redeemed as its maturity date and the amount payable on that date in accordance with the terms of the Note (the "redemption price") as its stated redemption price at maturity, the yield on the Note is lower than its yield to maturity in the case of an option exercisable by CHL (or, in the case of an option exercisable by a Holder, is greater than its yield to maturity). If such an option is not in fact exercised when presumed to be, solely for purposes of accruing original issue discount, the Note will be treated as if it were redeemed, and a new Note issued, on the presumed exercise date for an amount equal to its adjusted issue price on that date. Short-Term Notes. A Note that matures one year or less from the date of its issuance (a "Short-Term Note") will be treated as having been issued at an original issue discount equal to the excess of the total principal and interest payments on the Note over its issue price. In general, an individual or other cash basis holder of a Short-Term Note is not required to currently include in income accrued original issue discount for United States Federal income tax purposes unless it elects to do so. Accrual basis holders and certain other holders are required to include in income accrued original issue discount on Short-Term Notes on a straight-line basis unless an irrevocable election is made to include in income accrued original issue discount under the constant yield method (based on daily compounding). In the case of a holder not required and not electing to include accrued original issue discount in income currently, any gain realized on the sale or retirement of the Short-Term Note will be ordinary income to the extent of the original issue discount accrued on a straight-line basis (or, at the holder's irrevocable election, under a constant yield method, based on daily compounding) through the date of sale or retirement. A holder who is not required and does not elect to include in income accrued original issue discount on a Short-Term Note will be required to defer deduction of a portion of the holder's interest expense with respect to any indebtedness incurred or maintained to purchase or carry the Note. Foreign Currency Denominated Discount Notes. In the case of a Discount Note denominated in a Foreign Currency, for purposes of calculating original issue discount, a holder should: (i) calculate the amount and accrual of original issue discount in respect of the Note in the Foreign Currency; (ii) determine the U.S. dollar amount of original issue discount includable in income for each accrual period by translating the Foreign Currency amounts into U.S. dollars based on the average exchange rate in effect during that accrual period S-23 or based on the spot rate (A) on the last day of the relevant accrual period (or partial accrual period) or (B) on the payment date, if such date is within five business days of the last day of the accrual period; and (iii) recognize any Foreign Currency gain or loss when the original issue discount is received to the extent of the difference between the amount determined pursuant to clause (ii) above and the U.S. dollar value of such payment determined by translating the Foreign Currency at the spot rate in effect on the date of payment. The Federal income tax consequences of the disposition of any Foreign Currency received are described below under "--Exchange of Amounts in Foreign Currency." For these purposes, all receipts with respect to a Note will be treated first as the receipt of periodic interest (determined under Section 1273 of the Code and the Treasury Regulations), second as payments of previously accrued original issue discount (to the extent thereof, with payments treated as made for the earliest accrual periods first), and thereafter as the receipt of principal. NOTES PURCHASED AT A PREMIUM A holder that purchases a Note for an amount in excess of its principal amount may elect to treat that excess as "amortizable bond premium," in which case the amount required to be included in the holder's income each year with respect to interest on the Note will be reduced by the amount of amortizable bond premium allocable (based on the Note's yield to maturity) to that year. Any such election would apply to all bonds (other than bonds the interest on which is excludable from gross income) held by the holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the holder, and is irrevocable without the consent of the Internal Revenue Service. Amortizable bond premium on a Note denominated in a Foreign Currency will, if a holder so elects, reduce the amount of Foreign Currency interest income on the Note. An electing holder will recognize exchange gain or loss at the time it offsets the portion of the premium amortized with respect to any period against the interest income for such period, by treating such portion as a return of principal. ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT A holder may elect to treat all interest on any Note as original issue discount and calculate the amount includible in gross income under the constant yield method described above. For the purposes of this election, interest includes stated interest, acquisition discount, original issue discount, de minimis original issue discount, market discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. The election is made for the year in which the holder acquired the Note, and may not be revoked without the consent of the Internal Revenue Service. PURCHASE, SALE AND RETIREMENT OF THE NOTES A holder's tax basis in a Note generally will be its cost, increased by the amount of any original issue discount included in the holder's income with respect to the Note and reduced by the amount of any cash payments on the Note that are not qualified stated interest payments and by the amount of any amortizable bond premium applied to reduce interest on the Note. In the case of a Note denominated, and purchased, in a Foreign Currency, the holder's initial tax basis will be the U.S. dollar value of the Foreign Currency on the date of purchase of the Note (or, in certain circumstances, on the settlement date of the Transaction). A holder will recognize gain or loss on the sale or retirement of a Note equal to the difference between the amount realized on the sale or retirement and the holder's tax basis in the Note. The amount realized on a sale or retirement for an amount in a Foreign Currency will be the U.S. dollar value of that currency on the date of such sale or retirement (or, in certain circumstances, on the settlement date of the Transaction). As a general rule (with the exception, among other things, of amounts attributable to accrued but unpaid interest, amounts attributable to changes in exchange rates, and amounts received with respect to certain Short-Term Notes), gain or loss recognized on the sale or retirement of a Note will be capital gain or loss and will be long-term capital gain or loss if the Note was held for more than one year. Gain or loss recognized S-24 by a holder on the sale or retirement of a Note denominated in a Foreign Currency will be treated as ordinary income or loss to the extent such gain or loss is attributable to changes in exchange rates. However, exchange gain or loss is taken into account only to the extent of total gain or loss realized on the transaction. If Treasury Regulations proposed on March 17, 1992 are finalized in their current form, certain United States Holders will be able to elect to apply mark-to-market treatment to all foreign currency denominated financial transactions they enter into, including a Note denominated in a Foreign Currency, for purposes of determining the amount and timing of foreign currency gain or loss to be recognized on the Notes. Under these proposed regulations, similar non-elective rules will apply with respect to the determination of foreign currency gain or loss on Notes denominated in certain hyperinflationary currencies. EXCHANGE OF AMOUNTS IN FOREIGN CURRENCY Foreign Currency received on the sale or retirement of a Note will have a tax basis equal to the U.S. dollar value of that currency treated as the amount realized on the sale or retirement of the Note (See "--Purchase Sale and Retirement of the Notes"). An accrual basis holder may realize exchange gain or loss upon receipt of such Foreign Currency (and be required to adjust the basis of such Foreign Currency), if the date of receipt differs from the date such Foreign Currency is deemed received. Foreign Currency received as interest on a Note will have a tax basis equal to its U.S. dollar value on the date such interest was received. Foreign Currency which is purchased generally will have a tax basis equal to the U.S. dollar cost of acquisition. Any gain or loss recognized on a sale or other disposition of Foreign Currency (including its use to purchase Notes or upon exchange for U.S. dollars) will be ordinary income or loss. Accordingly, a holder that converts U.S. dollars to a Foreign Currency and immediately uses that Foreign Currency to purchase a Note denominated in the same currency normally will not recognize gain or loss in connection with such conversion and purchase. However, a holder that purchases a Note with previously owned Foreign Currency may recognize ordinary income or loss in an amount equal to the difference between the holder's tax basis in the Foreign Currency and the U.S. dollar value of the Note on the date of purchase. BACKUP WITHHOLDING A holder of a Note may be subject to backup withholding at a rate of 31% with respect to payments of principal and any premium or interest (including original issue discount) made on the Note or the proceeds of a sale or exchange of the Note before maturity unless such holder (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, or (b) provides a taxpayer identification number, certifies that the holder is not subject to backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. A holder of a Note that does not provide CHL, or its agent, with a correct taxpayer identification number or an adequate basis for exemption may be subject to penalties imposed by the Internal Revenue Service. The backup withholding tax is not an additional tax and will be credited against a holder's United States Federal income tax liability provided the required information is furnished to the Internal Revenue Service. PLAN OF DISTRIBUTION OF NOTES Under the terms of a Selling Agency Agreement (the "Agency Agreement"), the Notes are offered on a continuous basis by CHL through Lehman Brothers, Lehman Brothers Inc., Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., NationsBanc Capital Markets, Inc. and Salomon Brothers Inc (the "Agents"), each of which has agreed to use its reasonable best efforts to solicit purchases of the Notes. CHL will pay to each Agent a commission, in the form of a discount, ranging from . % to . % of the principal amount of any Note (or in the case of any Original Issue Discount Security, the price to the public), depending on its maturity, sold through such Agent, S-25 except that the commission payable by CHL to the Agents with respect to Notes with maturities of greater than 30 years will be negotiated at the time CHL issues such Notes. Each Agent will have the right, in its discretion reasonably exercised, to reject in whole or in part any offer to purchase Notes received by such Agent. CHL will have the sole right to accept offers to purchase Notes and may reject any such offer in whole or in part. CHL also may sell Notes to an Agent, acting as principal, at a discount to be agreed upon at the time of sale, for resale to one or more investors or other purchasers at varying prices related to prevailing market prices at the time of such resale, as determined by such Agent or, if so specified in the applicable Pricing Supplement, for resale at a fixed public offering price. CHL reserves the right to sell Notes from time to time directly on its own behalf to investors or through other agents, dealers or underwriters; if CHL grants any discount or pays any commission to such persons, such discount or commission will be disclosed in the applicable Pricing Supplement. In addition, the Agents may offer the Notes they have purchased as principal to other dealers. The Agents may sell Notes to any dealer at a discount and such discount allowed to any dealer may be all or part of the discount to be received by such Agent from CHL. Unless otherwise indicated in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price equal to 100% of the principal amount thereof less a percentage equal to the commission applicable to an agency sale of a Note of identical maturity, and may be resold by the Agent to investors and other purchasers from time to time in one or more transactions, including negotiated transactions, at fixed prices or at varying prices as described above. After the initial public offering of Notes to be resold to investors and other purchasers, the public offering price (in the case of Notes to be resold on a fixed price basis), concession and discount may be changed. Payment of the purchase price of the Notes will be required to be made in immediately available funds in The City of New York. The Agents may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). CHL and CCI have agreed to indemnify each Agent against certain liabilities, including liabilities under the Securities Act, or to contribute to payments an Agent may be required to make in respect thereof. CHL and CCI have agreed to reimburse the Agents for certain expenses, including fees and disbursements of counsel to the Agents. CHL has been advised by the Agents that they may from time to time purchase and sell Notes in the secondary market, but that they are not obligated to do so. No assurance can be given that there will be a secondary market for the Notes or liquidity in the secondary market if one develops. VALIDITY OF NOTES The validity of the Notes will be passed upon for CHL and CCI by Fried, Frank, Harris, Shriver & Jacobson, a partnership including professional corporations, New York, New York. The statements under "Certain Federal Income Tax Considerations," to the extent they constitute statements of law, are set forth herein in reliance upon the opinion of Fried, Frank, Harris, Shriver & Jacobson. Edwin Heller, whose professional corporation is a member of Fried, Frank, Harris, Shriver & Jacobson, is a director of CCI. Brown & Wood, New York, New York will serve as counsel to the Agents. Brown & Wood also serves as counsel for CWMBS, Inc., a wholly owned subsidiary of CCI, in connection with offerings of mortgage pass-through certificates, and as counsel to CWM Mortgage Holdings, Inc. S-26 SUBJECT TO COMPLETION, DATED MAY 15, 1996 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ PROSPECTUS COUNTRYWIDE HOME LOANS, INC. DEBT SECURITIES PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST UNCONDITIONALLY GUARANTEED BY [LOGO OF COUNTRYWIDE CREDIT INDUSTRIES, INC.] ----------- Countrywide Home Loans, Inc. (formerly Countrywide Funding Corporation) (the "Company" or "CHL"), a wholly owned subsidiary of Countrywide Credit Industries, Inc. (the "Guarantor" or "CCI"), may offer, from time to time, in one or more series, its debt securities (the "Debt Securities"), which will be unconditionally guaranteed (the "Guarantees") as to payment of principal, premium, if any, and interest by CCI, in the amounts, at prices and on the terms to be determined at the time of the offering. The Debt Securities may be issued in one or more series or issuances and will have an aggregate initial public offering price of up to $1,000,000,000 (or the equivalent thereof, based on the applicable exchange rate at the time of sale, in one or more foreign currencies, currency units or composite currencies as shall be designated by the Company). Certain specific terms of the Debt Securities in respect of which this Prospectus is being delivered are set forth in the accompanying Prospectus Supplement (the "Prospectus Supplement"), including, where applicable, the specific title, the aggregate principal amount, aggregate offering price, the denomination, the maturity, the premium, if any, the interest rate (which may be fixed, floating or adjustable), if any, the time and method of calculating payment of interest, if any, the place or places where principal of, premium, if any, and interest, if any, on such Debt Securities will be payable, the currency in which principal of, premium, if any, and interest, if any, on such Debt Securities will be payable, any terms of redemption at the option of the Company, or repayment at the option of the holder, any sinking fund provisions, any other special terms, and the public offering price and other terms of the offering and sale thereof. If so specified in the applicable Prospectus Supplement, Debt Securities of a series may be issued in whole or in part in the form of one or more temporary or permanent global securities. Unless otherwise specified in a Prospectus Supplement, the Debt Securities and the Guarantees, when issued, will be unsecured and unsubordinated obligations of the Company or CCI, as the case may be, and will rank pari passu in right of payment with all other unsecured and unsubordinated indebtedness of the Company or CCI, as the case may be. This Prospectus may not be used to consummate sales of Debt Securities unless accompanied by a Prospectus Supplement. ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURI- TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ----------- The Debt Securities may be sold through underwriting syndicates represented by managing underwriters, by underwriters without a syndicate, through agents designated from time to time, or directly to institutional purchasers. Any such managing underwriters, underwriters or agents may include Lehman Brothers, Lehman Brothers Inc., Goldman, Sachs & Co., J.P. Morgan Securities Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc Capital Markets, Inc. and Salomon Brothers Inc. The names of any underwriters or agents of the Company involved in the sale of the Debt Securities in respect of which this Prospectus is being delivered and any applicable commissions or discounts are set forth in the Prospectus Supplement. ----------- The date of this Prospectus is , 1996. AVAILABLE INFORMATION CCI is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Information as of particular dates concerning its directors and officers and any material interest of such persons in transactions with CCI is disclosed in proxy statements distributed to stockholders and filed with the Commission. Such reports, proxy statements and other information can be inspected and copied at the offices of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional offices located at Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661 and Suite 1300, 7 World Trade Center, New York, New York 10048. Copies of such materials can also be obtained from the Public Reference Section of the Commission at its principal office in Washington, D.C. at prescribed rates. Common Stock of CCI is listed on the New York and Pacific Stock Exchanges. Reports, proxy material and other information concerning securities of CCI can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York; and the Pacific Stock Exchange, Inc., 115 Sansome Street, San Francisco, California. This Prospectus constitutes a part of the Registration Statement on Form S-3 (together with all amendments, schedules and exhibits thereto, the "Registration Statement") filed by CCI and the Company with the Commission under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus and the accompanying Prospectus Supplement omit certain of the information contained in the Registration Statement in accordance with the rules and regulations of the Commission. For further information with respect to CCI, the Company and the Debt Securities, reference is made to the Registration Statement, including the schedules and exhibits filed therewith. Statements contained in this Prospectus as to the contents of certain documents are not necessarily complete, and, with respect to each such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission, reference is made to the copy of the document so filed. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE There is incorporated herein by reference the following documents of CCI heretofore filed by it with the Commission: Annual Report on Form 10-K for the year ended February 29, 1996. All documents filed by CCI pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus or any Prospectus Supplement and prior to the termination of the offering of the Debt Securities are incorporated herein by reference and such documents shall be deemed to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus or any Prospectus Supplement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus or any Prospectus Supplement. CCI will provide without charge to each person to whom this Prospectus or any Prospectus Supplement is delivered, on the request of any such person, a copy of any or all of the foregoing documents incorporated herein by reference (not including exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference into the information that this Prospectus or any Prospectus Supplement incorporates). Requests for copies of such documents should be directed to Countrywide Credit Industries, Inc., 155 North Lake Avenue, P. O. Box 7137, Pasadena, California 91109-7137, telephone (818) 304-8400, Attention: Investor Relations. 2 THE COMPANY AND CCI COUNTRYWIDE HOME LOANS, INC. Countrywide Home Loans, Inc. (formerly Countrywide Funding Corporation) (the "Company" or "CHL"), the principal subsidiary of Countrywide Credit Industries, Inc. (the "Guarantor" or "CCI"), is engaged primarily in the mortgage banking business and as such originates, purchases, sells and services mortgage loans. CHL's mortgage loans are principally prime credit quality first-lien mortgage loans secured by single- (one to four) family residences. CHL also offers home equity loans both in conjunction with newly produced first-lien mortgages and as a separate product and sub-prime credit quality first-lien single-family mortgage loans. The principal sources of revenue of CHL are (i) loan origination fees; (ii) gains from the sale of loans, if any; (iii) interest earned on mortgage loans during the period that they are held by CHL pending sale, net of interest paid on funds borrowed to finance such mortgage loans; (iv) loan servicing fees; and (v) interest benefit derived from the custodial balances associated with CHL's servicing portfolio. CHL produces mortgage loans through three separate divisions. The Consumer Markets Division originates loans using direct contact with consumers through its nationwide network of retail branch offices and its telemarketing systems. Through its Wholesale Division, CHL originates loans through and purchases loans from mortgage loan brokers. Through the Correspondent Division, CHL purchases loans primarily from other mortgage bankers, commercial banks, savings and loan associations, credit unions and other financial intermediaries. CHL customarily sells all loans that it originates or purchases. Substantially all loans sold by CHL are sold without recourse, subject, in the case of loan guaranties by the Veterans Administration ("VA"), to the limits of such guaranties. CHL services on a non-recourse basis substantially all of the mortgage loans that it originates or purchases. In addition, CHL purchases bulk servicing contracts, also on a non-recourse basis, to service single-family residential mortgage loans originated by other lenders. Servicing mortgage loans includes collecting and remitting loan payments, making advances when required, accounting for principal and interest, holding custodial (impound) funds for payment of property taxes and hazard insurance, making any physical inspections of the property, counseling delinquent mortgagors, supervising foreclosures and property dispositions in the event of unremedied defaults and generally administering the loans. CHL receives fee income for servicing mortgage loans ranging generally from 1/4% to 1/2% per annum on the declining principal balances of the loans. CHL has sold, and may sell in the future a portion of its portfolio of loan servicing rights to other mortgage servicers. CHL's principal financing needs are the financing of loan funding activities and the investment in servicing rights. To meet these needs, CHL currently utilizes commercial paper supported by its revolving credit facility, medium- term notes, mortgage-backed securities, repurchase agreements, subordinated notes, unsecured notes, pre-sale funding facilities and cash flows from operations. In the past, CHL has utilized whole loan repurchase agreements, servicing-secured bank facilities, direct borrowings from its revolving credit facility, privately-placed financings and contributions from CCI of the proceeds of public offerings of preferred stock. CHL is a New York corporation, originally incorporated in 1969. Its principal executive offices are located at 155 North Lake Avenue, P. O. Box 7137, Pasadena, California 91109-7137, and its telephone number is (818) 304-8400. COUNTRYWIDE CREDIT INDUSTRIES, INC. CCI is a holding company which through its principal subsidiary, CHL, is engaged primarily in the mortgage banking business. CCI, through its other wholly owned subsidiaries, offers products and services complementary to its mortgage banking business. A subsidiary of CCI trades to other broker-dealers and 3 institutional investors mortgage-backed securities and other mortgage-related assets. In addition, a subsidiary of CCI receives fee income for managing the operations of CWM Mortgage Holdings, Inc. ("CWM"), a real estate investment trust whose shares are traded on the New York Stock Exchange. CWM conducts real estate lending activities and has an affiliate engaged in the operation of a jumbo and non-conforming mortgage loan conduit. CCI also has a subsidiary which acts as an agent in the sale of homeowners, fire, flood, earthquake, mortgage life and disability insurance to CHL's mortgagors in connection with CHL's mortgage banking operations. Another subsidiary of CCI earns fee income by brokering servicing contracts owned by other mortgage lenders and loan servicers. CCI also has a subsidiary that acts as a provider of various title insurance and escrow servicers in the capacity of an agent rather than an underwriter. Unless the context otherwise requires, references to "CCI" herein shall be deemed to refer to CCI and its consolidated subsidiaries. CCI is a Delaware corporation, and was originally incorporated in New York under the name of OLM Credit Industries, Inc. in 1969. Its principal executive offices are located at 155 North Lake Avenue, P. O. Box 7137, Pasadena, California 91109-7137, and its telephone number is (818) 304-8400. USE OF PROCEEDS Except as may be otherwise stated in any Prospectus Supplement, the Company intends to use the net proceeds from the sale of the Debt Securities for general corporate purposes, which may include retirement of indebtedness of the Company or CCI and investment in servicing rights through the current production of loans and the bulk acquisition of contracts to service loans. 4 SELECTED CONSOLIDATED FINANCIAL DATA The consolidated financial data with respect to CCI set forth below for each of the five fiscal years in the period ended February 29, 1996 has been derived from, and should be read in conjunction with, the related audited financial statements and accompanying notes incorporated by reference herein.
YEARS ENDED FEBRUARY 28(29), ---------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT OPERATING DATA) SELECTED STATEMENT OF EARNINGS DATA: Revenues: Loan origination fees.. $ 199,724 $ 203,426 $ 379,533 $ 241,584 $ 91,933 Gain (loss) on sale of loans................. 92,341 (41,342) 88,212 67,537 38,847 ---------- ---------- ---------- ---------- ---------- Loan production reve- nue................... 292,065 162,084 467,745 309,121 130,780 Interest earned........ 354,226 280,917 320,217 191,389 103,014 Interest charges....... (281,573) (205,464) (219,898) (128,612) (69,760) ---------- ---------- ---------- ---------- ---------- Net interest income.... 72,653 75,453 100,319 62,777 33,254 Loan servicing income.. 575,058 428,994 307,477 177,291 94,830 Less amortization and impairment of servic- ing assets............ (342,811) (95,768) (242,177) (151,362) (53,768) Add (less) servicing hedge gain (loss)..... 200,135 (40,030) 73,400 74,075 17,000 Less write-off of ser- vicing hedge.......... -- (25,600) -- -- -- ---------- ---------- ---------- ---------- ---------- Net loan administration income................ 432,382 267,596 138,700 100,004 58,062 Commissions, fees and other income.......... 63,642 40,650 48,816 33,656 19,714 Gain on sale of servic- ing................... -- 56,880 -- -- 4,302 ---------- ---------- ---------- ---------- ---------- Total revenues........ 860,742 602,663 755,580 505,558 246,112 ---------- ---------- ---------- ---------- ---------- Expenses: Salaries and related expenses.............. 229,668 199,061 227,702 140,063 72,654 Occupancy and other of- fice expenses......... 106,298 102,193 101,691 64,762 36,645 Guarantee fees......... 121,197 85,831 57,576 29,410 13,622 Marketing expenses..... 27,115 23,217 26,030 12,974 5,015 Other operating expenses.............. 50,264 37,016 43,481 24,894 17,849 Branch and administra- tive office consolida- tion costs............ -- 8,000 -- -- -- ---------- ---------- ---------- ---------- ---------- Total expenses........ 534,542 455,318 456,480 272,103 145,785 ---------- ---------- ---------- ---------- ---------- Earnings before income taxes.................. 326,200 147,345 299,100 233,455 100,327 Provision for income taxes.................. 130,480 58,938 119,640 93,382 40,131 ---------- ---------- ---------- ---------- ---------- Net earnings............ $ 195,720 $ 88,407 $ 179,460 $ 140,073 $ 60,196 ========== ========== ========== ========== ========== SELECTED BALANCE SHEET DATA AT END OF PERIOD: Mortgage loans shipped and held for sale...... $4,740,087 $2,898,825 $3,714,261 $2,316,297 $1,585,392 Total assets............ 8,657,653 5,710,182 5,631,061 3,369,499 2,474,625 Short-term debt......... 4,423,738 2,664,006 3,111,945 1,579,689 1,046,289 Long-term debt.......... 1,911,800 1,499,306 1,197,096 734,762 383,065 Convertible preferred stock.................. -- -- -- 25,800 37,531 Common shareholders' eq- uity................... 1,319,755 942,558 880,137 693,105 558,617 OPERATING DATA (DOLLAR AMOUNTS IN MILLIONS): Volume of loans pro- duced.................. $ 34,584 $ 27,866 $ 52,459 $ 32,388 $ 12,156 Loan servicing portfolio (at period end)(1)..... 136,835 113,111 84,678 54,484 27,546 Ratio of earnings to fixed charges(2)....... 2.13 1.69 2.32 2.76 2.38
- -------- (1) Includes warehoused loans and loans under subservicing agreements. (2) For purposes of calculating the ratio of earnings to fixed charges, earnings consist of income before Federal income taxes, plus fixed charges. Fixed charges include interest expense on debt and the portion of rental expenses which is considered to be representative of the interest factor (one-third of operating leases). Since the major portion of CCI's interest costs is incurred to finance mortgage loans which generate interest income, and since interest income and interest expense are generated simultaneously, management of CCI believes that a more meaningful measure of its debt service requirements is the ratio of earnings to net fixed charges. Under this alternative formula, net fixed charges are defined as interest expense on debt, other than debt incurred to finance CCI's mortgage loan inventory, plus the interest element (one-third of operating leases). Under such alternative formula, these ratios for each of the five fiscal years in the period ended February 28, 1996, commencing with the fiscal year ended February 29, 1996, were 5.82, 726.84, 9.40, 7.53 and 3.75, respectively. 5 DESCRIPTION OF DEBT SECURITIES AND GUARANTEES The following description of the terms of the Debt Securities sets forth certain general terms and provisions of the Debt Securities. The extent, if any, to which such general provisions do not apply to the Debt Securities offered by any Prospectus Supplement will be described in such Prospectus Supplement. The Debt Securities are to be issued under the Indenture dated as of January 1, 1992, as amended, supplemented or modified from time to time, including by Supplemental Indenture No. 1 thereto, dated as of June 15, 1995 (the "Indenture"), among CHL, the Guarantor and The Bank of New York, as Trustee (the "Trustee"), which is incorporated by reference in the Registration Statement of which this Prospectus forms a part. Each series of Debt Securities issued pursuant to the Indenture will be issued pursuant to an amendment or supplement thereto in the form of a supplemental indenture or pursuant to an Officers' Certificate, in each case delivered pursuant to resolutions of the Board of Directors of CHL and in accordance with the provisions of Section 301 or Article Ten of the Indenture, as the case may be. The terms of the Debt Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "TIA"). The Debt Securities are subject to all such terms and the holders of Debt Securities are referred to the Indenture and the TIA for a statement of such terms. The following summaries of certain provisions of each Indenture and the Debt Securities are not complete and are qualified in their entirety by reference to the provisions of the Indenture, including the definitions of capitalized terms used herein without definition. Numerical references in parentheses are to sections in the Indenture and unless otherwise indicated capitalized terms have the meanings given them in the Indenture. GENERAL The Indenture does not limit the aggregate principal amount of Debt Securities that may be issued from time to time in series. (Section 301) The Debt Securities will constitute unsecured and unsubordinated indebtedness of CHL and will rank pari passu in right of payment with CHL's other unsecured and unsubordinated indebtedness. A substantial portion of the assets of CHL may be pledged under various credit agreements among CHL and various lending institutions. See Note D to CCI's Consolidated Financial Statements incorporated by reference herein. Reference is made to the Prospectus Supplement and pricing supplement, if any, relating to the particular series of Debt Securities offered thereby for a description of the terms of such Debt Securities in respect of which this Prospectus is being delivered, including, where applicable: (i) the title of such Debt Securities; (ii) any limit on the aggregate principal amount of such Debt Securities; (iii) the date or dates, or the method or methods, if any, by which such date or dates shall be determined or extended, on which the principal of such Debt Securities is payable; (iv) any places other than the issuer's office or agency in The City of New York where such Debt Securities shall be payable or surrendered for registration of transfer or exchange; (v) the denominations in which such Debt Securities shall be issuable; (vi) the currency of denomination of such Debt Securities, which may be in U.S. dollars, any foreign currency or currency unit, including European Currency Units ("ECU"), and, if applicable, certain other information relating to such foreign currency or currency unit; (vii) the designation of the currency or currencies in which payment of the principal of and premium, if any, and interest on such Debt Securities will be made and whether payment of the principal of and premium, if any, or the interest on Debt Securities designated in a foreign currency or currency unit, at the election of a holder thereof, may instead be payable in U.S. dollars and the terms and conditions upon which such election may be made; (viii) the rate or rates (which may be fixed or floating), if any, at which such Debt Securities will bear interest, or the method or methods, if any, by which such rate or rates are to be determined or reset, the date or dates, if any, from which such interest will accrue, or the method or 6 methods, if any, by which such date or dates shall be determined or reset, the dates on which such interest will be payable, the record date for the interest payable on any interest payment date, and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months; (ix) the terms and conditions, if any, on which such Debt Securities may be redeemed at the option of CHL or repaid at the option of the Holder (as defined below) thereof; (x) the obligation, if any, of CHL to redeem, repay or purchase such Debt Securities pursuant to any sinking fund or analogous provisions, and the terms and conditions on which such Debt Securities shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (xi) if other than the principal amount thereof, the portion of the principal amount of such Debt Securities which will be payable upon declaration of acceleration of the maturity thereof; (xii) provisions, if any, for the defeasance of such Debt Securities; (xiii) the ability, if any, of the Holder of a Debt Security to renew all or any portion of a Debt Security; (xiv) any additional Events of Default or restrictive covenants provided for with respect to such Debt Securities; (xv) any other terms not inconsistent with the Indenture, including any terms which may be required by or advisable under United States laws or regulations; (xvi) if such Debt Securities are denominated or payable in a currency or currency unit other than U.S. dollars, the designation of the initial Exchange Rate Agent and, if other than as set forth in the Indenture, the definition of the "Exchange Rate"; and (xvii) the form of such Debt Securities and, if in global form, the name of the depositary with respect thereto and the terms upon which and the circumstances under which such Debt Securities may be exchanged. (Section 301) "Holder" means a person in whose name a Debt Security is registered in the related Security Register. Unless otherwise indicated in the Prospectus Supplement relating thereto, the Debt Securities will be issued only in fully registered form without coupons. Debt Securities denominated in U.S. dollars will be issued in denominations of $1,000 or any integral multiple thereof unless otherwise provided in the Prospectus Supplement relating thereto. (Section 302) The Prospectus Supplement relating to a series of Debt Securities denominated in a foreign currency or currency unit will specify the denominations thereof. The Indenture does not contain any provisions that would limit the ability of the Company, CCI or any of their respective affiliates to incur indebtedness (secured or unsecured) or that would afford Holders of Debt Securities protection in the event of a highly leveraged transaction, restructuring, change in control, merger or similar transaction involving the Company or CCI that may adversely affect Holders of the Debt Securities. One or more series of Debt Securities may be sold at a substantial discount below their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates. One or more series of Debt Securities may be floating rate debt securities, and may be exchangeable for fixed rate debt securities. Federal income tax consequences and special considerations applicable to any such series will be described in the Prospectus Supplement relating thereto. Unless otherwise indicated in the Prospectus Supplement relating thereto, the principal of, and any premium or interest on, any series of Debt Securities will be payable, and such Debt Securities will be exchangeable and transfers thereof will be registerable, at the Corporate Trust Office of the Trustee, initially at 101 Barclay Street, New York, New York 10286, provided that, at the option of CHL, payment of interest may be made by check mailed to the address of the Person entitled thereto as it appears in the related Security Register. (Sections 301, 305, 306, 307 and 1102) No Debt Security shall be entitled to any benefit under the Indenture or be valid or obligatory for any purpose unless there appears on such Debt Security a certificate of authentication substantially in the form provided for in the Indenture duly executed by the Trustee by manual signature of one of its authorized officers, and such certificate upon any Debt Security shall be conclusive evidence, and the only evidence, that such Debt Security has been duly authenticated and delivered under the Indenture and is entitled to the benefits of the Indenture. (Section 203) 7 EVENTS OF DEFAULT The Indenture provides that the following shall constitute "Events of Default" with respect to any series of Debt Securities thereunder: (i) default in payment of principal of (or premium, if any, on) any Debt Security of such series at Maturity; (ii) default for 30 days in payment of interest on any Debt Security of such series when due; (iii) default in the deposit of any sinking fund payment on any Debt Security of such series when due; (iv) default in the performance or breach of any other covenant or warranty of CHL or the Guarantor in the Indenture, the Debt Securities or the related Guarantees, continued for 60 days after written notice thereof by the Trustee or the Holders of at least 25% in aggregate principal amount of the Debt Securities of such series at the time outstanding; (v) default resulting in acceleration of maturity of any other indebtedness for borrowed money of CHL, the Guarantor or any direct or indirect subsidiary of the Guarantor in an amount in excess of $10,000,000 and such acceleration shall not be rescinded or annulled for a period of 10 days after written notice thereof by the Trustee or the Holders of at least 25% in aggregate principal amount of the Debt Securities of such series at the time outstanding; (vi) certain events of bankruptcy, insolvency or reorganization; and (vii) any other Event of Default provided with respect to such series of Debt Securities. (Section 601) No Event of Default with respect to a particular series of Debt Securities issued under the Indenture necessarily constitutes an Event of Default with respect to any other series of Debt Securities issued thereunder. The Indenture provides that if an Event of Default specified therein shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Debt Securities of such series then outstanding may declare the principal amount of the Debt Securities of such series (or, in the case of Original Issue Discount Securities, such other amount, if any, as provided for in the terms of such Original Issue Discount Securities) to be due and payable immediately upon written notice thereof to CHL. In certain cases, the Holders of a majority in aggregate principal amount of the outstanding Debt Securities of any such series may, on behalf of the Holders of all such Debt Securities, rescind and annul such declaration of acceleration. (Section 602) "Original Issue Discount Security" means, except as otherwise defined in a Debt Security, any Debt Security which is issued with original issue discount within the meaning of Section 1273(a) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder. The agreements governing certain of CHL's and the Guarantor's outstanding indebtedness contain provisions to the effect that certain Events of Default under the Indenture would constitute an event of default under such agreements which, among other things, could cause an acceleration of the indebtedness thereunder. See Note D to CCI's Consolidated Financial Statements incorporated by reference herein. The Indenture contains a provision entitling the Trustee, subject to the duty of the Trustee during default under any series of Debt Securities to act with the required standard of care, to be indemnified by the Holders of the Debt Securities of such series before proceeding to exercise any right or power under the Indenture with respect to such series at the request of such Holders. (Sections 701 and 703) The Indenture provides that no Holders of Debt Securities of any series issued thereunder may institute any proceedings, judicial or otherwise, to enforce such Indenture except in the case of failure of the Trustee thereunder, for 60 days, to act after it has received a written request to enforce the Indenture by the Holders of at least 25% in aggregate principal amount of the then outstanding Debt Securities of such series, and an offer of reasonable indemnity. (Section 607) This provision will not prevent any Holder of Debt Securities from enforcing payment of the principal thereof, premium, if any, and interest thereon at the respective due dates thereof. (Section 608) The Holders of a majority in aggregate principal amount of the Debt Securities of any series issued under the Indenture then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it with respect to the Debt Securities of such series. The Trustee may, however, refuse to follow any direction that it determines may not lawfully be taken or would be illegal or in conflict with such Indenture or involve it in personal liability or which would be unjustly prejudicial to Holders of the Debt Securities of such series not joining therein. (Section 612) 8 The Indenture provides that the Trustee will, within 90 days after the occurrence of a default with respect to any series of Debt Securities issued thereunder, give to the Holders thereof notice of such default, unless such default has been cured or waived. Except in the case of a default in the payment of principal of, or premium, if any, or interest on any Debt Securities or payment of any sinking fund installment, the Trustee shall be protected in the withholding of such notice if it determines in good faith that the withholding of such notice is in the interest of the Holders of the Debt Securities of such series. (Section 702) CHL and the Guarantor will be required to file with the Trustee annually an Officers' Certificate as to the absence of certain defaults under the terms of the Indenture. (Section 1105) MODIFICATION AND WAIVER Modifications of and amendments to the Indenture may be made by CHL, the Guarantor and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the outstanding Debt Securities of each series affected by such modification or amendment; provided, however, that no such modification or amendment may, without the consent of the Holder of each outstanding Debt Security affected thereby: (i) except as otherwise permitted in the Indenture in connection with Debt Securities for which the Stated Maturity is extendible, change the Stated Maturity of the principal of, or any installment of interest on, such Debt Security; (ii) reduce the principal amount of, or, except as otherwise permitted in the Indenture in connection with Debt Securities for which the interest rate may be reset, interest on, or any premium payable upon redemption or repayment of, such Debt Security; (iii) reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof; (iv) adversely affect the right of repayment at the option of a Holder of such Debt Security; (v) reduce the amount of, or postpone the date fixed for, any payment under any sinking fund or analogous provisions of such Debt Security; (vi) change the place or currency or currency unit of payment of the principal of, premium, if any, or interest on such Debt Security; (vii) change or eliminate the rights of a Holder to receive payment in a designated currency; (viii) impair the right to institute suit for the enforcement of any required payment on or with respect to such Debt Security; (ix) reduce the percentage of the aggregate principal amount of the outstanding Debt Securities of any series the consent of whose Holders is required for modification or amendment of the Indenture, for waiver of compliance with certain provisions of the Indenture, or for waiver of certain defaults; (x) modify any of the provisions of Section 613 (described below) except to increase such percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each outstanding Debt Security affected thereby; or (xi) modify or affect the terms and conditions of the related Guarantees in a manner adverse to the interests of the Holders of the Debt Securities. The Indenture also contains provisions permitting CHL, the Guarantor and the Trustee, without the consent of any Holders of Debt Securities under such Indenture, to enter into supplemental indentures, in form satisfactory to the Trustee, for any of the following purposes: (i) to evidence the succession of another corporation to CHL or the Guarantor and the assumption by such successor of the obligations and covenants of CHL or the Guarantor contained in the Indenture and in the Debt Securities and the related Guarantees, as the case may be; (ii) to add to the covenants of CHL or the Guarantor, for the benefit of the Holders of all or any series of Debt Securities issued under the Indenture (and if such covenants are to be for the benefit of less than all series of Debt Securities issued under the Indenture, stating that such covenants are expressly being included solely for the benefit of such series), or to surrender any right or power herein conferred upon CHL or the Guarantor; (iii) to add any additional Events of Default (and if such Events of Default are to be applicable to less than all series of Debt Securities issued under the Indenture, stating that such Events of Default are expressly being included solely to be applicable to such series); (iv) to add or change any of the provisions of the Indenture to such extent as shall be necessary to permit or facilitate the issuance of Debt Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; (v) to change or eliminate any of the provisions of the Indenture, provided that any such change or elimination shall become effective only when there is no Debt Security outstanding of any series created prior to the 9 execution of such supplemental indenture which is entitled to the benefit of such provision; (vi) to establish the form or terms of Debt Securities of any series as otherwise permitted by the Indenture; (vii) to evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee with respect to the Debt Securities of one or more series issued under the Indenture and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one Trustee, pursuant to the requirements of the Indenture; (viii) to secure the Debt Securities issued under the Indenture; (ix) to cure any ambiguity, to correct or supplement any provision in such Indenture which may be defective or inconsistent with any other provision of the Indenture, or to make any other provisions with respect to matters or questions arising under the Indenture which shall not be inconsistent with any provision of the Indenture, provided such other provisions shall not adversely affect the interests of the Holders of Debt Securities of any series issued under the Indenture in any material respect; (x) to modify, eliminate or add to the provisions of the Indenture to such extent as shall be necessary to effect the qualification of the Indenture under the TIA or under any similar federal statute subsequently enacted and to add to the Indenture such other provisions as may be expressly required under the TIA; or (xi) to effect the assumption, by the Guarantor or a Subsidiary thereof, of the payment obligations with respect to the Debt Securities and of the performance of every covenant of the Indenture on the part of CHL to be performed or observed. (Section 1001) The Holders of a majority in aggregate principal amount of the outstanding Debt Securities of each series may, on behalf of all Holders of Debt Securities of that series, waive any past default under the Indenture with respect to Debt Securities of that series except a default in the payment of the principal of (or premium, if any), or interest on, any Debt Security of that series and except a default in respect of a covenant or provision the modification or amendment of which would require the consent of the Holder of each outstanding Debt Security of the affected series. (Section 613) GLOBAL SECURITIES The Debt Securities of a series may be issued in whole or in part in the form of one or more global securities ("Global Securities") that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the Prospectus Supplement relating to such series. Global Securities may be issued in either registered or bearer form and in either temporary or permanent form. Unless and until it is exchanged in whole or in part for individual certificates evidencing Debt Securities in definitive form represented thereby, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. The specific terms of the depositary arrangement with respect to a series of Debt Securities will be described in the Prospectus Supplement relating to such series. CONSOLIDATION, MERGER AND TRANSFER OF ASSETS Under the Indenture, neither CHL nor the Guarantor may consolidate with or merge into any corporation, or transfer its assets substantially as an entirety to any Person, unless: (i) the successor corporation or transferee assumes CHL's or the Guarantor's obligations on the Debt Securities or the related Guarantees, as the case may be, and under the Indenture, and in the case of a consolidation or merger of CHL, the Guarantor delivers an affirmation of the continuance of its obligations to the Trustee; (ii) after giving effect to the transaction, no Event of Default and no event which, after notice or lapse of time or both, would become an Event of Default shall have occurred and be continuing; and (iii) certain other conditions are met. (Sections 901 and 903) 10 SATISFACTION, DISCHARGE AND DEFEASANCE The Indenture, with respect to any series of Debt Securities (except for certain specified surviving obligations, including (A) any rights of registration of transfer and exchange and (B) rights to receive the principal, premium, if any, and interest on the Debt Securities) will be discharged and cancelled upon the satisfaction of certain conditions, including the following: (i) all Debt Securities of such series not theretofore delivered to the Trustee for cancellation have become due or payable, will become due and payable at their Stated Maturity within one year, or are to be called for redemption within one year and (ii) the deposit with such Trustee of an amount in the Specified Currency sufficient to pay the principal, premium, if any, and interest to the Maturity of all Debt Securities of such series. (Section 501) If so specified in the Prospectus Supplement with respect to Debt Securities of any series, CHL, at its option, (i) will be discharged from any and all obligations in respect of the Debt Securities of such series (except for certain obligations to register the transfer or exchange of Debt Securities of such series, replace stolen, lost or mutilated Debt Securities of such series, maintain certain offices or agencies in each Place of Payment, and hold moneys for payment in trust), or (ii) will not be subject to provisions of the Indenture described above under "--Consolidation, Merger and Transfer of Assets" with respect to the Debt Securities of such series, in each case if CHL irrevocably deposits with the Trustee, in trust, money or U.S. Government Obligations (as defined in the Indenture) which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient (in the opinion of independent public accountants) to pay all the principal (including any mandatory sinking fund payments) of, and premium, if any, and interest on, the Debt Securities of such series on the dates such payments are due in accordance with the terms of such Debt Securities. To exercise any such option, CHL is required to deliver to the Trustee (1) an opinion of counsel to the effect that (a) the deposit and related defeasance would not cause the Holders of the Debt Securities of such series to recognize income, gain or loss for Federal income tax purposes, (b) CHL's exercise of such option will not cause any violation of the Investment Company Act of 1940, as amended, and (c) if the Debt Securities of such series are then listed on the New York Stock Exchange, such Debt Securities would not be delisted as a result of the exercise of such option and (2) in the case of the Debt Securities of such series being discharged, a ruling received from or published by the United States Internal Revenue Service to the effect that the deposit and related defeasance would not cause the Holders of the Debt Securities of such series to recognize income, gain or loss for Federal income tax purposes. (Sections 1401 and 1402) GUARANTEES The Debt Securities will be unconditionally guaranteed (the "Guarantees") by the Guarantor as to payment of principal, premium, if any, and interest when and as the same shall become due and payable, whether at their Stated Maturity or upon redemption or repayment or otherwise. (Section 401) The Guarantees will rank pari passu in right of payment with all other unsecured and unsubordinated obligations of the Guarantor. The obligations of the Guarantor under the Guarantees will be unconditional regardless of the enforceability of the Debt Securities or the Indenture and will not be discharged until all obligations contained in such Debt Securities and the Indenture are satisfied. Holders of the Debt Securities may proceed directly against the Guarantor in the event of an Event of Default with respect to such Debt Securities without first proceeding against CHL. (Section 401) Because the Guarantor is a holding company, the rights of its creditors, including the Holders of the Debt Securities in the event the Guarantees are enforced, to share in the distribution of the assets of any subsidiary upon the subsidiary's liquidation or recapitalization will be subject to the prior claims of the subsidiary's creditors, except to the extent the Guarantor may itself be a creditor with recognized claims against the subsidiary. 11 CONCERNING THE TRUSTEES The Bank of New York is the Trustee under the Indenture. CHL and CCI maintain banking relationships in the ordinary course of business with the Trustee. Among other things, The Bank of New York is a lending bank under an existing revolving credit facility of CHL. See Notes to CCI's Consolidated Financial Statements incorporated by reference herein. PLAN OF DISTRIBUTION The Company may sell the Debt Securities in any of three ways: (i) through one or more underwriters or dealers; (ii) through agents; or (iii) directly to a limited number of purchasers or to a single purchaser. The Prospectus Supplement with respect to each series of Debt Securities will set forth the terms of the offering of the Debt Securities of such series, including the name or names of any underwriters, dealers or agents, the purchase price of such Debt Securities, the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation or agents' commissions, any initial public offering price, any discounts or concessions allowed or reallowed or paid to dealers, and any securities exchanges on which the Debt Securities of such series may be listed. If one or more underwriters are used in the sale, the Debt Securities will be acquired by such underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price, or at varying prices determined at the time of sale. The Debt Securities may be offered to the public through underwriting syndicates represented by managing underwriters or by one or more underwriters without a syndicate. Unless otherwise set forth in the Prospectus Supplement, the obligations of the underwriters to purchase Debt Securities will be subject to certain conditions precedent and the underwriters will be obligated to purchase all the Debt Securities of a series if any are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The Debt Securities may be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offer or sale of the Debt Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by the Company to such agent will be set forth, in the Prospectus Supplement or any supplement thereto. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a reasonable best efforts basis for the period of its appointment. If so indicated in the Prospectus Supplement, the Company will authorize agents, underwriters or dealers to solicit offers by certain specified entities to purchase Debt Securities from the Company at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement. The Prospectus Supplement will set forth the commissions payable for solicitations of such contracts. Agents and underwriters may from time to time purchase and sell Debt Securities in the secondary market, but are not obligated to do so, and there can be no assurance that there will be a secondary market for the Debt Securities or that there will be liquidity in the secondary market if one develops. From time to time, agents and underwriters may make a market in the Debt Securities. Agents and underwriters may be entitled under agreements entered into with the Company and the Guarantor to indemnification by the Company and the Guarantor, jointly and severally, against certain civil liabilities, including liabilities under the Securities Act of 1933, or to contribution with respect to payments which the agents or underwriters may be required to make in respect thereof. Agents and underwriters may be customers of, engage in transactions with or perform services for, the Company or its affiliates in the ordinary course of business. 12 VALIDITY OF SECURITIES The validity of the Debt Securities will be passed upon for the Company and CCI by Fried, Frank, Harris, Shriver & Jacobson, a partnership including professional corporations, New York, New York. Edwin Heller, whose professional corporation is a member of Fried, Frank, Harris, Shriver & Jacobson, is a director of CCI. Brown & Wood, New York, New York will serve as counsel for any underwriters and agents. Brown & Wood also serves as counsel for CWMBS, Inc., a wholly owned subsidiary of CCI, in connection with offerings of mortgage pass- through certificates, and as counsel to CWM. EXPERTS The consolidated financial statements of CCI incorporated by reference in the Registration Statement, of which this Prospectus forms a part, have been audited by Grant Thornton LLP, independent certified public accountants, for the periods and to the extent indicated in their report thereon, and have been so incorporated in reliance upon the authority of said firm as experts in accounting and auditing. 13 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- No dealer, salesperson or other individual has been authorized to give any information or to make any representations other than those contained or in- corporated by reference in this Prospectus Supplement or the Prospectus in connection with the offering covered by this Prospectus Supplement and the Prospectus. If given or made, such information or representations must not be relied upon as having been authorized by CHL, the Guarantor or any Agent. This Prospectus Supplement and the Prospectus do not constitute an offer to sell, or a solicitation of an offer to buy, the Notes in any jurisdiction where, or to any person whom, it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus Supplement and the Prospectus nor any sale made hereunder or thereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this Prospectus Supplement or the Prospectus or in the affairs of CHL or the Guar- antor since the date hereof. --------------- TABLE OF CONTENTS
Page ---- Prospectus Supplement Risk Factors............................................................... S-2 Description of Notes....................................................... S-4 Certain Federal Income Tax Considerations.................................. S-21 Plan of Distribution of Notes.............................................. S-25 Validity of Notes.......................................................... S-26 Prospectus Available Information...................................................... 2 Incorporation of Certain Documents by Reference.............................................................. 2 The Company and CCI........................................................ 3 Use of Proceeds............................................................ 4 Selected Consolidated Financial Data....................................... 5 Description of Debt Securities and Guarantees.............................. 6 Plan of Distribution....................................................... 12 Validity of Securities..................................................... 13 Experts.................................................................... 13
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- U. S. $1,000,000,000 COUNTRYWIDE HOME LOANS, INC. MEDIUM-TERM NOTES, SERIES E DUE NINE MONTHS OR MORE FROM DATE OF ISSUE PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST UNCONDITIONALLY GUARANTEED BY [LOGO COUNTRYWIDE/SM/ CREDIT INDUSTRIES, INC.] --------------- PROSPECTUS AND PROSPECTUS SUPPLEMENT , 1996 --------------- LEHMAN BROTHERS GOLDMAN, SACHS & CO. MERRILL LYNCH & CO. J.P. MORGAN & CO. NATIONSBANC CAPITAL MARKETS, INC. SALOMON BROTHERS INC - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Rule 424(b)(3) File Nos. PRICING SUPPLEMENT NO. DATED 19 (To Prospectus Dated , 1996, as Supplemented , 199 ) COUNTRYWIDE HOME LOANS, INC. MEDIUM-TERM NOTES, SERIES E DUE NINE MONTHS OR MORE FROM DATE OF ISSUE PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST UNCONDITIONALLY GUARANTEED BY COUNTRYWIDE CREDIT INDUSTRIES, INC. FIXED RATE NOTES ---------------- Trade Date: Issue Price: Original Issue Date: Stated Maturity Date: Interest Rate: Book-Entry: [_] Interest Payment Dates: Record Certificated: [_] Dates: Principal Amount: Net Proceeds: Minimum Denomination: Specified Currency: Exchange Rate Agent: Redemption: Check box opposite applicable paragraph. [_] The Notes cannot be redeemed prior to maturity. [_] The Notes may be redeemed prior to maturity. Initial Redemption Date: Initial Redemption Percentage: Annual Redemption Percentage Reduction, if any: Repayment: Check box opposite applicable paragraph. [_] The Notes cannot be repaid prior to maturity. [_] The Notes may be repaid prior to maturity. Optional Repayment Dates: Additional/Other Terms: ---------------- The Notes to which this Pricing Supplement relates will constitute unsecured and unsubordinated indebtedness of CHL and will rank pari passu in right of payment with CHL's other unsecured and unsubordinated indebtedness. As of , 19 , the Guarantor had $ aggregate principal amount of secured indebtedness outstanding, and CHL had $ aggregate principal amount of secured indebtedness outstanding. As of such date, CHL had $ aggregate principal amount of unsecured indebtedness outstanding, which indebtedness ranked pari passu in right of payment with CHL's other unsecured and unsubordinated indebtedness and which indebtedness will rank pari passu in right of payment with the Notes to which this Pricing Supplement relates. Rule 424(b)(3) File Nos. PRICING SUPPLEMENT NO. DATED 19 (To Prospectus Dated , 1996, as Supplemented , 199 ) COUNTRYWIDE HOME LOANS, INC. MEDIUM-TERM NOTES, SERIES E DUE NINE MONTHS OR MORE FROM DATE OF ISSUE PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST UNCONDITIONALLY GUARANTEED BY COUNTRYWIDE CREDIT INDUSTRIES, INC. FLOATING RATE NOTES ---------------- Trade Date: Book-Entry: [_] Issue Price: Certificated: [_] Original Issue Date: Principal Amount: Stated Maturity Date: Net Proceeds: Specified Currency: Base Rate(s): [_] Commercial Paper Rate [_] LIBOR (See Additional/ [_] Certificate of Deposit Rate Other Terms) [_] Treasury Rate [_] Federal Funds Rate [_] Prime Rate [_] CMT Rate (See Additional/ [_] Eleventh District [_] Other Other Terms) Cost of Funds Rate
Exchange Rate Agent: Minimum Denomination: Fixed Rate Commencement Date: Initial Interest Rate: Fixed Interest Rate: Interest Reset Dates: Interest Payment Dates: Index Maturity: Maximum Interest Rate: Minimum Interest Rate: Interest Factor Convention: Spread (plus or minus): Spread Multiplier: Calculation Agent: Redemption: Repayment: Check box opposite applicable paragraph.Check box opposite applicable paragraph. [_] The Notes cannot be redeemed prior to maturity. [_] The Notes cannot be repaid prior to maturity. [_] The Notes may be redeemed prior to maturity. [_] The Notes may be repaid prior to Initial Redemption Date: maturity. Optional Repayment Dates: Initial Redemption Percentage: Annual Redemption Percentage Reduction, if any: Additional/Other Terms: ---------------- The Notes to which this Pricing Supplement relates will constitute unsecured and unsubordinated indebtedness of CHL and will rank pari passu in right of payment with CHL's other unsecured and unsubordinated indebtedness. As of , 19 , the Guarantor had $ aggregate principal amount of secured indebtedness outstanding, and CHL had $ aggregate principal amount of secured indebtedness outstanding. As of such date, CHL had $ aggregate principal amount of unsecured indebtedness outstanding, which indebtedness ranked pari passu in right of payment with CHL's other unsecured and unsubordinated indebtedness and which indebtedness will rank pari passu in right of payment with the Notes to which this Pricing Supplement relates. P-2 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION* SEC registration fee.......................................... $ 344,828 Blue sky fees and expenses.................................... 15,000 Legal fees and expenses....................................... 75,000 Accounting fees and expenses.................................. 30,000 Printing and engraving expenses............................... 74,000 Trustee's fees and expenses................................... 12,500 Rating agency fees............................................ 600,000 Miscellaneous................................................. 23,672 ---------- Total..................................................... $1,175,000 ==========
- -------- *Except for the SEC registration fee, all of the foregoing expenses have been estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law provides, in substance, that Delaware corporations shall have the power, under specified circumstances, to indemnify their directors, officers, employees and agents in connection with actions, suits or proceedings brought against them by a third party or in the right of the corporation, by reason of the fact that they were or are such directors, officers, employees or agents, against expenses incurred in any such action, suit or proceeding. The Delaware General Corporation Law also provides that Delaware corporations may purchase insurance on behalf of any such director, officer, employee or agent. Sections 722, 723, 725 and 726 of the New York Business Corporation Law are substantively equivalent to Section 145 of the Delaware General Corporation Law. Article SIXTH of the Certificate of Incorporation of CCI provides that CCI may indemnify its directors and officers to the full extent permitted by the laws of the State of Delaware. Article VIII of CCI's Bylaws provides that CCI shall indemnify its directors and officers, and persons serving as directors and officers of CHL at the request of CCI, against any threatened, pending or completed action, suit or proceeding or investigation brought against such directors and officers by reason of the fact that such persons were such directors or officers, provided that such persons acted in good faith and in a manner which they reasonably believed to be in or not opposed to the best interests of CCI; except that in the case of actions brought by or in the right of CCI to procure a judgment in its favor, no indemnification is permitted in respect to any claim, issue or matter as to which any such director or officer shall have been adjudged to be liable to CCI unless the court in which the action was brought determines that such person is entitled to indemnification. CCI's Bylaws further contemplate that the indemnification provisions permitted thereunder are not exclusive of any other rights to which such directors and officers are otherwise entitled by means of Bylaw provisions, agreements, vote of stockholders or disinterested directors or otherwise. CCI has entered into indemnity agreements with certain of its directors and executive officers (including the directors and executive officers of CHL), whereby such individuals are indemnified by CCI up to an aggregate limit of $5,000,000 for any claims made against such individual based on any act, omission or breach of duty committed while acting as a director or officer, except, among other things, cases involving dishonesty or improper personal benefit. CCI also maintains an insurance policy pursuant to which its directors and officers (including the directors and executive officers of CHL) are insured against certain liabilities which might arise out of their relationship with CCI as directors and officers. II-1 Article SEVENTH of the Certificate of Incorporation provides that a director of CCI shall have no personal liability to CCI or its stockholders for monetary damages for breach of his fiduciary duty of care as a director to the full extent permitted by the Delaware General Corporation Law, as it may be amended from time to time. ITEM 16. EXHIBITS
1.1 --Form of Selling Agency Agreement 4.1 --Indenture, dated as of January 1, 1992, among CHL, the Guarantor and The Bank of New York, as trustee (incorpo- rated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 of CHL and the Guarantor (File Nos. 33-50661 and 33-50661-01) filed on October 19, 1993) 4.2 --Supplemental Indenture No. 1 dated as of June 15, 1995, to the Indenture dated as of January 1, 1992, among CHL, the Guarantor and The Bank of New York, as trustee (in- corporated by reference to Exhibit 4.9 to Amendment No. 2 to the Registration Statement on Form S-3 of CHL and the Guarantor (File Nos. 33-59559 and 33-59559-01) filed on June 16, 1995) 4.3 --Form of Fixed Rate Medium-Term Note 4.4 --Form of Floating Rate Medium-Term Note 5.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to CHL and CCI, as to the legality of the securi- ties being offered 8.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to CHL and CCI, as to certain tax matters 12.1 --Statement regarding computation of ratio of earnings to fixed charges (incorporated by reference to Exhibit 12.1 to CCI's Annual Report on Form 10-K dated February 29, 1996) 12.2 --Statement regarding computation of ratio of earnings to net fixed charges (incorporated by reference to Exhibit 12.2 to CCI's Annual Report on Form 10-K dated February 29, 1996) 23.1 --Consent of Grant Thornton LLP 23.2 --Consent of Fried, Frank, Harris, Shriver & Jacobson (in- cluded in Exhibit 5.1) 23.3 --Consent of Fried, Frank, Harris, Shriver & Jacobson (in- cluded in Exhibit 8.1) 24 --Powers of Attorney for CHL and CCI relating to subse- quent amendments (included on pages II-5 and II-6 of the Registration Statement) 25.1 --Form T-1 Statement of Eligibility Under Trust Indenture Act of 1939 of The Bank of New York (separately bound)
ITEM 17. UNDERTAKINGS (a) The undersigned, CHL and CCI (the "Registrants"), hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually II-2 or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933 if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that the undertakings set forth in paragraphs (1) (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrants pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Each of the undersigned Registrants hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of CCI's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants pursuant to the provisions permitted under Item 15 above or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted against the Registrants by such director, officer or controlling person in connection with the securities being registered hereby, the Registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Countrywide Home Loans, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and it has duly caused this Post-Effective Amendment No. 1 to the Registration Statement (File No. 33- 59559) and this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pasadena, State of California, on the 15th day of May, 1996. COUNTRYWIDE HOME LOANS, INC. By: /s/ Angelo R. Mozilo ------------------------------------- Angelo R. Mozilo Chairman of the Board of Directors POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David S. Loeb, Angelo R. Mozilo, Stanford L. Kurland and Carlos M. Garcia and each of them, his true and lawful attorneys- in-fact and agents, with full power of substitution and resubstitution, for and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Post-Effective Amendment No. 1 to the Registration Statement (File No. 33-59559) (the "Post- Effective Amendment") and this Registration Statement, and any registration statement related to the offering contemplated by this Post-Effective Amendment and this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as might or could be done in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Post- Effective Amendment and this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ David S. Loeb Director May 15, 1996 ____________________________________ DAVID S. LOEB /s/ Angelo R. Mozilo Chairman of the Board of May 15, 1996 ____________________________________ Directors and Chief ANGELO R. MOZILO Executive Officer (Principal Executive Officer); Director /s/ Stanford L. Kurland President and Chief May 15, 1996 ____________________________________ Operating Officer; Director STANFORD L. KURLAND /s/ Thomas K. McLaughlin Executive Vice President and May 15, 1996 ____________________________________ Chief Financial Officer THOMAS K. MCLAUGHLIN (Principal Financial and Accounting Officer)
II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Countrywide Credit Industries, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and it has duly caused this Post-Effective Amendment No. 1 to the Registration Statement (File No. 33-59559) and this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pasadena, State of California, on the 15th day of May, 1996. COUNTRYWIDE CREDIT INDUSTRIES, INC. By: /s/ David S. Loeb ------------------------------------- David S. Loeb Chairman of the Board of Directors and President POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David S. Loeb, Angelo R. Mozilo, Stanford L. Kurland and Carlos M. Garcia, and each of them, his true and lawful attorneys- in-fact and agents, with full power of substitution and resubstitution, for and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Post-Effective Amendment No.1 to the Registration Statement (File No. 33-59559) (the "Post- Effective Amendment") and this Registration Statement, and any registration statement related to the offering contemplated by this Post-Effective Amendment and this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as might or could be done in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Post- Effective Amendment and this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ David S. Loeb Chairman of the Board of May 15, 1996 ____________________________________ Directors and President DAVID S. LOEB (Principal Executive Officer); Director /s/ Angelo R. Mozilo Executive Vice President and May 15, 1996 ____________________________________ Vice Chairman of the Board ANGELO R. MOZILO of Directors; Director /s/ Carlos M. Garcia Managing Director--Finance, May 15, 1996 ____________________________________ Chief Financial Officer and CARLOS M. GARCIA Chief Accounting Officer (Principal Financial and Accounting Officer) /s/ Robert J. Donato Director May 15, 1996 ____________________________________ ROBERT J. DONATO /s/ Ben M. Enis Director May 15, 1996 ____________________________________ BEN M. ENIS /s/ Edwin Heller Director May 15, 1996 ____________________________________ EDWIN HELLER /s/ Harley W. Snyder Director May 15, 1996 ____________________________________ HARLEY W. SNYDER
II-5 EXHIBIT INDEX
PAGE NUMBER DESCRIPTION NO. ------ ----------- ---- 1.1 --Form of Selling Agency Agreement 4.1 --Indenture, dated as of January 1, 1992, among CHL, the Guaran- tor and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 of CHL and the Guar- antor (File Nos. 33-50661 and 33-50661-01) filed on October 19, 1993) 4.2 --Supplemental Indenture No. 1 dated as of June 15, 1995, to the Indenture dated as of January 1, 1992, among CHL, the Guarantor and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.9 to Amendment No. 2 to the Registration Statement on Form S-3 of CHL and the Guarantor (File Nos. 33-59559 and 33-59559-01) filed on June 16, 1995) 4.3 --Form of Fixed Rate Medium-Term Note 4.4 --Form of Floating Rate Medium-Term Note 5.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to CHL and CCI, as to the legality of the securities being of- fered 8.1 --Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to CHL and CCI, as to certain tax matters 12.1 --Statement regarding computation of ratio of earnings to fixed charges (incorporated by reference to Exhibit 12.1 to CCI's An- nual Report on Form 10-K dated February 29, 1996) 12.2 --Statement regarding computation of ratio of earnings to net fixed charges (incorporated by reference to Exhibit 12.2 to CCI's Annual Report on Form 10-K dated February 29, 1996) 23.1 --Consent of Grant Thornton LLP 23.2 --Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1) 23.3 --Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 8.1) 24 --Powers of Attorney for CHL and CCI relating to subsequent amendments (included on pages II-5 and II-6 of the Registration Statement) 25.1 --Form T-1 Statement of Eligibility Under Trust Indenture Act of 1939 of The Bank of New York (separately bound)
EX-1.1 2 SELLING AGENCY AGREEMENT EXHIBIT 1.1 Countrywide Home Loans, Inc. U.S. $1,000,000,000 Medium-Term Notes, Series E Due Nine Months or More From Date of Issue Payment of Principal, Premium, if any, and Interest Unconditionally Guaranteed by Countrywide Credit Industries, Inc. SELLING AGENCY AGREEMENT May __, 1996 Lehman Brothers Lehman Brothers Inc. 3 World Financial Center - 12th Floor New York, New York 10285-1200 Goldman, Sachs & Co. 85 Broad Street New York, N.Y. 10004 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center North Tower - 10th Floor New York, New York 10281-1310 J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260 NationsBanc Capital Markets, Inc. 100 North Tyron Street Charlotte, NC 28255 Salomon Brothers Inc Seven World Trade Center New York, N.Y. 10048 Ladies and Gentlemen: Countrywide Home Loans, Inc., a New York corporation (the "Company"), confirms its agreement with each of you (collectively, the "Agents") with respect to the issue and sale by the Company of up to U.S. $1,000,000,000 aggregate initial offering price of its Medium-Term Notes, Series E, Due Nine Months or More from Date of Issue (the "Notes"). The Notes will be unconditionally guaranteed as to payment of principal, premium, if any, and interest (the "Guarantees") by Countrywide Credit Industries, Inc. (the "Guarantor"). The Notes and the Guarantees will be issued under an indenture, dated as of January 1, 1992, as supplemented by Supplemental Indenture No. 1 thereto dated as of June 15, 1995 (collectively, the "Indenture"), among the Company, the Guarantor and The Bank of New York, as trustee (the "Trustee"). Unless otherwise specified in the Pricing Supplement referred to below, the Notes will be issued in minimum denominations of U.S. $1,000 and in denominations exceeding such amount by integral multiples of U.S. $1,000, and if denominated in a currency or currency unit other than U.S. dollars, the equivalent in such other currency or currency unit (the "Specified Currency") as determined in accordance with the Indenture, of U.S. $1,000 (rounded down to an integral multiple of 1,000 units of such Specified Currency) and any larger amount that is an integral multiple of 1,000 units of such Specified Currency, will be issued only in fully registered certificated or book-entry form, and will be issued in the currency or currency units and will have the maturities, annual interest rates (whether fixed or floating), redemption provisions and other terms set forth in a pricing supplement (the "Pricing Supplement") to the Prospectus referred to below. The Notes will be issued, and the terms thereof established, in accordance with the Indenture and the Medium-Term Note Administrative Procedures attached hereto as Exhibit A (the "Procedures"). The Procedures may only be amended by written agreement of the Company and each Agent after notice to, and in the case of amendments which affect the rights, duties or obligations of the Trustee, with the approval of, the Trustee. 1. Representations and Warranties. The Company and the Guarantor, ------------------------------ jointly and severally, represent and warrant to, and agree with, each Agent that: (a) The Company and the Guarantor meet the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "Act") and rules and regulations ("Rules and Regulations") of the Securities and Exchange Commission (the "Commission") promulgated thereunder and have filed with the Commission Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (File No. 33-59559) (the "Post-Effective Amendment") and the Registration Statement on Form S-3 (File No. 333-_______) (the "New Registration Statement"), and a related preliminary prospectus for the registration under the Act of certain securities, including the Notes and the Guarantees (collectively, the "Securities") and the offering thereof from time to time in accordance with Rule 415 of the Rules and Regulations, which Post-Effective Amendment and New Registration Statement have been declared effective by the Commission and copies of which have heretofore been delivered to you. Such Post-Effective Amendment and New Registration Statement, as they may be amended or supplemented, meet the requirements set forth in Rule 415(a)(1)(x) and (a)(2) of the Rules and Regulations and comply in all other material respects with said Rule. In connection with the sale of Notes, the Company and the Guarantor propose to file 2 with the Commission pursuant to Rule 424 under the Act a supplement to the form of prospectus included in such Post-Effective Amendment and New Registration Statement relating to the Notes and the Guarantees and the plan of distribution thereof and have previously advised the Agents of all further information (financial and other) with respect to the Company and the Guarantor to be set forth therein. Such Post-Effective Amendment and New Registration Statement, in the form in which they were declared effective, as amended through the date hereof, including all documents incorporated or deemed to be incorporated by reference therein and the information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the Rules and Regulations through the date hereof, is hereinafter referred to as the "Registration Statement". Such prospectus, as supplemented through the date hereof, is hereinafter called the "Prospectus", except that if any revised prospectus or prospectus supplement shall be provided to the Agents by the Company for use in connection with the offering of the Securities which differs from the Prospectus (whether or not such revised prospectus or prospectus supplement is required to be filed by the Company pursuant to Rule 424(b) of the Rules and Regulations), the term "Prospectus" shall refer to such revised prospectus or prospectus supplement, as the case may be, from and after the time it is first provided to the Agents for such use. Any reference herein to the Registration Statement or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before the date of this Agreement or the date of the Prospectus, as the case may be; and any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement or the date of the Prospectus, as the case may be, deemed to be incorporated therein by reference. (b) As of the date hereof, when any amendment to the Registration Statement becomes effective (including the filing of any document incorporated by reference in the Registration Statement), when any supplement to the Prospectus is filed with the Commission, as of the date of any Terms Agreement (as defined by Section 2 hereof) and at the date of delivery by the Company of any Notes sold hereunder (a "Settlement Date"), (i) the Registration Statement, as amended as of any such time, and the Prospectus, as supplemented as of any such time, and the Indenture complies, or will comply, as the case may be, in all material respects with the applicable requirements of the Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the Exchange Act and the 3 respective rules and regulations thereunder and (ii) neither the Registration Statement, as amended as of any such time, nor the Prospectus, as supplemented as of any such time, contains, or will contain, as the case may be, any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; provided, however, that the -------- ------- representations or warranties in this subsection shall not apply to (a) that part of the Registration Statement which shall constitute the Statements of Eligibility on Form T-1 under the Trust Indenture Act of the Trustee or (b) the information contained in or omitted from the Registration Statement or the Prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company or the Guarantor by any of you specifically for use in connection with the preparation of the Registration Statement and the Prospectus or any amendment thereof or supplement thereto. (c) Neither the Company nor the Guarantor nor any of their respective subsidiaries is in violation of its corporate charter or bylaws or in default under any agreement, indenture or instrument to which the Company, the Guarantor or any of their respective subsidiaries is a party, the effect of which violation or default would be material to the Company or the Guarantor and its subsidiaries considered as a whole; the execution, delivery and performance of this Agreement and the Indenture and consummation of the transactions contemplated hereunder and thereunder will not conflict with, result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Company, the Guarantor or any of their respective subsidiaries pursuant to the terms of, or constitute a default under, any agreement, indenture or instrument, or result in a violation of the charter or by-laws of the Company or the Guarantor or any order, rule or regulation of any court or governmental agency having jurisdiction over the Company, the Guarantor or any of their respective subsidiaries; and except as required by the Act, the Trust Indenture Act, the Exchange Act and applicable state securities laws, no consent, authorization or order of, or filing or registration with, any court or governmental agency is required for the execution, delivery and performance of this Agreement and the Indenture. (d) Except as described in or contemplated by the Registration Statement and the Prospectus, there has not been any material adverse change in, or any adverse development which materially affects, the business, properties, financial condition or results of operations of the Company or the Guarantor and its subsidiaries considered as a whole 4 since the dates as of which information is given in the Registration Statement and the Prospectus. (e) Grant Thornton LLP, whose reports have been included in the Prospectus and incorporated by reference or included in the Guarantor's most recent Annual Report on Form 10-K, which is incorporated by reference in the Prospectus, are independent public accountants as required by the Act and the Rules and Regulations. (f) (i) The Indenture has been duly authorized, executed and delivered by the Company and the Guarantor and constitutes the legally binding obligation of the Company and the Guarantor, respectively, enforceable in accordance with its terms subject to bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent conveyance, moratorium or other laws affecting creditors' rights generally and general principles of equity, (ii) on any Settlement Date, the Notes will have been duly authorized and, upon payment therefor as provided in this Agreement, will constitute legally binding obligations of the Company enforceable in accordance with their terms subject to bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent conveyance, moratorium or other laws affecting creditors' rights generally and general principles of equity and the holders of the Notes will be entitled to the benefits of the Indenture, (iii) on any Settlement Date, the Guarantees will have been duly authorized and, upon delivery of the related Notes, will constitute legally binding obligations of the Guarantor enforceable in accordance with their terms subject to bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent conveyance, moratorium or other laws affecting creditors' rights generally and general principles of equity and the holders of the Notes upon which the Guarantees are endorsed will be entitled to the benefits of the Indenture, and (iv) the Indenture conforms, and the Notes and related Guarantees will conform, in each case in all material respects, to the descriptions thereof contained in the Prospectus. (g) Each of the Company, the Guarantor and any Significant Subsidiary of the Company or the Guarantor, as defined in Rule 405 of Regulation C of the Rules and Regulations (individually, a "Subsidiary" and collectively, the "Subsidiaries"), has been duly incorporated, is validly existing and in good standing under the laws of the jurisdiction in which it is chartered or organized, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which its ownership of property or the conduct of its business requires such qualification (except where the failure to be so qualified would not have a material adverse effect on the 5 business operations or financial condition of the Company or the Guarantor and its subsidiaries taken as a whole), and has power and authority necessary to own or hold its property and to conduct the business in which it is engaged. (h) All of the outstanding shares of capital stock of each Subsidiary have been duly and validly authorized and issued and are fully paid and nonassessable, and all outstanding shares of capital stock of the Subsidiaries are owned by the Company or the Guarantor, directly or through subsidiaries, free and clear of any perfected security interest, other security interests, claims, liens or encumbrances. (i) Except as described in the Prospectus, there is no material litigation or governmental proceeding pending or, to the knowledge of the Company or the Guarantor, threatened against the Company, the Guarantor or any of their respective subsidiaries which is reasonably likely to result in any material adverse change in the financial condition, results of operations, business or prospects of the Company or the Guarantor and its subsidiaries considered as a whole or which is required to be disclosed in the Registration Statement. (j) The financial statements filed or incorporated as part of the Registration Statement or included or incorporated in the Prospectus present fairly, or (in the case of any amendment or supplement to any such document, or any material incorporated by reference in any such document, filed with the Commission after the date as of which this representation is being made) will present fairly, at all times during the effectiveness of this Agreement, the financial condition and results of operations of the Guarantor, at the dates and for the periods indicated, and have been, and (in the case of any amendment or supplement to any such document, or any material incorporated by reference in any such document, filed with the Commission after the date as of which this representation is being made) will be at all times during the effectiveness of this Agreement, prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved, except as otherwise required pursuant to such generally accepted accounting principles; and the summarized financial information of the Company included or incorporated by reference in the Registration Statement and the Prospectus presents fairly the information required to be stated therein. (k) The documents incorporated by reference into the Prospectus have been, and (in the case of any amendment or supplement to any such document, or any material incorpo- 6 rated by reference in any such document, filed with the Commission after the date as of which this representation is being made) will be at all times during the effectiveness of this Agreement, prepared in all material respects in conformity with the applicable requirements of the Act and the Rules and Regulations and the Exchange Act and the rules and regulations of the Commission thereunder and such documents have been, or (in the case of any amendment or supplement to any such document, or any material incorporated by reference in any such document, filed with the Commission after the date as of which this representation is being made) will be at all times during the effectiveness of this Agreement hereof, timely filed as required thereby. (l) There are no contracts or other documents which are required to be filed as exhibits to the Registration Statement by the Act or by the Rules and Regulations, or which were required to be filed as exhibits to any document incorporated by reference in the Prospectus by the Exchange Act or the rules and regulations of the Commission thereunder, which have not been filed as exhibits to the Registration Statement or to such document or incorporated therein by reference as permitted by the Rules and Regulations or the rules and regulations of the Commission under the Exchange Act as required. (m) The Company, the Guarantor and each subsidiary of the Guarantor have complied, and will comply, with the provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida Statutes, 1987, as amended, and all regulations promulgated thereunder relating to issuers doing business in Cuba. 2. Appointment of Agents; Solicitations by the Agents of Offers to --------------------------------------------------------------- Purchase; Sales of Notes to a Purchaser. (a) Subject to the terms and - --------------------------------------- conditions set forth herein, and to the reservation by the Company of the right to sell, solicit, and accept offers to purchase Notes directly on its own behalf, the Company hereby authorizes each Agent to act as its agent to solicit offers for the purchase of all or part of the Notes from the Company. On the basis of the representations and warranties, and subject to the terms and conditions set forth herein, each of the Agents agrees, as agent of the Company, to use its reasonable best efforts to solicit offers to purchase the Notes from the Company upon the terms and conditions set forth herein and in the Prospectus as amended or supplemented and in the Procedures. The Company reserves the right, in its sole discretion, to instruct the Agents or any one or more of the Agents from time to time to suspend at any time, for any period of time or perma- 7 nently, the solicitation of offers to purchase the Notes. Upon receipt of instructions from the Company, such Agents will forthwith suspend solicitation of offers to purchase Notes from the Company until such time as the Company has advised them that such solicitation may be resumed. Unless otherwise agreed between the Company and such Agent, the Company agrees to pay each Agent a commission in U.S. dollars, at the time of settlement of each sale of Notes by the Company as a result of a solicitation made by such Agent, in an amount equal to that percentage specified in Schedule I hereto (or, with respect to Notes in which the stated maturity is in excess of 30 years, such percentage as shall be agreed upon by the Company and the related Agent at such time) of the aggregate principal amount of the Notes sold by the Company as a result of solicitations by such Agent and such commission shall be payable as specified in the Procedures. Subject to the provisions of this Section and to the Procedures, offers for the purchase of Notes may be solicited by each Agent as agent for the Company at such time and in such amounts as such Agent deems advisable; provided, however, -------- ------- that so long as this Agreement shall be in effect, the Company shall not solicit offers to purchase Notes through any agents other than the Agents. Notwithstanding anything to the contrary contained herein, the Company may authorize any other person, partnership or corporation (an "Additional Agent") to act as its agent to solicit offers for the purchase of all or part of the Notes of the Company and/or accept offers to purchase Notes from any such Additional Agent, provided that any such Additional Agent shall have entered -------- into an agreement with the Company upon the same terms and conditions as set forth in this Agreement. (b) Subject to the terms and conditions stated herein, the Company agrees that, whenever the Company determines to sell Notes directly to any Agent as principal for resale to others, it will enter into a separate agreement relating to such sale in accordance with the provisions of this Section 2(b). For the purposes of this Agreement, the term "Agent" shall refer to each of you acting solely in the capacity as agent for the Company hereunder and not as principal; the term "Purchaser" shall refer to each of you acting solely as principal hereunder and not as agent, and the term "you" shall refer to each of you acting in both such capacities or in either such capacity. Each sale of Notes to a Purchaser shall be made in accordance with the terms of this Agreement and the Procedures and a supplemental agreement which will provide for the sale of such Notes to, and the purchase and reoffering thereof by, a Purchaser. Each such supplemental agreement (which may be an 8 oral agreement and confirmed in writing between a Purchaser and the Company) is herein referred to as a "Terms Agreement". Each such Terms Agreement, whether oral (and confirmed in writing, which may be by facsimile transmission) or in writing, shall be with respect to such information (as applicable) as is specified in Exhibit B hereto. A Purchaser's commitment to purchase Notes shall be deemed to have been made on the basis of the representations and warranties of the Company and the Guarantor herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall describe the Notes to be purchased by the Purchaser pursuant thereto, specify the principal amount of such Notes, the price to be paid to the Company for such Notes, the currency or currency unit in which such Notes shall be denominated and be payable, whether the Notes will be issued in certificated or book-entry form, whether interest shall be payable at a fixed or floating rate, the date and time of delivery of payment for such Notes (the "Purchase Date"), the place of delivery of the Notes and payment therefor, the method of payment and any requirements for the delivery of the opinions of counsel, the certificates from the Company, the Guarantor or their officers, or the letter from Grant Thornton LLP pursuant to Section 6(b). Such Terms Agreement shall also specify the period of time, if applicable, referred to in Section 4(l). In connection with the resale of any Notes purchased by a Purchaser, such Purchaser may engage the services of any other broker or dealer in connection with such resale and may allow all or any portion of the discount received to such brokers and dealers. Delivery of the certificates for Notes sold to a Purchaser pursuant to any Terms Agreement shall be made as agreed to between the Company and the Purchaser as set forth in the respective Terms Agreement, not later than the Purchase Date set forth in such Terms Agreement, against payment of funds to the Company in the net amount due to the Company for such Notes by the method and in the form set forth in the respective Terms Agreement. 3. Offering Procedure. (a) Unless otherwise agreed between the ------------------ Company and each Agent, each Agent shall communicate to the Company, orally or in writing, each offer to purchase Notes received by such Agent (unless such offer is rejected by such Agent in accordance herewith) on terms previously communicated by the Company to such Agent, and unless otherwise agreed between the Company and each Agent, the Company shall have the sole right to accept such offers to purchase Notes and may refuse any proposed purchase of Notes in whole or in part for any reason. (b) Unless otherwise agreed between the Company and each Agent, each Agent shall have the right, in its discretion reasonably exercised, to reject any proposed purchase of Notes, as a whole or in part, and any such rejection shall not be deemed 9 a breach of its agreement contained herein. Each Agent and the Company agree to perform the respective duties and obligations specifically provided to be performed by them in the Procedures. 4. Agreements. The Company and the Guarantor, jointly and severally, ---------- agree with each Agent that: (a) Prior to the termination of the offering of the Notes, the Company and the Guarantor will not file any amendment of the Registration Statement or supplement to the Prospectus (except for a supplement relating to an offering of securities other than the Notes and related Guarantees) unless the Company or the Guarantor has furnished to such Agent a copy for its review prior to filing and will not file any such proposed amendment or supplement to which such Agent may reasonably object. Subject to the foregoing sentence, the Company and the Guarantor will cause each supplement to the Prospectus to be filed (or mailed for filing) with the Commission as required pursuant to Rule 424. The Company and the Guarantor will promptly advise such Agent (i) when each supplement to the Prospectus shall have been filed (or mailed for filing) with the Commission pursuant to Rule 424, (ii) when any amendment of the Registration Statement shall have become effective, (iii) of any request by the Commission for any amendment of the Registration Statement or amendment of or supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (v) of the receipt by the Company or the Guarantor of any notification with respect to the suspension of the qualification of the Notes and related Guarantees for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company and the Guarantor will use their best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (b) If, at any time when a prospectus relating to the Notes and related Guarantees is required to be delivered under the Act, any event occurs as a result of which the Registration Statement, as then amended, or the Prospectus, as then supplemented, would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, any facts or events arise which, individually or in the aggregate, would represent a fundamental change in the information set forth in the Registration Statement or the Prospectus, or if it shall be necessary to amend the Registration Statement or to supplement the Prospectus to 10 comply with the Act or the Exchange Act or the respective rules and regulations thereunder, the Company and the Guarantor promptly will (i) notify such Agent to suspend the solicitation of offers to purchase Notes (and, if so notified, such Agent shall forthwith suspend such solicitation and cease using the Prospectus as then amended or supplemented), (ii) prepare and file with the Commission, subject to the first sentence of paragraph (a) of this Section 4, an amendment or supplement which will correct such statement or omission or an amendment or supplement which will effect such compliance and (iii) will supply any such amended or supplemented Prospectus to such Agent in such quantities as such Agent may reasonably request. If such amendment or supplement, and any documents, certificates and opinions furnished to such Agent pursuant to paragraph (f) of this Section 4 in connection with the preparation or filing of such amendment or supplement are reasonably satisfactory in all respects to such Agent, such Agent will, upon the filing of such amendment or supplement with the Commission and upon the effectiveness of an amendment to the Registration Statement if such an amendment is required, resume such Agent's obligation to solicit offers to purchase Notes hereunder. (c) As soon as practicable, the Guarantor will make generally available to the security holders of the Guarantor and to such Agent an earnings statement which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (d) The Company and the Guarantor will furnish to such Agent and to its counsel, without charge, copies of the Registration Statement (including exhibits thereto) and each amendment thereto which shall become effective and, so long as delivery of a prospectus may be required by the Act, as many copies of any preliminary prospectus and the Prospectus and any amendments thereof and supplements thereto as such Agent may reasonably request. (e) The Company and the Guarantor will arrange for the qualification of the Notes and related Guarantees for sale under the laws of such jurisdictions as such Agent may designate, will maintain such qualifications in effect so long as required for the distribution of the Notes and related Guarantees, and will arrange for the determination of the legality of the Notes and related Guarantees for purchase by institutional investors. (f) The Company and the Guarantor shall furnish to such Agent and counsel for such Agent, such documents, certificates of officers and opinions of counsel relating to their respective businesses, operations and affairs, the 11 Registration Statement, any preliminary prospectus, the Prospectus, and any amendments or supplements thereto, the Indenture, the Notes, the Guarantees, this Agreement, the Procedures and the performance by the Company and the Guarantor of their respective obligations hereunder and thereunder as such Agent may from time to time and at any time prior to the termination of this Agreement reasonably request. (g) The Company and the Guarantor shall, whether or not any sale of the Notes is consummated, (i) pay all expenses incident to the performance of their obligations under this Agreement, including the fees and disbursements of its accountants and counsel, the cost of printing (or otherwise producing) and delivery of the Registration Statement, the Prospectus, all amendments thereof and supplements thereto, the Indenture, this Agreement and all other documents relating to the offering, the cost of preparing, printing, packaging and delivering the Notes and related Guarantees, the fees and disbursements, including fees of counsel, incurred in connection with the qualification of the Notes and related Guarantees for sale and determination of eligibility for investment of the Notes and related Guarantees under the securities or blue sky laws of each such jurisdiction as such Agent may reasonably designate, the fees and disbursements of the Trustee, the Calculation Agent (as such term is used in the Prospectus, as supplemented, relating to the Notes and related Guarantees) and the fees of any agency that rates the Notes, and (ii) reimburse such Agent on a monthly basis for all out-of-pocket expenses (including without limitation advertising expenses) incurred by such Agent and approved by the Company or the Guarantor in advance, in connection with the offering and the sale of the Notes and related Guarantees, and (iii) be responsible for the reasonable fees and disbursements of such Agent's counsel incurred heretofore or hereafter in connection with the offering and sale of the Notes and related Guarantees. (h) Each acceptance by the Company of an offer to purchase Notes will be deemed to be a reconfirmation to you of the representations and warranties of the Company and the Guarantor in Section 1(b). (i) Each time that the Registration Statement or the Prospectus is amended or supplemented (other than by an amendment or supplement (i) relating to an offering of securities other than the Notes and related Guarantees or (ii) providing solely for the specification of the terms of the Notes (excluding (a) any change in the formula by which interest rates on the Notes may be determined and (b) any information relating to Specified Currencies other than U.S. 12 dollars)) or there is filed with the Commission any document incorporated by reference into the Prospectus, the Company and the Guarantor will each deliver or cause to be delivered forthwith to such Agent a certificate of its President, Managing Director or any Vice President and its principal financial or accounting officer or the Treasurer, dated the date of the effectiveness of such amendment or the date of filing of such supplement, in form reasonably satisfactory to such Agent, to the effect that the statements contained in the certificate that was last furnished to such Agent pursuant to either Section 5(e) or this Section 4(i) are true and correct at the time of the effectiveness of such amendment or the filing of such supplement as though made at and as of such time (except that (i) the last day of the fiscal quarter for which financial statements of the Guarantor were last filed with the Commission shall be substituted for the corresponding date in such certificate and (ii) such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of the effectiveness of such amendment or the filing of such supplement) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in Section 5(e), but modified to relate to the last day of the fiscal quarter for which financial statements of the Guarantor were last filed with the Commission and to the Registration Statement and the Prospectus as amended and supplemented to the time of the effectiveness of such amendment or the filing of such supplement. (j) Each time that the Registration Statement or the Prospectus is amended or supplemented (other than by an amendment or supplement (i) relating to an offering of securities other than the Notes and related Guarantees, (ii) providing solely for the specification of the terms of the Notes (excluding (a) any change in the formula by which interest rates on the Notes may be determined and (b) any information relating to Specified Currencies other than U.S. dollars) or (iii) setting forth or incorporating by reference financial statements or other financial information as of and for a fiscal quarter, unless, in the case of clause (iii) above, in such Agent's reasonable judgment, such financial statements or other financial information are of such a nature that an opinion of counsel should be furnished) or there is filed with the Commission any document incorporated by reference into the Prospectus, the Company and the Guarantor shall furnish or cause to be furnished forthwith to such Agent the written opinion of the General Counsel of the Company and the Guarantor, or such other counsel satisfactory to such Agent, dated the date of the effectiveness of such amendment or the date of filing of such supplement, in form satisfactory to such Agent, cover- 13 ing all of the matters referred to in the opinions set forth in Sections 5(b) and 5(c) but modified to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of the effectiveness of such amendment or the filing of such supplement or, in lieu of such opinion, counsel last furnishing such an opinion to such Agent may furnish a letter to the effect that such Agent may rely on such last opinion to the same extent as though it were dated the date of such letter authorizing reliance (except that statements in such last opinion will be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of the effectiveness of such amendment or the filing of such supplement); provided, however, that, upon a reasonable -------- ------- request from such Agent, the Company and the Guarantor shall cause to be furnished forthwith to such Agent the written opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company and the Guarantor, dated the date of the effectiveness of such amendment or the date of filing of such supplement, in form satisfactory to such Agent, of the same tenor as the opinions referred to in Section 5(b) but modified to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of the effectiveness of such amendment or the filing of such supplement. (k) Each time that the Registration Statement or the Prospectus is amended or supplemented to set forth amended or supplemental financial information or such amended or supplemental information is incorporated by reference in the Registration Statement or the Prospectus, the Company and the Guarantor shall cause Grant Thornton LLP, their independent public accountants, forthwith to furnish to such Agent a letter, dated the date of the effectiveness of such amendment or the date of filing of such supplement, in form satisfactory to such Agent, of the same tenor as the letter referred to in Section 5(f) with such changes as may be necessary to reflect the amended and supplemental financial information included or incorporated by reference in the Registration Statement and the Prospectus, as amended or supplemented to the date of such letter, provided that if the -------- Registration Statement or the Prospectus is amended or supplemented solely to include or incorporate by reference financial information as of and for a fiscal quarter, Grant Thornton LLP may limit the scope of such letter, which shall be satisfactory in form to such Agent, to the unaudited financial statements included in such amendment or supplement, unless any other information included or incorporated by reference therein of an accounting, financial or statistical nature is of such a nature that, in such Agent's reasonable judgment, such letter should cover such other information. 14 (l) During the period, if any, specified in any Terms Agreement, the Company and the Guarantor shall not, without the prior consent of the Purchaser, issue or announce the proposed issuance of any debt securities of the Company or the Guarantor in a public offering or register any debt securities of the Company or the Guarantor under the Act in connection with any secondary distribution of such debt securities. 5. Conditions to the Obligations of the Agents. The obligations of any ------------------------------------------- Agent to solicit offers to purchase the Notes shall be subject to the accuracy of the representations and warranties on the part of the Company and the Guarantor contained herein as of the date hereof, as of the date of the effectiveness of any amendment to the Registration Statement (including the filing of any document incorporated by reference therein), as of the date any supplement to the Prospectus is filed with the Commission and as of each Settlement Date, to the accuracy of the statements of the Company and the Guarantor made in any certificates pursuant to the provisions hereof, to the performance by the Company and the Guarantor of their respective obligations hereunder and to the following additional conditions: (a) No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued, and no proceedings for that purpose shall have been instituted or threatened. (b) The Company and the Guarantor shall have furnished to the Agents the opinion or opinions of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company and the Guarantor, dated the date hereof, substantially as set forth below, with such additional qualifications and exceptions as shall be acceptable to the Agents and their counsel: (i) Each of the Company and the Guarantor is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation and has the corporate power and authority to own its properties and to conduct its business as described in the Prospectus. (ii) The Company and the Guarantor have the corporate power and authority to enter into this Agreement and the Terms Agreement (if applicable), and this Agreement and the Terms Agreement (if applicable) have been duly and validly authorized, executed and delivered by the Company and the Guarantor, respectively. (iii) The form and general terms of the Notes have been duly and validly authorized and established in conformity with the provisions of the Indenture by 15 all necessary corporate action by the Company, and when the particular terms of the Notes have been duly established in accordance with the provisions of the Indenture, the Procedures and the resolutions of the Board of Directors of the Company and such Notes have been duly executed, authenticated and delivered against payment therefor in accordance with the provisions of the Indenture, the Procedures and this Agreement, will constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and the terms of the Indenture, and the holders of the Notes will be entitled to the benefits of the Indenture; and the Indenture has been duly authorized, executed and delivered by each of the Company and Guarantor, has been qualified under the Trust Indenture Act, and constitutes a legal, valid and binding obligation enforceable against each of the Company and the Guarantor in accordance with its terms. (iv) The Guarantees, in the forms certified to by an authorized officer of the Guarantor, have been duly and validly authorized by all necessary corporate action by the Guarantor and, upon due issuance, authentication and delivery of the related Notes and due endorsement of the Guarantees, the Guarantees will have been duly executed, issued and delivered and will constitute the legal, valid and binding obligations of the Guarantor enforceable against the Guarantor in accordance with their terms and the terms of the Indenture, and the holders of the Notes upon which the Guarantees are endorsed will be entitled to the benefits of the Indenture. (v) The Registration Statement has become effective under the Act; any required filing of the Prospectus, and any supplements thereto, pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b); to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued, no proceedings for that purpose have been instituted or threatened and the Registration Statement and the Prospectus (other than (i) the financial statements and other financial and statistical information contained therein and (ii) the Statements of Eligibility on Form T-1 filed as exhibits thereto, as to which such counsel need express no opinion), as of their respective effective or issue dates, as the case may be, appear on their face to be responsive as to form in all material respects with the applicable requirements of the Act and the Rules and Regulations 16 and the Trust Indenture Act and the rules and regulations of the Commission thereunder. (vi) No consent, approval, authorization or order of any United States federal or New York, California or (with respect to matters arising under the Delaware General Corporation Law) Delaware court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement or the Indenture, except such as have been obtained under the Act and such as may be required under the securities and blue sky laws, rules or regulations of any jurisdiction in connection with the purchase and distribution of the Notes and related Guarantees by the Agents and such other approvals as have been obtained. (vii) Neither the issue and sale of the Notes (in the forms certified to by an authorized officer of the Company), the compliance by the Company and the Guarantor with all the provisions of this Agreement, the Indenture, the Notes or the Guarantees (in the form certified to by an authorized officer of the Guarantor), the consummation of the transactions herein or therein contemplated nor the fulfillment of the terms hereof or thereof will conflict with, result in a breach of, or constitute a default under the charter or bylaws of the Company or the Guarantor or the terms of any indenture or other agreement or instrument filed with the Commission and to which the Company or the Guarantor or any of the Guarantor's subsidiaries is a party or bound, or any order, decree, judgment or regulation (other than any federal or state securities or blue sky laws, rules or regulations) known to such counsel to be applicable to the Company or the Guarantor or any of the Guarantor's subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or the Guarantor or any of the Guarantor's subsidiaries. (viii) To the best knowledge of such counsel, no holders of securities of the Company or the Guarantor have rights to the registration of such securities under the Registration Statement. (ix) Such counsel confirms (i) that the statements in the Prospectus under the caption "Certain Federal Income Tax Considerations", insofar as such statements constitute a summary of the legal matters referred to therein, fairly present the information disclosed therein in all material respects, (ii) the conformity in all material respects of the Notes (in 17 the forms certified to by an authorized officer of the Company) to the statements relating thereto in the Prospectus, and (iii) the conformity in all material respects of the Indenture and the Guarantees to the statements relating thereto in the Prospectus under the captions "Description of Notes" and "Description of Debt Securities and Guarantees". Such counsel shall also state that, in the course of their engagement to represent or advise the Company and the Guarantor professionally, they have not become aware of any pending legal proceeding before any court or administrative agency or authority or any arbitration tribunal, nor have they devoted substantive attention in the form of legal representation as to any current overtly threatened litigation against or directly affecting the Company or its subsidiaries or the Guarantor or its subsidiaries, in each case that is required to be described in the Registration Statement or the Prospectus and is not so described. In making the foregoing statement, they shall endeavor, to the extent they believe necessary, to determine from lawyers currently in their firm who have performed substantive legal services for the Company or the Guarantor, whether such services involved substantive attention in the form of legal representation concerning pending legal proceedings or overtly threatened litigation of the nature referred to above. Beyond that, they need not make any review, search or investigation of public files or records or files or records of the Company or the Guarantor, or of their respective transactions, or any other investigation or inquiry with respect to the foregoing statement. Such counsel shall also state that in the course of the preparation by the Company, the Guarantor and their counsel of the Registration Statement and Prospectus (other than the Incorporated Documents (as defined below)), such counsel attended conferences with certain of the officers of, and the independent public accountants for, the Company and the Guarantor, at which the Registration Statement and Prospectus were discussed. Given the limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process, such counsel need not pass upon and need not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and Prospectus including the Incorporated Documents, except as specifically described in the opinion set forth in paragraph (ix) above. Subject to the foregoing and on the basis of the information such counsel gained in the performance of the services referred to above, including information obtained from officers and other representatives of the Company and Guarantor, such counsel shall state that no facts have come to such counsel's attention that have caused it to believe that the Registration Statement, at the time it became effective or at the time an Annual Report on Form 10-K was filed (whichever is 18 later), contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at its date or at the date hereof, included or includes, as the case may be, any untrue statement of material fact or omitted or omits, as the case may be, to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that such counsel need not express a view or belief with respect to (i) the financial statements, the related notes and schedules thereto or other financial and statistical data included or incorporated by reference in the Registration Statement and Prospectus or (ii) any part of the Registration Statement which shall constitute a Statement of Eligibility on Form T-1 under the Trust Indenture Act. References to the Prospectus in this Section 5(b) include any amendments or supplements thereto at the date hereof. In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the State of California, the State of New York, the State of Delaware (but only with respect to the Delaware General Corporation Law) or the United States, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Agents and (B) as to matters of fact, to the extent they deem proper, on certificates and oral or written statements and other information of or from public officials and officers and representatives of the Company, the Guarantor, their respective subsidiaries and others. In rendering the opinions set forth in paragraphs (iii) and (iv), such counsel may state that such opinions are subject to the following: (i) bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent conveyance, moratorium or other laws now or hereafter in effect affecting creditors' rights generally; and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness) whether such principles are considered in a proceeding in equity or at law. In rendering the opinions set forth above, such counsel need not express an opinion as to the legality, validity, binding effect or enforceability of any provision of the Notes, the Indenture or the Guarantees providing for payments thereunder in a currency other than currency of the United States of America to the extent that a court of competent jurisdiction will under applicable law convert any judgment rendered in such other currency into currency of the United States of America or to the extent that payment in a currency other than currency of the United States of America is contrary to applicable law. 19 In rendering the opinions set forth above, such counsel may state that it has assumed, with the permission of the Agents, that the amount of Notes to be issued from time to time will not violate any provision in any such agreement referred to in paragraph (vii) which imposes limits on the amount of debt of the Company, the Guarantor or any of the Guarantor's subsidiaries which may be outstanding at any one time (whether directly or indirectly, through satisfaction of financial ratios or otherwise). (c) The Company and the Guarantor shall have furnished to the Agents the opinion or opinions of Sandor E. Samuels, General Counsel of the Company and the Guarantor, dated the date hereof, substantially as set forth below, with such additional qualifications and exceptions as shall be acceptable to the Agents and their counsel: (i) Each Subsidiary, if any, is a corporation, duly incorporated, validly existing and in good standing under the laws of the state of its incorporation, with the corporate power and authority to own its properties and to conduct its business as described in the Prospectus. (ii) Each of the Company, the Guarantor and the Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business other than jurisdictions in which the failure to so qualify, when considered in the aggregate and not individually, would not have a material adverse effect on the Company or the Guarantor and its Subsidiaries considered as one enterprise. (iii) All the outstanding shares of capital stock of the Company and each Subsidiary have been duly and validly authorized and issued and are fully paid and nonassessable, and, except as otherwise set forth in the Prospectus, all outstanding shares of capital stock of the Company and the Subsidiaries are owned by the Guarantor either directly or through wholly owned subsidiaries free and clear of any perfected security interest and, to the knowledge of such counsel, after due inquiry, any other security interests, claims, liens or encumbrances. (iv) The outstanding shares of common stock of the Guarantor have been duly and validly authorized and issued and are fully paid and nonassessable. 20 (v) Neither the issue and sale of the Notes, the compliance by the Company and the Guarantor with all the provisions of this Agreement, the Indenture, the Notes or the Guarantees, the consummation of any other of the transactions herein or therein contemplated nor the fulfillment of the terms hereof or thereof will conflict with, result in a breach of, or constitute a default under the charter or by-laws of the Company or the Guarantor or, to the knowledge of such counsel, the terms of any indenture or other agreement or instrument to which the Company or the Guarantor or any of the Guarantor's subsidiaries is a party or bound, or any order, decree, law, judgment, rule or regulation known to such counsel to be applicable to the Company or the Guarantor or any of the Guarantor's subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or the Guarantor or any of the Guarantor's subsidiaries. (vi) The documents (the "Incorporated Documents") incorporated by reference in the Registration Statement and Prospectus (except for the financial statements and other financial or statistical data, as to which no opinion need be expressed), as of the dates they were filed with the Commission, complied as to form in all material respects to the requirements of the Act and the Rules and Regulations and the Exchange Act and the rules and regulations of the Commission thereunder. (vii) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement or the Indenture, except such as have been obtained under the Act and such as may be required under the securities and blue sky laws, rules and regulations of any jurisdiction in connection with the purchase and distribution of the Notes and related Guarantees by the Agents and such other approvals as have been obtained. In rendering the opinions set forth above, such counsel may state that it has assumed, with the permission of the Agents, that the amount of Notes to be issued from time to time will not violate any provision in any such agreement referred to in paragraph (v) which imposes limits on the amount of debt of the Company, the Guarantor or any of the Guarantor's subsidiaries which may be outstanding at any one time (whether directly or indirectly, through satisfaction of financial ratios or otherwise). 21 (d) Such Agent shall have received from Brown & Wood, counsel for the Agents, such opinion or opinions, dated the date hereof, with respect to the issuance and sale of the Notes and related Guarantees, this Agreement, the Indenture, the Registration Statement, the Prospectus and other related matters as such Agent may reasonably require, and the Company and the Guarantor shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (e) The Company and the Guarantor shall have each furnished to such Agent a certificate of its President, a Managing Director or a Vice President and its Treasurer or an Assistant Treasurer, dated the date hereof, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Prospectus and this Agreement and that: (i) the representations and warranties of the Company or the Guarantor, as the case may be, in this Agreement are true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, and the Company or the Guarantor, as the case may be, has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied as a condition to the obligation of such Agent to solicit offers to purchase the Notes; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the knowledge of the Company or the Guarantor, as the case may be, threatened; and (iii) since the date of the most recent financial statements included or incorporated in the Prospectus, there has been no material adverse change in the condition (financial or otherwise), earnings, business or properties of the Company or the Guarantor and its subsidiaries considered as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus. (f) On the date hereof, Grant Thornton LLP shall have furnished to such Agent a letter or letters (which may refer to letters previously delivered to such Agent), dated as of the date hereof, in form and substance satisfactory to such Agent, confirming that they are independent accountants within the meaning of the Act and the Exchange Act and the 22 respective applicable published rules and regulations thereunder and stating in effect that: (i) in their opinion the audited consolidated financial statements and financial statement schedules included or incorporated in the Registration Statement and the Prospectus and reported on by them comply as to form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations; (ii) on the basis of a reading of the latest unaudited consolidated financial statements made available to them; carrying out certain specified procedures (which shall include, without limitation, the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS No. 71, Interim Financial Information, with respect to such unaudited consolidated financial statements included or incorporated by reference in the Registration Statement or the Prospectus); a reading of the minutes of the meetings of the stockholders, directors and standing committees thereof; and inquiries of certain officials who have responsibility for financial and accounting matters as to transactions and events subsequent to the date of the most recent audited financial statements included or incorporated in the Prospectus, nothing came to their attention which caused them to believe that: (1) any unaudited financial statements included or incorporated in the Registration Statement and the Prospectus do not comply as to form in all material respects with applicable accounting requirements of the Exchange Act as they apply to quarterly reports on Form 10-Q or that any material modifications should be made to said unaudited financial statements for them to be in conformity with generally accepted accounting principles; (2) with respect to the period subsequent to the date of the most recent financial statements (other than any capsule information), audited or unaudited, in or incorporated in the Registration Statement and the Prospectus, there was any change, at a specified date not more than three business days prior to the date of the letter, in the capital stock or long and intermediate term debt of the Company or the Guarantor and its subsidiaries taken as a whole or any decreases in 23 the shareholders' equity or consolidated net assets as compared with the amounts shown on the most recent consolidated balance sheet included or incorporated in the Registration Statement and the Prospectus, or for the period from the date of the most recent financial statements included or incorporated in the Registration Statement and the Prospectus to such specified date there were any decreases, as compared with the corresponding period in the preceding year in consolidated revenues (net of interest charges), earnings before income taxes or net earnings of the Company or the Guarantor and its subsidiaries, except in all instances for changes or decreases set forth in such letter; or (3) the amounts included in any unaudited "capsule" information included or incorporated in the Registration Statement and the Prospectus do not agree with the amounts set forth in the unaudited financial statements for the same periods or were not determined on a basis substantially consistent with that of the corresponding amounts in the audited financial statements included or incorporated in the Registration Statement and the Prospectus; (iii) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature set forth in the Registration Statement and the Prospectus and in Exhibit 12 to the Registration Statement, the information included or incorporated in Items 1, 2, 6, 7 and 11 of the Guarantor's Annual Report on Form 10-K (and, if filed, the Company's Annual Report on Form 10-K), incorporated in the Registration Statement and the Prospectus and the information included in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included or incorporated in the Company's or the Guarantor's Quarterly Reports on Form 10-Q incorporated in the Registration Statement and the Prospectus, agrees with the accounting records of the Company, the Guarantor and their respective subsidiaries, excluding any questions of legal interpretation; and (iv) if pro forma financial statements are included or incorporated in the Registration Statement and the Prospectus, on the basis of a reading of the unaudited pro forma financial statements, carrying out certain specified procedures, inquiries of certain 24 officials of the Company or the Guarantor, as the case may be, who have responsibility for financial and accounting matters, and proving the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the pro forma financial statements, nothing came to their attention which caused them to believe that the pro forma financial statements do not comply in form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X or that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of such statements. References to the Registration Statement and the Prospectus in this paragraph (f) are to such documents as amended and supplemented at the date of the letter. (g) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus (as amended or supplemented, in the case of a Terms Agreement) there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (f) of this Section 5 or (ii) any change, or any development involving a prospective change, in or affecting the business or properties of the Company, the Guarantor and their respective subsidiaries the effect of which, in any case referred to in clause (i) or (ii) above, is, in the judgment of such Agent, so material and adverse as to make it impractical or inadvisable to proceed with the soliciting of offers to purchase the Notes as contemplated by the Registration Statement and the Prospectus (or, in the case of a Terms Agreement, to proceed with the offering or the delivery of the Notes to be purchased as contemplated by the Terms Agreement). (h) Prior to the date hereof, the Company and the Guarantor shall have furnished to such Agent such further information, certificates and documents as such Agent may reasonably request. (i) Prior to the date hereof, the Notes shall have been rated, and on the date hereof the Notes shall be rated, at least BBB by Standard & Poor's Ratings Group ("S&P") and Baa3 by Moody's Investors Service, Inc. ("Moody's"). If any of the conditions specified in this Section 5 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and 25 substance to such Agent and its counsel, this Agreement and all obligations of such Agent hereunder may be canceled at any time by such Agent. Notice of such cancellation shall be given to the Company and the Guarantor in writing or by telephone or telegraph confirmed in writing. The documents required to be delivered by this Section 5 shall be delivered to the office of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004, or such other location as shall be mutually agreed upon, on the date hereof. 6. Conditions to the Obligations of a Purchaser. The obligations of a -------------------------------------------- Purchaser to purchase Notes pursuant to any Terms Agreement will be subject to the accuracy of the representations and warranties on the part of the Company and the Guarantor herein as of the date of the respective Terms Agreement and as of the Purchase Date thereunder, to the performance and observance by the Company and the Guarantor of all covenants and agreements herein contained on its part to be performed and observed and to the following additional conditions precedent: (a) No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) Except to the extent modified by the respective Terms Agreement, the Purchaser shall have received, appropriately updated in a manner consistent with Section 5 hereof, (i) certificates of the Company and the Guarantor, dated as of the Purchase Date, to the effect set forth in Section 5(e), (ii) the opinion or opinions of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company and the Guarantor, dated as of the Purchase Date, to the effect set forth in Section 5(b), (iii) the opinion or opinions of Sandor E. Samuels, General Counsel to the Company and the Guarantor, dated as of the Purchase Date, to the effect set forth in Section 5(c), (iv) the opinion or opinions of Brown & Wood, counsel for the Purchaser, dated as of the Purchase Date, to the effect set forth in Section 5(d) and (v) letter of Grant Thornton LLP, dated as of the Purchase Date, to the effect set forth in Section 5(f). (c) The conditions set forth in Section 5(g) shall have been satisfied. (d) Prior to the Purchase Date, the Company and the Guarantor shall have furnished to the Purchaser such further information, certificates and documents as the Purchaser may reasonably request. 26 (e) Prior to and at the Purchase Date, the Notes shall have been rated at least BBB- by S&P and Baa3 by Moody's. (f) Subsequent to the execution of any Terms Agreement and prior to the Purchase Date pursuant to such Terms Agreement, the rating assigned by S&P or Moody's to any debt securities of the Company or the Guarantor has not been lowered and neither S&P nor Moody's has publicly announced that it has under surveillance or review, with possible negative implications, its rating of any debt securities of the Company or the Guarantor. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Purchaser and its counsel, this Agreement and all obligations of the Purchaser hereunder may be canceled at, or at any time prior to, the respective Purchase Date by the Purchaser. Notice of such cancellation shall be given to the Company or the Guarantor in writing or by telephone or telegraph confirmed in writing. 7. Reimbursement of the Agent's Expenses. If any condition to the ------------------------------------- obligations or any Agent set forth in Section 5 hereof is not satisfied, if any condition to the obligations of a Purchaser set forth in Section 6 hereof is not satisfied, if any termination pursuant to Section 9 hereof shall occur or in the case of any refusal, inability or failure on the part of the Company or the Guarantor to perform any agreement herein or comply with any provision hereof other than by reason of a default by an Agent, the Company and the Guarantor will reimburse such Agent upon demand for all expenses that shall have been incurred by such Agent pursuant to Section 4(g) hereof in connection with this Agreement. 8. Indemnification and Contribution. (a) The Company and the Guarantor, -------------------------------- jointly and severally, agree to indemnify and hold harmless each Agent and each person who controls such Agent within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which such Agent or any of them may become subject under the Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Notes as originally filed or in any amendment thereof, or in the Prospectus or any preliminary Prospectus, or in any amendment 27 thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, -------- ------- that (i) the Company and the Guarantor will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company or the Guarantor by or on behalf of such Agent specifically for use in connection with the preparation thereof, and (ii) such indemnity with respect to any preliminary Prospectus or any Prospectus as supplemented or amended shall not inure to the benefit of any Agent (or any person controlling such Agent) from whom the person asserting any such loss, claim, damage or liability purchased the Notes which are the subject thereof if such Agent (or any person controlling such Agent) received a copy of such Prospectus (or such Prospectus as so amended or supplemented) and such person did not receive a copy of the Prospectus (or the Prospectus as amended or supplemented) excluding documents incorporated therein by reference at or prior to the confirmation of the sale of such Notes to such person in any case where such delivery is required by the Act and the untrue statement or omission or the alleged untrue statement or omission was corrected in the Prospectus (or the Prospectus as amended or supplemented). This indemnity agreement will be in addition to any liability which the Company or the Guarantor may otherwise have. (b) Each Agent agrees to indemnify and hold harmless the Company and the Guarantor, their respective directors, each of their officers who sign the Registration Statement, and each person who controls the Company or the Guarantor within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company and the Guarantor to such Agent, but only with reference to written information relating to such Agent furnished to the Company or the Guarantor by or on behalf of such Agent specifically for use in the preparation of the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which such Agent may otherwise have. The Company and the Guarantor acknowledge that the statements set forth in the last paragraph of the cover page and under the heading "Plan of Distribution of Notes" in any preliminary Prospectus and the Prospectus constitute the only information furnished in writing by or on behalf of such Agent for inclusion in the documents referred to in the foregoing indemnity, and you confirm that such statements are correct. 28 (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 8. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, -------- however, that if the defendants in any such action include both the indemnified - ------- party and the indemnifying party, and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Agents in the case of paragraph (a) of this Section 8, representing the indemnified parties under such paragraph (a) who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contri- 29 bute to the amount paid or payable to such indemnified party as a result of such losses, claims, damages, or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor on the one hand and each Agent on the other from the offering of the Notes to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Guarantor on the one hand and each Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantor on the one hand and each Agent on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company bear to the total commissions received by each Agent. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Guarantor on the one hand or any Agent on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantor and each Agent agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Agents were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Agent shall be required to contribute any amount in excess of the amount by which the total price at which Notes sold by it exceeds the amount of any damages which such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Agents in this subsection (d) to contribute are several in proportion to their respective 30 underwriting obligations with respect to such Notes and not joint. 9. Termination. This Agreement will continue in effect until terminated ----------- as provided in this Section 9. (a) This Agreement may be terminated by either the Company or any Agent giving written notice of such termination to the other party hereto. This Agreement shall so terminate at the close of business on the first business day following the receipt of such notice by the party to whom such notice is given. This Agreement may be terminated as to one or more of the Agents, and to the extent not terminated with respect to any Agent, this Agreement shall remain in full force and effect as between the Company and any such Agent. In the event of such termination, no party shall have any liability to the other party hereto, except as provided in the fourth paragraph of Section 2(a), Section 4(g), Section 7, Section 8 and Section 10. (b) Each Terms Agreement shall be subject to termination in the absolute discretion of the Purchaser, by notice given to the Company and the Guarantor prior to delivery of and payment for Notes to be purchased thereunder, if prior to such time (i) trading in securities generally, or in the securities of the Guarantor, on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such exchange, (ii) a banking moratorium shall have been declared by either federal or New York State authorities or, in the case of Notes denominated in other than U.S. dollars, by the authorities of the country of the currency in which such Notes are so denominated or (iii) there shall have occurred any outbreak or material escalation of hostilities or other calamity or crisis the effect of which on the financial markets of the United States or in the country or countries of origin of any foreign currency or currency unit in which the Notes are denominated, indexed or payable is such as to make it, in the judgment of the Purchaser, impracticable to market such Notes. 10. Representations and Indemnities to Survive. The respective ------------------------------------------ agreements, representations, warranties, indemnities and other statements of the Company, the Guarantor or any of their officers and of each Agent set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of such Agent or the Company, the Guarantor or any of their officers, directors or controlling persons referred to in Section 8 hereof, and will survive delivery of and payment for the Notes. The provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this Agreement. 31 11. Right of Person Who Agreed to Purchase to Refuse to Purchase. The ------------------------------------------------------------ Company and the Guarantor agree that any person who has agreed to purchase and pay for any Note, including a Purchaser and any person who purchases pursuant to a solicitation by any of the Agents, shall have the right to refuse to purchase such Note if, at the Settlement Date therefor, either (a) any condition set forth in Section 5 or 6, as applicable, shall not be satisfied or (b) subsequent to the agreement to purchase such Note, any change, or any development involving a prospective change, in or affecting the business or properties of the Company or the Guarantor and its subsidiaries shall have occurred the effect of which is, in the reasonable judgment of the Purchaser or the Agent which presented the offer to purchase such Note, as applicable, so material and adverse as to make it impractical or inadvisable to proceed with the delivery of such Note. 12. Notices. All communications hereunder will be in writing and ------- effective only on receipt, and, if sent to an Agent, will be mailed, delivered or telegraphed and confirmed to such Agent, at the address specified in Schedule 1 hereto; or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at 155 North Lake Avenue, Pasadena, California 91101, Attention: Chairman of the Board of Directors. 13. Successors. This Agreement will inure to the benefit of and be ---------- binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8 hereof, and no other person will have any right or obligation hereunder. 14. Applicable Law. This Agreement will be governed by and construed in -------------- accordance with the laws of the State of New York applicable to agreements made and to be performed in said State. 32 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and the acceptance by each of you shall represent a binding agreement among the Company, the Guarantor and each of you. Very truly yours, COUNTRYWIDE HOME LOANS, INC. By: __________________________________ Name: Title: COUNTRYWIDE CREDIT INDUSTRIES, INC. By: __________________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date hereof. LEHMAN BROTHERS INC. By:______________________________ Title: _________________________________ Goldman, Sachs & Co. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By:______________________________ Title: J.P. MORGAN SECURITIES INC. By:______________________________ Title: 33 NATIONSBANC CAPITAL MARKETS, INC. By:______________________________ Title: SALOMON BROTHERS INC By:______________________________ Title: 34 SCHEDULE 1 Selling Agency Agreement dated May ___, 1996 Unless otherwise agreed between the Company and such Agent, the Company agrees to pay any Agent a commission equal to the following percentage of the principal amount of each Note sold by such Agent: Term Commission Rate(a) ---- ------------------ From 9 months to less than 1 year............. 0.125% From 1 year to less than 18 months............ 0.150% From 18 months to less than 2 years........... 0.200% From 2 years to less than 3 years............. 0.250% From 3 years to less than 4 years............. 0.350% From 4 years to less than 5 years............. 0.450% From 5 years to less than 6 years............. 0.500% From 6 years to less than 7 years............. 0.550% From 7 years to less than 10 years............ 0.600% From 10 years to less than 15 years........... 0.625% From 15 years to less than 20 years........... 0.650% From 20 years up to and including 30 years(b). 0.750% _____________ (a) With respect to each Note that is an Original Issue Discount Note (as defined in the Indenture), the commission payable to each Agent with respect to each such Note sold as a result of a solicitation made by such Agent shall be based on the purchase price of such Note, rather than on the principal amount of such Note. (b) Commissions for Notes with terms in excess of 30 years will be agreed upon by the Company and the related Agent at the time of sale. Addresses for Notices to Agents: Notices to Lehman Brothers Inc. shall be directed to it at 3 World Financial Center, 12th Floor, New York, New York 10285-1200, Attention: Medium- Term Note Department. Notices to Goldman, Sachs & Co. shall be directed to it at 85 Broad Street, New York, New York 10004, Attention: Patti O'Connell. Notices to Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be directed to it at World Financial Center, North Tower - 10th Floor, New York, New York 10281-1310, Attention: MTN Product Management. Notices to J.P. Morgan Securities Inc. shall be directed to it at 60 Wall Street, 3rd Floor, New York, New York 10260, Attention: Medium-Term Note Trading Desk. Notices to NationsBanc Capital Markets, Inc. shall be directed to it at 100 North Tyron Street, Charlotte, NC 28255, NC1-007-07-01, Attention: Product Management. Notices to Salomon Brothers Inc shall be directed to it at Seven World Trade Center, New York, New York 10048, Attention: Medium-Term Note Department. EXHIBIT A COUNTRYWIDE HOME LOANS, INC. MEDIUM-TERM NOTE ADMINISTRATIVE PROCEDURES May __, 1996 Medium-Term Notes, Series E, Due Nine Months or More From Date of Issue (the "Notes") are to be offered on a continuing basis by Countrywide Home Loans, Inc. (the "Company"). Lehman Brothers Inc., Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., NationsBanc Capital Markets, Inc. and Salomon Brothers Inc (each individually, an "Agent", and collectively, the "Agents"), have agreed to solicit purchases of the Notes. The Agents will not be obligated to purchase Notes as principal. The Notes are being sold pursuant to a Selling Agency Agreement among the Company, Countrywide Credit Industries, Inc. (the "Guarantor") and the Agents dated May __, 1996 (the "Agency Agreement"). The Notes will be unconditionally guaranteed as to payment of principal, premium, if any, and interest by the Guarantor (the "Guarantees"). The Notes will rank equally with all other unsecured and unsubordinated debt of the Company and have been registered with the Securities and Exchange Commission (the "Commission"). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Indenture referred to below. Each Note and related Guarantee will be issued under an Indenture dated as of January 1, 1992, as supplemented by Supplemental Indenture No. 1 thereto dated as of June 15, 1995 (collectively, the "Indenture"), among the Company, the Guarantor and The Bank of New York, as trustee (the "Trustee"). The Notes will bear interest at either fixed rates ("Fixed Rate Notes") or floating rates ("Floating Rate Notes"). Each Note will be represented by either a certificate delivered to the Holder thereof or a Person designated by such Holder (a "Certificated Note") or a Global Security (as defined hereinafter) delivered to the Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in the book-entry system maintained by DTC (a "Book-Entry Note"). An owner of a Book-Entry Note will not be entitled to receive a certificate representing such Note except in the limited circumstances described in the Prospectus (as defined in the Agency Agreement). The procedures to be followed during, and the specific terms of, the solicitation of offers by the Agents and the sale as a result thereof by the Company are explained below. Certificated Notes will be issued in accordance with the administrative A-1 procedures set forth in Part I hereof and Book-Entry Notes will be issued in accordance with the administrative procedures set forth in Part II hereof. The Company will advise each Agent and the Trustee in writing of those persons handling administrative responsibilities with whom the Agents and the Trustee are to communicate regarding offers to purchase Notes and the details of their delivery. Administrative procedures and specific terms of the offering are explained below. To the extent the procedures set forth below conflict with the provisions of the Notes, the Indenture or the Agency Agreement, the relevant provisions of the Notes, the Indenture and the Agency Agreement shall control. PART I: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES Maturities: Each Certificated Note will mature on a date (the - ---------- "Stated Maturity Date") nine months or more after the date of delivery by the Company of such Certificated Note (the "Settlement Date"), subject to any applicable provisions relating to redemption or repayment or the extension of maturity. Price to Public: Each Certificated Note will be issued at the percentage - --------------- of principal amount specified in the Prospectus. Currencies: The Certificated Notes will be denominated in U.S. - ---------- dollars or in such other currency or currency unit as is specified in the Prospectus (the "Specified Currency"). Denominations: Except as set forth in the Certificated Note, the - ------------- denomination of any Certificated Note will be a minimum of U.S.$1,000 or any amount in excess thereof which is an integral multiple of U.S.$1,000 or, if in a Specified Currency other than U.S. dollars, of U.S.$1,000 and any amount in excess thereof which is an integral multiple of U.S.$1,000 or the equivalent, in any case as determined pursuant to the provisions of the Indenture. Registration: Certificated Notes will be issued only in fully - ------------ registered form. A-2 Interest Payments: Except as set forth in the Certificated Note, each - ----------------- Certificated Note which is a Fixed Rate Note will bear interest from the Settlement Date of such Certificated Note at the annual rate stated on the face thereof, payable semiannually on January 15 and July 15 of each year (each, an "Interest Payment Date") and on the Stated Maturity Date or date of earlier redemption or repayment (such date is herein referred to as the "Maturity Date" with respect to the principal repayable on such date), and each Certificated Note which is a Floating Rate Note will bear interest as determined in the manner set forth on the face thereof, payable on the dates set forth on the face thereof. Unless otherwise specified on the face thereof, interest (including payments for partial periods) on Fixed Rate Notes will be calculated on the basis of a 360-day year of twelve 30-day months. Interest on Floating Rate Notes will be determined in the manner agreed upon by the Company and the purchaser thereof in accordance with the provisions of the Prospectus. Except as set forth in the Certificated Note, the "Record Date" with respect to any Interest Payment Date for Floating Rate Notes shall be the date 15 calendar days immediately preceding such Interest Payment Date, and for Fixed Rate Notes shall be the December 31 or June 30 next preceding such Interest Payment Date, whether or not such date shall be a Business Day, as defined in the Prospectus. The first payment of interest on any Certificated Note originally issued between a Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next Record Date to the Holder on such next succeeding Record Date. Notwithstanding the record date provisions above, interest payable on the Maturity Date will be payable to the person to whom principal shall be payable. Interest on the Certificated Notes will be paid in the Specified Currency by mailing a check (from an account at a bank located outside of the A-3 United States if such check is payable in a Specified Currency other than U.S. dollars) to the Holder at the address of such Holder appearing on the Security Register on the applicable Record Date; provided, -------- however, that a Holder of U.S.$10,000,000 (or the ------- equivalent thereof in a Specified Currency other than U.S. dollars) or more in aggregate principal amount of Notes (whether or not having identical terms and provisions) shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive U.S. dollar payments by wire transfer of immediately available funds to an account maintained by the payee with a bank located in the United States, but only if appropriate wire transfer instructions have been received in writing by the Trustee not later than the Record Date immediately preceding the applicable Interest Payment Date, and (ii) if the Specified Currency is other than U.S. dollars, to receive by wire transfer of immediately available funds to an account maintained by the payee with a bank located in a jurisdiction in which payment in such Specified Currency is then lawful. Within ten days following each Record Date, the Trustee will inform the Company of the total amount of the interest payments to be made by the Company on the next succeeding Interest Payment Date and the currencies or currency units in which such interest payments are to be made. The Trustee will provide monthly to the Company a list of the principal and interest to be paid on Certificated Notes maturing in the next succeeding month. Procedure for The Company and the Agents will discuss - ------------- from time to time the aggregate princi- Rate Setting pal amount of, the issuance price of, and the interest - ------------ rates to be borne by, Certificated Notes that may be and Posting: sold as a result of the solicitation or offers by the - ----------- Agents. If the Company decides to establish prices of (including the currency of issuance), and rates borne by, any Certificated Notes to be sold (the A-4 establishment of such prices and rates to be referred to herein as "posting") or if the Company decides to change prices or rates previously posted by it, it will promptly advise the Agents of the prices and rates to be posted. Acceptance Unless otherwise agreed between the Com- - ---------- pany and such Agent, any Agent which receives an offer of Offers: to purchase Certificated Notes will promptly advise the - --------- Company of each such offer other than offers rejected by such Agent as provided below. The Company will have the sole right to accept any such offer to purchase Certificated Notes. The Company may reject any such offer in whole or in part. Unless otherwise agreed between the Company and any Agent, each Agent may, in its discretion reasonably exercised, reject any offer to purchase Certificated Notes received by it in whole or in part. Preparation If any offer to purchase a Certificated - ----------- Note is accepted by or on behalf of the of Pricing Company, the Company and the Guarantor, with the - ---------- approval of the Agents, will prepare a Pricing Supplement: Supplement reflecting the terms of such Certificated - ---------- Note and will arrange to have requisite copies of such Pricing Supplement filed with the Commission, in each case no later than the second Business Day after the earlier of the determination of the offering price or the date it is first used and will supply at least ten copies thereof (or additional copies if requested) to the Agents and one copy to the Trustee no later than 11:00 A.M., New York City time, on the Business Day following the date of acceptance at the following applicable address (unless otherwise specified in the applicable trading confirmation): if to Lehman Brothers Inc., to Lehman Brothers Inc., Prospectus Department, 3 World Financial Center, 9th Floor, New York, New York 10285-0900, attention of Brunnie Vazquez, telephone no. (212)526-8400, A-5 telecopier no. (212) 528-7035; if to Goldman, Sachs & Co., to Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004, attention of Patti O'Connell; if to Merrill Lynch & Co., to Merrill Lynch & Co. - Tritech Services, 4 Corporate Place - Corporate Park 287, Piscataway, New Jersey 08854, attention of Final Prospectus Unit/Nachman Kimmerling, telephone no. (908) 878-6525/26/27, telecopier no. (908) 878-6530, with a copy to Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center, North Tower, 10th Floor, New York, New York 10281-1310, attention of MTN Product Management, telephone no. (212) 449-3780, telecopier no. (212) 449-2234; if to J.P. Morgan Securities Inc. to J.P. Morgan Securities Inc., 60 Wall Street, 3rd Floor, New York, New York 10260, attention of Dan Benton, telephone no. (212) 648-0591, telecopier no. (212) 648-5907; if to NationsBanc Capital Markets, Inc. to Bank of New York, One Wall Street, 3rd Floor, Dealers Clearance, Window B, A/C NationsBanc Capital Markets, Inc.; if to Salomon Brothers Inc, to Salomon Brothers Inc, 8800 Hidden River Parkway, Tampa, Florida 33637, attention of Enrique Castro, telephone no. (813) 558-7165, telecopier no. (813) 558-4123; and if to the Trustee, to The Bank of New York, 101 Barclay Street, New York, New York 10286, attention of Corporate Trust Office. Such Agent will cause a Pricing Supplement to be delivered to the purchaser of the Certificated Note. In all respects, the Company and the Guarantor will prepare and file each such Pricing Supplement in accordance with Rule 424 under the Act. In each instance that a Pricing Supplement is prepared, each Agent will affix the Pricing Supplement to Prospectuses prior to their use; provided, however, that pursuant to Rule 434 ("Rule 434") under the Securities Act of 1933, as amended, the Pricing Supplement may be delivered separately from the Prospectuses. Outdated Pricing A-6 Supplements, and the Prospectuses to which they are attached or relate (other than those retained for files), will be destroyed. Suspension of The Company reserves the right, in its - ------------- sole discretion, to instruct the Agents Solicitation; to suspend at any time, for any period - ------------- of time or permanently, the solicitation of offers to Amendment or purchase Certificated Notes. As soon as practicable, - ------------ but in no event later than one Business Day after Supplement: receipt of instructions from the Company, the Agents - ---------- will suspend solicitation of offers to purchase Certificated Notes from the Company until such time as the Company has advised them that such solicitation may be resumed. If the Company or the Guarantor decides to amend or supplement the Registration Statement or the Prospectus relating to the Notes (except in the case of a Pricing Supplement to the Prospectus), the Company or the Guarantor, as the case may be, will promptly advise the Agents and the Trustee and will furnish the Agents and the Trustee with the proposed amendment or supplement in accordance with the terms of the Agency Agreement. The Company or the Guarantor will mail or transmit to the Commission for filing therewith any supplement to the Prospectus relating to the Notes, provide the Agents with copies of any supplement, and confirm to the Agents that such supplement has been filed with the Commission. In the event that at the time the Company suspends solicitation of offers to purchase Certificated Notes there shall be any outstanding offers to purchase Certificated Notes that have been accepted by the Company but for which settlement has not yet occurred, the Company will promptly advise the Agents and the Trustee whether such sales may be settled and whether copies of the Prospectus as supplemented to the time of the suspension may be delivered in connection with the settlement of A-7 such sales. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such sales may not be settled or that copies of such Prospectus may not be so delivered. Delivery of Each Agent shall, for each offer to - ----------- purchase a Certificated Note that is solicited by such Prospectus: Agent and accepted by the Company, deliver a copy of - ---------- the Prospectus as most recently amended or supplemented (including the applicable Pricing Supplement which, pursuant to Rule 434, may be delivered separately from the Prospectus) with the earlier of the delivery of the confirmation of sale or the Certificated Note to the purchaser thereof or such purchaser's agent. Confirmation: For each offer to purchase a Certificated Note - ------------ solicited by any Agent and accepted by the Company, such Agent will issue a confirmation to the purchaser, with a copy to the Company, setting forth the details set forth above and delivery and payment instructions. Settlement: The Settlement Date with respect to any offer to - ---------- purchase Certificated Notes accepted by or on behalf of the Company will be a date on or before the third Business Day next succeeding the date of acceptance unless otherwise agreed by the purchaser and the Company and shall be specified upon acceptance of such offer. The Company will instruct the Trustee to effect delivery of each Certificated Note no later than 1:00 p.m., New York City time, on the Settlement Date to such Agent for delivery to the purchaser. Details for For each offer to purchase a Certifi- - ----------- cated Note received by any Agent and accepted pursuant Settlement: to the terms of the Agency Agreement, such Agent will - ---------- provide (unless provided by the purchaser directly to the Company) by telephone A-8 the following information (to the extent applicable) to the Company: 1. Exact name of Holder. 2. Exact address of Holder and address for payment of principal, premium, if any, and interest. 3. Taxpayer identification number of Holder (if available). 4. Principal amount of the Note. 5. Specified Currency. 6. Interest rate or interest rate basis. 7. Base Rate(s), Index Maturity, Initial Interest Rate, Maximum Interest Rate, Minimum Interest Rate, Interest Reset Dates, Interest Payment Dates, Calculation Dates, Interest Reset Dates and Spread and/or Spread Multiplier (as each such term is defined in the Prospectus). 8. Issue price of Note and proceeds to Company. 9. Settlement Date. 10. Stated Maturity Date. 11. Redemption and/or repayment provisions, if any. 12. Agent's commission to be paid in the form of a discount upon settlement. 13. Other relevant terms, including any reset and/or extension provisions. Such Agent will advise the Company of the foregoing information (unless provided by the purchaser directly to the Company) for each offer to purchase a Certificated Note solicited by such Agent and accepted by the Company in time for the Trustee to prepare and authenticate the required Certificated Note. Before accepting any offer to purchase a Certificated Note to be settled in less than three Business Days, the Company shall verify that the Trustee will have adequate time to prepare and authenticate such Certificated Note. After receiving from such Agent the details for each offer to purchase a A-9 Certificated Note, the Company will, after recording the details and any necessary calculations, provide appropriate documentation to the Trustee, including the information provided by such Agent necessary for the preparation and authentication of such Certificated Note. Prior to preparing the Certificated Note for delivery (but in any case no later than 11:00 a.m., New York City time, on the Business Day next preceding the Settlement Date therefor), the Trustee will confirm the details of such issue with such Agent by telephone. Note Deliveries Upon receipt of appropriate documenta- - --------------- tion and instructions, the Company will cause the and Cash Payment: Trustee to prepare and authenticate the pre-printed 4- - ---------------- ply Certificated Note packet containing the following documents in forms approved by the Company, the Agents and the Trustee: 1. Certificated Note with customer confirmation. 2. Stub 1--For the applicable Agent. 3. Stub 2--For the Company. 4. Stub 3--For the Trustee. Each Certificated Note shall be authenticated on or before the Settlement Date therefor. The Trustee will authenticate each Certificated Note and deliver it to such Agent (and deliver the stubs as indicated above), all in accordance with written instructions (which may be in the form of facsimile transmission) from the Company. Delivery by the Trustee of each Certificated Note will be made against receipt by the Company by 1:00 p.m., New York City time, on the Settlement Date in immediately available funds of an amount equal to the issue price of such Certificated Note or the U.S. dollar equivalent of the issue price of such Note as agreed between the Company and such Agent, unless otherwise agreed between the Company and such Agent, less such Agent's commission. A-10 Upon verification by such Agent that a Note has been prepared and properly authenticated by the Trustee and registered in the name of the purchaser in the proper principal amount and that the related Guarantee has been duly endorsed thereon, payment will be made to the Company by such Agent the same day in immediately available funds in the Specified Currency. Such payment shall be made only upon prior receipt by such Agent of immediately available funds from or on behalf of the purchaser in the Specified Currency unless such Agent decides, at its option, to advance its own funds for such payment against subsequent receipt of funds from the purchaser. Upon delivery of a Certificated Note to such Agent, such Agent shall promptly deliver such Certificated Note to the purchaser. In the event any Certificated Note is incorrectly prepared, the Trustee shall promptly issue a replacement Certificated Note in exchange for the incorrectly prepared Certificated Note. Failure to Settle: If any Agent, at its own option, has advanced its own - ----------------- funds for payment against subsequent receipt of funds from the purchaser, and if the purchaser shall fail to make payment for the Certificated Note on the Settlement Date therefor, such Agent will promptly notify the Trustee and the Company by telephone, promptly confirmed in writing (but no later than the next Business Day). In such event, the Company shall promptly provide the Trustee with appropriate documentation and instructions consistent with these procedures for the return of the Certificated Note to the Trustee and such Agent will promptly return the Certificated Note to the Trustee. Upon confirmation (i) from the Trustee in writing (which may be given by telex or telecopy) that the Trustee has received the Certificated Note and (ii) from such Agent in writing (which A-11 may be given by telex or telecopy) that such Agent has not received payment from the purchaser (the matters referred to in clauses (i) and (ii) are referred to hereinafter as the "Confirmations"), the Company will promptly pay to such Agent an amount in immediately available funds equal to the amount previously paid by such Agent in respect of such Certificated Note. Assuming receipt of the Certificated Note by the Trustee and of the Confirmations by the Company, such payment will be made on the Settlement Date, if reasonably practicable, and in any event not later than the Business Day following the date of receipt of the Certificated Note and Confirmations. If a purchaser shall fail to make payment for the Certificated Note for any reason other than the failure of such Agent to provide the necessary information to the Company as described above for settlement or to provide a confirmation to the purchaser within a reasonable period of time as described above or otherwise to satisfy its obligation hereunder or in the Agency Agreement, and if such Agent shall have otherwise complied with its obligations hereunder and in the Agency Agreement, the Company will reimburse such Agent on an equitable basis for its loss of the use of funds during the period when they were credited to the account of the Company. Immediately upon receipt of the Certificated Note in respect of which the failure occurred, the Trustee will void said Certificated Note, make appropriate entries in its records and destroy the Certificated Note; and upon such action, the Certificated Note will be deemed not to have been issued, authenticated and delivered. Trustee Not to Nothing herein shall be deemed to - -------------- require the Trustee to risk or expend its own funds in Risk Funds: connection with any payment to the Company, or any - ---------- Agent or the purchaser, it being understood by all parties that payments made by the Trustee to either the Company or any A-12 Agent shall be made only to the extent that funds are provided to the Trustee for such purpose. Authenticity of The Company will cause the Trustee and - --------------- the Guarantor to furnish each Agent from time to time Signatures: with the specimen signatures of the officers, employees - ---------- or agents who have been authorized to authenticate Certificated Notes or execute the related Guarantee, as the case may be, but each Agent will have no obligation or liability to the Company, the Guarantor or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company, the Guarantor or the Trustee on any Certificated Note. Payment of Each Agent shall forward to the Company - ---------- and the Guarantor, from time to time (but not more Expenses: often than monthly), a statement of the out-of-pocket - -------- expenses incurred by such Agent during the related period which are reimbursable to it pursuant to the terms of the Agency Agreement. The Company and the Guarantor will promptly remit payment to such Agent. Advertising The Company will determine with each - ----------- Agent the amount of advertising that may be appropriate Costs: in soliciting offers to purchase the Notes. - ----- Advertising expenses will be paid by the Company and the Guarantor. A-13 PART II: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES In connection with the qualification of Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the Trustee will perform the custodial, document control and administrative functions described below, in accordance with its respective obligations under a Letter of Representations from the Company, the Guarantor and the Trustee to The Depository Trust Company ("DTC") of even date herewith and a Medium-Term Note Certificate Agreement between the Trustee and DTC, dated April 14, 1989 and its obligations as a participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS"). Issuance: On any Settlement Date (as defined under "Settlement" - -------- below) for one or more Fixed Rate Book-Entry Notes, the Company will issue a single global security in fully registered form without coupons (a "Global Security") representing up to U.S.$200,000,000 principal amount of all of such Notes that have the same Issue Date, Specified Currency, Interest Rate, Stated Maturity Date, redemption and/or repayment provisions and Interest Payment Dates. Similarly, on any Settlement Date for one or more Floating Rate Book-Entry Notes, the Company will issue a single Global Security representing up to U.S.$200,000,000 principal amount of all of such Notes that have the same Issue Date, Specified Currency, Base Rate(s), Index Maturity, Interest Reset Dates, Spread and/or Spread Multiplier (if any), Initial Interest Rate, Interest Payment Dates, Minimum Interest Rate (if any), Maximum Interest Rate (if any), Stated Maturity Date and redemption and/or repayment provisions. Each Global Security will be dated and issued as of the date of its authentication by the Trustee. Each Global Security will bear an "Interest Accrual Date", which will be (i) with respect to an original Global Security (or any portion thereof), its original issuance date and (ii) with respect to any Global Security (or portion thereof) issued subsequently upon exchange of a Global Security or in lieu of a destroyed, lost or stolen Global Security, the most recent Interest Payment Date to which interest has been A-14 paid or duly provided for on the predecessor Global Security or Securities (or if no such payment or provision has been made, the original issuance date of the predecessor Global Security), regardless of the date of authentication of such subsequently issued Global Security. No Global Security will represent any Certificated Note. Price to Public: Each Book-Entry Note will be issued at the percentage - --------------- of principal amount specified in the Prospectus. Identification The Company will arrange, on or prior to - -------------- commencement of a program for the offering of Book- Numbers: Entry Notes, with the CUSIP Service Bureau of Standard - ------- & Poor's Ratings Group (the "CUSIP Service Bureau") for the reservation of a series of CUSIP numbers (including tranche numbers), consisting of approximately 900 CUSIP numbers and relating to Global Securities representing the Book-Entry Notes. The Trustee has or will obtain from the CUSIP Service Bureau a written list of such series of reserved CUSIP numbers and will deliver to the Company and DTC such written list of 900 CUSIP numbers of such series. The Company will assign CUSIP numbers to Global Securities as described below under Settlement Procedure "B". DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Company has assigned to Global Securities. The Trustee will notify the Company at any time when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global Securities, and if it deems necessary, the Company will reserve additional CUSIP numbers for assignment to Global Securities representing Book-Entry Notes. Upon obtaining such additional CUSIP numbers, the Trustee shall deliver such additional CUSIP numbers to the Company and DTC. Registration: Each Global Security will be registered in the name of - ------------ CEDE & CO., as nominee for DTC, on the Securities Register A-15 maintained under the Indenture governing such Global Security. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (with respect to such Note, the "Participants") to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Note in the account of such Participants. The ownership interest of such beneficial owner in such Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. Transfers: Transfer of a Book-Entry Note will be accomplished by - --------- book entries made by DTC and, in turn, by Participants (and in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Note. Consolidation and The Trustee may deliver to DTC and the - ----------------- CUSIP Service Bureau at any time a written notice of Exchange: consolidation specifying (i) the CUSIP numbers of two - -------- or more outstanding Global Securities that represent (A) Fixed Rate Book-Entry Notes having the same Issue Date, Specified Currency, Interest Rate, Stated Maturity Date, redemption and/or repayment provisions (if any) and Interest Payment Dates and with respect to which interest has been paid to the same date or (B) Floating Rate Book-Entry Notes having the same Issue Date, Specified Currency, Base Rate, Index Maturity, Interest Reset Dates, Spread and/or Spread Multiplier (if any), Initial Interest Rate, Interest Payment Dates, Minimum Interest Rate (if any), Maximum Interest Rate (if any), redemption and/or repayment provisions (if any) and Stated Maturity Date and with respect to which interest has been A-16 paid to the same date, (ii) a date, occurring at least thirty days after such written notice is delivered and at least thirty days before the next Interest Payment Date for such Book-Entry Notes, on which such Global Securities shall be exchanged for a single replacement Global Security and (iii) a new CUSIP number, obtained from the Company, to be assigned to such replacement Global Security. Upon receipt of such a notice, DTC will send to its Participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Securities to be exchanged will no longer be valid. On the specified exchange date, the Trustee will exchange such Global Securities for a single Global Security bearing the new CUSIP number and a new Interest Accrual Date, and the CUSIP numbers of the exchanged Global Securities will, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. Notwithstanding the foregoing, if the Global Securities to be exchanged exceed U.S.$200,000,000 in aggregate principal amount, one Global Security will be authenticated and issued to represent each U.S.$200,000,000 of principal amount of the exchanged Global Securities and an additional Global Security will be authenticated and issued to represent any remaining principal amount of such Global Securities (see "Denominations" below). Maturities: Each Book-Entry Note will mature on a date nine months - ---------- or more after the Settlement Date for such Note. Notice of Redemption The Trustee will notify DTC not more - -------------------- A-17 Dates: than 60 but not less than 30 days prior to each - ----- redemption date, if any, with respect to a Book-Entry Note, of the CUSIP number of such Note, the redemption date, the redemption price and the principal amount of such Book-Entry Note to be redeemed. Denominations: Book-Entry Notes will be issued in principal amounts of - ------------- U.S.$1,000 or any amount in excess thereof that is an integral multiple of U.S.$1,000. Global Securities will be denominated in principal amounts not in excess of U.S.$200,000,000. If one or more Book-Entry Notes having an aggregate principal amount in excess of U.S.$200,000,000 would, but for the preceding sentence, be represented by a single Global Security, then one Global Security will be issued to represent each U.S.$200,000,000 principal amount of such Book-Entry Note or Notes and an additional Global Security will be issued to represent any remaining principal amount of such Book-Entry Note or Notes. In such a case, each of the Global Securities representing such Book-Entry Note or Notes shall be assigned the same CUSIP number. Interest: General. Interest on each Book-Entry Note will accrue - -------- ------- from the Interest Accrual Date of the Global Security representing such Note. Except as set forth in the underlying Global Security, each Book-Entry Note which is a Fixed Rate Note will bear interest at the annual rate stated in such Global Security, payable semiannually on January 15 and July 15 of each year (each, an "Interest Payment Date") and on the Maturity Date, and each Book-Entry Note which is a Floating Rate Note will bear interest as determined in the manner set forth in such Global Security, payable on the dates set forth on such Global Security. Except as set forth in the underlying Global Security, interest (including payments for partial periods) on Fixed Rate Notes will be calculated on the basis of a 360-day A-18 year of twelve 30-day months. Except as set forth in the underlying Global Security, interest on Book-Entry Notes which are Floating Rate Notes will be determined in the manner agreed upon by the Company and the purchaser thereof in accordance with the provisions of the Prospectus. Except as set forth in the underlying Global Security, the "Record Date" with respect to any Interest Payment Date for Book-Entry Notes which are Floating Rate Notes shall be the date 15 calendar days immediately preceding such Interest Payment Date, and for Fixed Rate Notes shall be the December 31 or June 30 next preceding such Interest Payment Date, whether or not such date shall be a Business Day. The first payment of interest on any Book-Entry Note originally issued between a Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next succeeding Record Date to the Holder on such next succeeding Record Date. Notwithstanding the record date provisions above, interest payable on the Maturity Date will be payable to the person to whom principal shall be payable. Standard & Poor's Ratings Group will use the information received in the pending deposit message described under Settlement Procedure "C" below in order to include the amount of any interest payable and certain other information regarding the related Global Security in the appropriate weekly bond report published by Standard & Poor's Ratings Group. On the first Business Day of January, April, July and October of each year, the Trustee will deliver to the Company and DTC a written list of Record Dates and Interest Payment Dates that will occur with respect to Floating Rate Book-Entry Notes during the six-month period beginning on such first Business Day. Promptly after each Interest Determination Date (as defined in the Prospectus) for Floating Rate Notes, the A-19 Company will notify the Trustee, and the Trustee in turn will notify Standard & Poor's Ratings Group, of the interest rates determined on such Interest Determination Date. Payments of Payments of Interest Only. Promptly after each Record - ----------- ------------------------- Principal Date, the Trustee will deliver to the Company and DTC - --------- a written notice specifying by CUSIP number the amount and Interest: of interest to be paid on each Global Security on the - ------------- following Interest Payment Date (other than an Interest Payment Date coinciding with a Maturity Date) and the total of such amounts. DTC will confirm the amount payable on each Global Security on such Interest Payment Date by reference to the daily bond reports published by Standard & Poor's Corporation. The Company will pay to the Trustee, as paying agent, the total amount of interest due on such Interest Payment Date (other than on the Maturity Date), and the Trustee will pay such amount to DTC at the times and in the manner set forth below under "Manner of Payment". Payments at Maturity. On or about the first Business -------------------- Day of each month, the Trustee will deliver to the Company and DTC a written list of principal and interest to be paid on each Global Security with a Maturity Date in the following month. The Company, the Trustee and DTC will confirm the amounts of such principal and interest payments with respect to each such Global Security on or about the fifth Business Day preceding the Maturity Date of such Global Security. The Company will pay to the Trustee, as the paying agent, the principal amount of such Global Security, together with interest due on such Maturity Date. The Trustee will pay such amount to DTC at the time and in the manner set forth below under "Manner of Payment". Promptly after payment to DTC of the principal and interest due on the Maturity Date of such Global Security, A-20 the Trustee will cancel such Global Security and deliver it to the Company with an appropriate debit advice. On the first Business Day of each month, the Trustee will prepare a written statement indicating the total principal amount of outstanding Global Securities for which it serves as trustee as of the immediately preceding Business Day. Manner of Payment. The total amount of any principal ----------------- and interest due on Global Securities on any Interest Payment Date or on the Maturity Date shall be paid by the Company to the Trustee in funds available for use by the Trustee as of 9:30 A.M. (New York City time) on such date. The Company will make such payment on such Global Securities by instructing the Trustee to withdraw funds from an account maintained by the Company at the Trustee. For maturity, redemption, repayment or any other principal payments: prior to 10:00 A.M. (New York City time) on such date or as soon as possible thereafter, the Trustee will make such payments to DTC in same day funds in accordance with DTC's Same Day Funds Settlement Paying Agent Operating Procedures. For interest payments: the Trustee will make such payments to DTC in accordance with existing arrangements between DTC and the Trustee. DTC will allocate such payments to its participants in accordance with its existing operating procedures. Neither the Company (either as Issuer or as Paying Agent), the Trustee or any Agent shall have any direct responsibility or liability for the payment by DTC to such Participants of the principal of and interest on the Book-Entry Notes. Withholding Taxes. The amount of any taxes required ----------------- under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other Person responsible for forwarding payments and materials directly to the beneficial owner of such Note. A-21 Procedure for The Company and the Agents will discuss from time - ------------- to time the aggregate principal amount of, the Rate Setting issuance price of, and the interest rates to be borne - ------------ by, Book-Entry Notes that may be sold as a result of and Posting: the solicitation or offers by the Agents. If the - ----------- Company decides to establish prices of (including the currency of issuance), and rates borne by, any Book- Entry Notes to be sold (the establishment of such prices and rates to be referred to herein as "posting") or if the Company decides to change prices or rates previously posted by it, it will promptly advise the Agents of the prices and rates to be posted. Acceptance Unless otherwise agreed between the Company and such - ---------- Agent, any Agent which receives an offer to purchase of Offers: Book-Entry Notes will promptly advise the Company of - --------- each such offer other than offers rejected by such Agent as provided below. The Company will have the sole right to accept any such offer to purchase Book-Entry Notes. The Company may reject any such offer in whole or in part. Unless otherwise agreed between the Company and any Agent, each Agent may, in its discretion reasonably exercised, reject any offer to purchase Book-Entry Notes received by it in whole or in part. Preparation of If any offer to purchase a Book-Entry Note is accepted - -------------- by or on behalf of the Company, the Company and the Pricing Guarantor, with the approval of the Agents, will - ------- prepare a Pricing Supplement reflecting the terms of Supplement: such Book-Entry Note and will arrange to have requisite - ---------- copies of such Pricing Supplement filed with the Commission, in each case no later than the second Business Day after the earlier of the determination of the offering price or the date it is first used and will supply at least ten copies thereof (or additional copies if requested) to the Agents and one copy to the Trustee no A-22 later than 11:00 A.M., New York City time, on the Business Day following the date of acceptance at the following applicable address (unless otherwise specified in the applicable trading confirmation): if to Lehman Brothers Inc., to Lehman Brothers Inc., Prospectus Department, 3 World Financial Center, 9th Floor, New York, New York 10285-0900, attention of Brunnie Vazquez, telecopier no. (212) 528-7035; if to Goldman, Sachs & Co., to Goldman, Sachs & Co., 85 Broad Street, 27th Floor, New York, New York 10004, attention of Patti O'Connell; if to Merrill Lynch & Co., to Merrill Lynch & Co. - Tritech Services, 4 Corporate Place - Corporate Park 287, Piscataway, New Jersey 08854, attention of Nachman Kimmerling/Final Prospectus Unit, telephone no. (908) 878-6525/26/27, telecopier no. (908) 878-6530, with a copy to Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center, North Tower, 10th Floor, New York, New York 10281-1310, attention of MTN Product Management, telephone no. (212) 449-3780, telecopier no. (212) 449- 2234; if to J.P. Morgan Securities Inc. to J.P. Morgan Securities Inc., 60 Wall Streeet, 3rd Floor, New York, New York 10260, attention of Dan Benton, telephone no. (212) 648-0591, telecopier no. (212) 648-5907; if to NationsBanc Capital Markets, Inc. to NationsBanc Capital Markets, Inc., 100 North Tyron Street, Charlotte, NC 28255, NC1-007-07-01, attention of Jim Trobert, MTN Trading, telecopier no. (704) 388-9212; if to Salomon Brothers Inc, to Salomon Brothers Inc, 8800 Hidden River Parkway, Tampa, Florida 33637, attention of Enrique Castro, telephone no. (813) 558-7165, telecopier no. (813) 558-4123; and if to the Trustee, to The Bank of New York, 101 Barclay Street, New York, New York 10286, attention of Corporate Trust Office. Such Agent will cause a Pricing Supplement to be delivered to the purchaser of the Book-Entry Note. In all respects, the Company and the Guarantor A-23 will prepare and file each such Pricing Supplement in accordance with Rule 424 under the Act. In each instance that a Pricing Supplement is prepared, each Agent will affix the Pricing Supplement to Prospectuses prior to their use; provided, however, that pursuant to Rule 434, the Pricing Supplement may be delivered separately from the Prospectuses. Outdated Pricing Supplements, and the Prospectuses to which they are attached or relate (other than those retained for files), will be destroyed. Suspension of The Company reserves the right, in its sole discretion, - ------------- to instruct the Agents to suspend at any time, for any Solicitation; period of time or permanently, the solicitation of - ------------- offers to purchase Book-Entry Notes. As soon as Amendment or practicable, but in no event later than one Business - ------------ Day after receipt of instructions from the Company, the Supplement: Agents will suspend solicitation of offers to purchase - ---------- Book-Entry Notes from the Company until such time as the Company has advised them that such solicitation may be resumed. If the Company or the Guarantor decides to amend or supplement the Registration Statement or the Prospectus relating to the Notes (except in the case of a Pricing Supplement to the Prospectus), the Company or the Guarantor, as the case may be, will promptly advise the Agents and the Trustee and will furnish the Agents and the Trustee with the proposed amendment or supplement in accordance with the terms of the Agency Agreement. The Company or the Guarantor will mail or transmit to the Commission for filing therewith any supplement to the Prospectus relating to the Notes, provide the Agents with copies of any supplement, and confirm to the Agents that such supplement has been filed with the Commission. A-24 In the event that at the time the Company suspends solicitation of offers to purchase Book-Entry Notes there shall be any outstanding offers to purchase Book- Entry Notes that have been accepted by the Company but for which settlement has not yet occurred, the Company will promptly advise the Agents and the Trustee whether such sales may be settled and whether copies of the Prospectus as supplemented to the time of the suspension may be delivered in connection with the settlement of such sales. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such sales may not be settled or that copies of such Prospectus may not be so delivered. Delivery of Each Agent shall, for each offer to - ----------- purchase a Book-Entry Note that is solicited by such Prospectus: Agent and accepted by the Company, deliver a copy of - ---------- the Prospectus as most recently amended or supplemented (including the applicable Pricing Supplement which, pursuant to Rule 434, may be delivered separately from the Prospectus) with the earlier of the delivery of the confirmation of sale or the Book-Entry Note to the purchaser thereof or such purchaser's agent. Confirmation: Such Agent will confirm the purchase of such Note to - ------------ the purchaser either by transmitting to the Participants with respect to such Note a confirmation order or orders through DTC's institutional delivery system or by mailing a written confirmation to such purchaser. Settlement: The receipt by the Company of immediately available - ---------- funds in payment for a Book-Entry Note and the authentication and issuance of the Global Security representing such Note shall constitute "settlement" with respect to such Note. The "Settlement Date" with respect to any offer to purchase Book-Entry Notes accepted by or A-25 on behalf of the Company will be a date on or before the third Business Day next succeeding the date of acceptance unless otherwise agreed by the purchaser and the Company and shall be specified upon acceptance of such offer. Settlement Settlement Procedures with regard to - ---------- each Book-Entry Note sold by the Company through an Procedures: Agent, as agent, shall be as follows: - ---------- A. Such Agent will advise the Company by telephone of the following settlement information: 1. Principal amount. 2. Specified Currency. 3. Stated Maturity Date. 4. In the case of a Fixed Rate Book-Entry Note, the interest rate, or, in the case of a Floating Rate Book-Entry Note, Base Rate, Index Maturity, Initial Interest Rate, Maximum Interest Rate, Minimum Interest Rate, Interest Reset Dates, Interest Payment Dates, Calculation Dates, Interest Reset Dates and Spread and/or Spread Multiplier. 5. Settlement Date. 6. Redemption and/or repayment provisions, if any. 7. Agent's commission, determined as provided in the Agency Agreement between the Company and such Agent. 8. The DTC Participant account number of such Agent. 9. Taxpayer identification number of beneficial owner (if available). 10. Issue price of Book-Entry Note and proceeds to the Company. B. The Trustee will assign a CUSIP number to the Global Security representing such Book-Entry Note and will then advise the Company of such CUSIP number. The Company will then advise the Trustee by A-26 electronic transmission (confirmed by telephone) of the information set forth in Settlement Procedure "A" above and the name of such Agent. Each such communication by the Company shall constitute a representation and warranty by the Company to the Trustee and each Agent that (i) such Note is then, and at the time of issuance and sale thereof will be, duly authorized for issuance and sale by the Company, (ii) such Note, and the Global Security representing such Note, will conform with the terms of the Indenture pursuant to which such Note and Global Security are issued and (iii) upon authentication and delivery of such Global Security, the aggregate initial offering price of all Notes issued under the Indenture will not exceed $1,000,000,000 (except for Book-Entry Notes represented by Global Securities authenticated and delivered in exchange for or in lieu of Global Securities pursuant to the Indenture and except for Certificated Notes authenticated and delivered upon registration of transfer of, in exchange for, or in lieu of Certificated Notes pursuant to the Indenture). C. The Trustee will enter a pending deposit message through DTC's Participant Terminal System, providing the following settlement information to DTC, such Agent, Standard & Poor's Ratings Group and, upon request, the Trustee under the Indenture pursuant to which such Note is to be issued: 1. The information set forth in Settlement Procedure "A". 2. Identification as a Fixed Rate Book-Entry Note or a Floating Rate Book-Entry Note. 3. Initial Interest Payment Date for such Note and amount of A-27 interest payable on such Interest Payment Date. 4. Frequency of interest payments (monthly, semiannually, quarterly, etc.). 5. CUSIP number of Global Security representing such Note. 6. Whether such Global Security will represent any other Book-Entry Note (to the extent known at such time). D. The Trustee will complete the Global Security, the form of which was previously approved by the Company, the Agents and the Trustee. E. The Trustee, as Trustee, will authenticate the Global Security representing such Note. F. DTC will credit such Note to the Trustee's participant account at DTC. G. The Trustee will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC to (i) debit such Note to the Trustee's participant account and credit such Note to such Agent's participant account and (ii) debit such Agent's settlement account and credit the Trustee's settlement account for an amount equal to the price of such Note less such Agent's commission. The entry of such a deliver order shall constitute a representation and warranty by the Trustee to DTC that (i) the Global Security representing such Book-Entry Note has been issued and authenticated and (ii) the Trustee is holding such Global Security pursuant to the Certificate Agreement. H. Such Agent will enter an SDFS deliver order through DTC's Participant Terminal System A-28 instructing DTC (i) to debit such Note to such Agent's participant account and credit such Note to the participant accounts of the Participants with respect to such Note and (ii) to debit the settlement accounts of such Participants and credit the settlement account of such Agent for an amount equal to the price of such Note. I. Transfers of funds in accordance with SDFS deliver orders described in Settlement Procedures "G" and "H" will be settled in accordance with SDFS operating procedures in effect on the Settlement Date. J. The Trustee will credit to an account of the Company maintained at the Trustee funds available for immediate use in the amount transferred to the Trustee in accordance with Settlement Procedure "G". K. The Trustee will hold the Global Security pursuant to the Certificate Agreement and will send a photocopy of such Global Security to the Company by first-class mail. Upon written request the Trustee will deliver a photocopy of such Global Security to such Agent. Periodically, the Trustee will send to the Company a statement setting forth the principal amount of Notes Outstanding as of that date and setting forth a brief description of any sales of which the Company has advised the Trustee but which have not yet been settled. L. As set forth in "Delivery of Prospectus" above, such Agent will deliver to the purchaser a copy of the most recent Prospectus applicable to the Book- Entry Note with or prior to any written offer of Book-Entry Notes and the A-29 confirmation and payment by the purchaser of such Note. Such Agent will confirm the purchase of such Note to the purchaser either by transmitting to the Participants with respect to such Note a confirmation order or orders through DTC's institutional delivery system or by mailing a written confirmation to such purchaser. Settlement For offers to purchase Book-Entry - ---------- Notes solicited by an Agent, as agent, Procedures and accepted by the Company for settlement on the first - ---------- Business Day after the sale date, Settlement Procedures Timetable: "A" through "L" set forth above shall be completed as - --------- soon as possible but not later than the respective times (New York City time) set forth below: Settlement Procedure Time --------- ---- A-B 11:00 A.M. on the sale date C 2:00 P.M. on the sale date D 3:00 P.M. on day before Settlement Date E 9:00 A.M. on Settlement Date F 10:00 A.M. on Settlement Date G-H 2:00 P.M. on Settlement Date I 4:45 P.M. on Settlement Date J-L 5:00 P.M. on Settlement Date If a sale is to be settled more than one Business Day after the sale date, Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable but no later than 11:00 A.M. and 2:00 P.M., as the case may be, on the first Business Day after the sale date. If the initial interest rate for a Floating Rate Book- Entry Note has not A-30 been determined at the time that Settlement Procedure "A" is completed, Settlement Procedures "B" and "C" shall be completed as soon as such rate has been determined but no later than 11:00 A.M. and 12:00 Noon, respectively, on the second Business Day before the Settlement Date. Settlement Procedure "I" is subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the Settlement Date. Failure to Settle: If the Trustee fails to enter an SDFS deliver order - ----------------- with respect to a Book-Entry Note pursuant to Settlement Procedure "G", the Trustee may deliver to DTC, through DTC's Participant Terminal System, as soon as practicable a withdrawal message instructing DTC to debit such Note to the Trustee's participant account. DTC will process the withdrawal message, provided that the Trustee's participant account contains a principal amount of the Global Security representing such Note that is at least equal to the principal amount to be debited. If a withdrawal message is processed with respect to all the Book-Entry Notes represented by a Global Security, the Trustee will mark such Global Security "canceled", make appropriate entries in the Trustee's records and send such canceled Global Security to the Company. The CUSIP number assigned to such Global Security shall, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. If a withdrawal message is processed with respect to one or more, but not all, of the Book-Entry Notes represented by a Global Security, the Trustee will exchange such Global Security for two Global Securities, one of which shall represent such Book-Entry Note or Notes and shall be canceled immediately after issuance and other Book-Entry Notes previously represented by the surrendered Global Security and A-31 shall bear the CUSIP number of the surrendered Global Security. If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser thereof (or a Person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants and, in turn, the Agent for such Note may enter SDFS deliver orders through DTC's Participant Terminal System reversing the orders entered pursuant to Settlement Procedures "H" and "G", respectively. Thereafter, the Trustee will deliver the withdrawal message and take the related actions described in the preceding paragraph. Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. In the event of a failure to settle with respect to one or more, but not all, of the Book-Entry Notes to have been represented by a Global Security, the Trustee will provide, in accordance with Settlement Procedures "D" and "E", for the authentication and issuance of a Global Security representing the other Book-Entry Notes to have been represented by such Global Security and will make appropriate entries in its records. Trustee Not to Nothing herein shall be deemed to - -------------- require the Trustee to risk or expend its own funds in Risk Funds: connection with any payment to the Company, or any - ---------- Agent or the purchaser, it being understood by all parties that payments made by the Trustee to either the Company or any Agent shall be made only to the extent that funds are provided to the Trustee for such purpose. Authenticity of The Company will cause the Trustee and - --------------- the Guarantor to furnish each Agent from time to time Signatures: with the specimen - ---------- A-32 signatures of the officers, employees or agents who have been authorized to authenticate Notes or execute the related Guarantee, but each Agent will have no obligation or liability to the Company, the Guarantor or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company, the Guarantor or the Trustee on any Note. Payment of Each Agent shall forward to the Company - ---------- and the Guarantor, from time to time (but not more Expenses: often than monthly), a statement of the out-of-pocket - -------- expenses incurred by such Agent during the related period which are reimbursable to it pursuant to the terms of the Agency Agreement. The Company and the Guarantor will promptly remit payment to such Agent. Advertising The Company will determine with each - ----------- Agent the amount of advertising that may be appropriate Costs: in soliciting offers to purchase the Notes. Advertising - ----- expenses will be paid by the Company and the Guarantor. A-33 EXHIBIT B Countrywide Home Loans, Inc. Medium-Term Notes, Series E Due Nine Months or More From Date of Issue TERMS AGREEMENT _________________, 19__ Countrywide Home Loans, Inc. 155 North Lake Avenue Pasadena, California 91101 Attention: Corporate Counsel Subject in all respects to the terms and conditions of the Selling Agency Agreement dated May __, 1996 among Lehman Brothers, Lehman Brothers Inc., Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., NationsBanc Capital Markets, Inc. and Salomon Brothers Inc, and you (the "Agreement"), the undersigned agrees to purchase the following Medium-Term Notes, Series E (the "Notes"), of Countrywide Home Loans, Inc.: Aggregate Principal Amount: Currency or Currency Unit: Interest Rate or Base Rate(s): Spread: Spread Multiplier: Stated Maturity Date: Interest Payment Dates: Record Dates: Purchase Price: % of Principal Amount [plus accrued interest, if any, from _______________, 19 __] Purchase Date and Time: Certificated or Book-Entry Form: B-1 Place for Delivery of Notes and Payment Therefor: Method of Payment: Modification, if any, in the requirements to deliver the documents specified in Section 6(b) of the Agreement: Period during which additional Notes may not be sold pursuant to Section 4(l) of the Agreement: Default provisions, if any: Other terms: [LEHMAN BROTHERS INC. By: _______________________________] [__________________________________ Goldman, Sachs & Co.] [MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: _______________________________] [J.P. MORGAN SECURITIES INC. By: _______________________________] [NATIONSBANC CAPITAL MARKETS, INC. By: _______________________________] [SALOMON BROTHERS INC By: _______________________________] B-2 Accepted: COUNTRYWIDE HOME LOANS, INC. By: ______________________________ Title: B-3 EX-4.3 3 FORM OF FIXED RATE MEDIUM-TERM NOTE EXHIBIT 4.3 COUNTRYWIDE HOME LOANS, INC. CUSIP REGISTERED PRINCIPAL AMOUNT NO. FX- $ MEDIUM-TERM NOTE, SERIES E (FIXED RATE) DUE NINE MONTHS OR MORE FROM DATE OF ISSUE PAYMENT OF THE PRINCIPAL, PREMIUM, IF ANY, AND INTEREST ON THIS NOTE IS UNCONDITIONALLY GUARANTEED BY COUNTRYWIDE CREDIT INDUSTRIES, INC. IF THE HOLDER OF THIS NOTE IS THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY, THIS NOTE IS A GLOBAL NOTE AND THE FOLLOWING LEGEND APPLIES: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH NOTE IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. ISSUE PRICE: INTEREST RATE: ORIGINAL ISSUE DATE: STATED MATURITY DATE: PRINCIPAL AMOUNT: INTEREST PAYMENT DATES (IF OTHER THAN JANUARY 15 AND JULY 15): SPECIFIED CURRENCY: RECORD DATES (IF OTHER THAN DECEMBER 30 AND JUNE 30): MINIMUM DENOMINATION: EXCHANGE RATE AGENT: OTHER/ADDITIONAL TERMS: OPTION TO RECEIVE PAYMENT IN U.S. DOLLARS: [ ] NO [ ] YES REDEMPTION: [ ] NO [ ] YES INITIAL REDEMPTION DATE: INITIAL REDEMPTION PERCENTAGE: ANNUAL REDEMPTION PERCENTAGE REDUCTION: REPAYMENT: [ ] NO [ ] YES OPTIONAL REPAYMENT DATE(S): COUNTRYWIDE HOME LOANS, INC., a New York corporation (the "Company"), for value received, hereby promises to pay to __________________________________________, or registered assignees, the principal sum of _________________________________ (________) on the Stated Maturity Date specified above (except to the extent redeemed or repaid prior to the Stated Maturity Date) at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, and such other place or places as may be provided for pursuant to the Indenture referred to below, and to pay interest semi-annually in arrears on January 15 and July 15 of each year or such other Interest Payment Dates specified above (each, an "Interest Payment Date"), commencing on the Interest Payment Date next succeeding the Original Issue Date specified above and on the Stated Maturity Date or, if applicable, any date of earlier redemption (the "Redemption Date") or repayment (the "Repayment Date") (the earliest of the Stated Maturity Date, the Redemption Date and the Repayment Date is hereinafter referred to as the "Maturity Date" with respect to the principal repayable on such date) on said principal sum at the Interest Rate specified above from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for, from and including the Original Issue Date, until the principal hereof becomes due and payable; provided, however, that any payment of principal, premium, if - -------- ------- any, and/or interest to be made on an Interest Payment Date or on the Maturity Date which is not a Business Day shall be made on the next Business Day with the same force and effect as if made on such Interest Payment Date or the Maturity Date, as the case may be, and no interest on such payment shall accrue to the next Business Day. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (i) New York, New York or Los Angeles, California or (ii) if the Specified Currency specified above is other than U.S. dollars, the Principal Financial Center (as defined below) of the country issuing the Specified Currency. "Principal Financial Center" means the capital city of the country issuing such Specified Currency, except that with respect to Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and European Currency Units ("ECU"), the "Principal Financial Center" shall be Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will be to the person (the "Holder") in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the December 31 or June 30 or such other Record Dates specified above (whether or not a Business Day) (each, a "Record Date") immediately preceding such Interest Payment Date; provided, however, that interest payable -------- ------- on the Maturity Date will be payable to the person to whom principal is payable. Unless otherwise specified above, if this Note is originally 3 issued between a Record Date and an Interest Payment Date, the first payment of interest on this Note will be made on the Interest Payment Date following the next Record Date to the Holder hereof on such next Record Date. Unless otherwise specified above, payment of the principal of, and premium, if any, and interest on, this Note due on the Maturity Date will be made in immediately available funds in the Specified Currency, upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee. If the Specified Currency is other than U.S. dollars, this Note must be presented and surrendered to the Trustee referred to below in time for the Trustee to make such payment in accordance with its normal procedures. Unless otherwise specified above, payment of interest on this Note due on any Interest Payment Date other than the Maturity Date will be made by mailing a check in the Specified Currency (from an account at a bank located outside the United States if such check is payable in a Specified Currency other than U.S. dollars) to the address of the Holder hereof as such address shall appear in the Security Register (as defined in the Indenture) on the applicable Record Date. Notwithstanding the foregoing, on any Interest Payment Date other than the Maturity Date, each Holder of U.S. $10,000,000 (or the equivalent thereof in a Specified Currency other than U.S. dollars) or more in aggregate principal amount of Notes (whether or not having identical terms and provisions) shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive such payment by wire transfer of immediately available funds to an account maintained by the payee with a bank located in the United States, but only if appropriate wire transfer instructions have been received in writing by the Trustee not later than the Record Date immediately preceding such Interest Payment Date and (ii) if the Specified Currency is other than U.S. dollars, to receive such payment by wire transfer of immediately available funds to an account maintained by the payee with a bank located in a jurisdiction in which payment in such Specified Currency is then lawful. The Company shall pay any administrative costs imposed by banks in connection with making payments by wire transfer; provided, however, that any tax, assessment or other governmental -------- ------- charge imposed upon payments shall be borne by the Holder hereof in respect of which payments are made. All payments of principal, premium, if any, and interest in respect of this Note will be made by the Company in the Specified Currency; provided, -------- however, that if the Specified Currency specified above is other than U.S. - ------- dollars, the Holder hereof may, if indicated above under "Option to Receive Payment in U.S. Dollars," elect to receive all payments of principal, premium, if any, and/or interest in respect of this Note in U.S. dollars by delivering a written request to the Trustee not later than the close of business on the Record Date immediately preceding the Interest Payment Date or the fifteenth day immediately preceding the Maturity Date, as the case may be. Upon such election by the Holder hereof, the Company shall tender payment in U.S. dollars at the Exchange Rate 4 (as defined below), and any costs associated with the conversion of the Specified Currency into U.S. dollars shall be borne by the Holder hereof through deductions from such payments. The Holder's election to receive payments in U.S. dollars will remain in effect until revoked by written notice from the Holder to the Trustee, provided that any such revocation must be received by the Trustee not later than the close of business on the Record Date immediately preceding the Interest Payment Date or the fifteenth day immediately preceding the Maturity Date, as the case may be. Unless otherwise specified above or elsewhere herein, "Exchange Rate" means, with respect to a Specified Currency other than ECU, the noon Dollar buying rate for such Specified Currency for cable transfers quoted by the Exchange Rate Agent specified above in The City of New York on the Record Date or Special Record Date (as defined below) or the fifteenth day immediately preceding the Maturity Date or such other date provided herein or in the Indenture, as the case may be, as certified for customs purposes by the Federal Reserve Bank of New York. With respect to ECU, "Exchange Rate" means the exchange rate between dollars and ECU reported by the Council of the European Communities on the applicable Record Date or Special Record Date with respect to an Interest Payment Date or the fifteenth day immediately preceding the Maturity Date or such other date provided herein or in the Indenture, as the case may be. If any payment of principal, premium, if any, or interest on this Note is to be made in a Specified Currency other than U.S. dollars and such Specified Currency is not available to the Company for making such payment due to the imposition of exchange controls or other circumstances beyond the control of the Company, the Company will be entitled to satisfy its obligations to the Holder hereof by making such payment in U.S. dollars on the basis of the Exchange Rate referred to below two Business Days prior to the Interest Payment Date or the Maturity Date, as the case may be (or, if no rate is quoted for such Specified Currency on such date, the last date such Exchange Rate is quoted). Any payment made under such circumstances in U.S. dollars where the required payment is in a Specified Currency other than U.S. dollars will not constitute an Event of Default under the Indenture. For purposes of this paragraph and the immediately succeeding paragraph, the "Exchange Rate" for a foreign currency or ECU will be the noon Dollar selling rate for that currency or ECU for cable transfers quoted by the Exchange Rate Agent in The City of New York, as certified for customs purposes by the Federal Reserve Bank of New York. If payment on this Note is required to be made in ECU and ECU is unavailable due to the imposition of exchange controls or other circumstances beyond the control of the Company, or is no longer used in the European Monetary System, all payments due on that Interest Payment Date or Maturity Date with respect to this Note shall be made in U.S. dollars. The amount so payable on any date in ECU shall be converted into U.S. dollars, at a rate determined by the Exchange Rate Agent as of the 5 second Business Day prior to the date on which such payment is due on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts which were components of the ECU as of the last date on which the ECU was used in the European Monetary System. The equivalent of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Components. The U.S dollar equivalent of each of the Components shall be determined by the Exchange Rate Agent on the basis of the most recently available Exchange Rate. If the official unit of any component currency is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies (in appropriate proportions) the sum of which shall be equal to the amount of the former component currency. All determinations referred to above made by the Exchange Rate Agent shall be at its sole discretion (except to the extent expressly provided that any determination is subject to approval) and, in the absence of manifest error, shall be conclusive for all purposes and binding on the Holder of this Note and the Exchange Rate Agent shall have no liability therefor. Any interest not punctually paid or duly provided for with respect to this Note ("Defaulted Interest") will forthwith cease to be payable to the Holder of this Note on the applicable Record Date and may either be paid to the person in whose name this Note is registered at the close of business on a special record date (the "Special Record Date") for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to the Holder of this Note not less than ten days prior to such Special Record Date, or may be paid at any time in any other lawful manner, all as more completely described in the Indenture. Unless otherwise specified above, interest will be computed on the basis of a 360-day year of twelve 30-day months. This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Company (collectively, the "Debt Securities"), of the series hereinafter specified, all issued or to be issued under and pursuant to an indenture, dated as of January 1, 1992, as amended, supplemented or modified from time to time, including Supplemental Indenture No. 1 thereto dated as of June 15, 1995 6 (collectively, the "Indenture"), among the Company, the Guarantor (as defined below), and The Bank of New York, as trustee (the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company, the Guarantor and the Holders of the Notes. The Debt Securities may be issued in one or more series, which different series (and which Debt Securities issued within each series) may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates or formulas, may be subject to different redemption or repayment provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, and may otherwise vary as provided in the Indenture. This Note is one of a series designated as "Medium-Term Notes, Series E, Due Nine Months or More From Date of Issue" of the Company (collectively, the "Notes"), limited in aggregate offering price to U.S. $1,000,000,000, or the equivalent thereof in one or more Specified Currencies other than U.S. dollars. If an Event of Default, as defined in the Indenture, with respect to the Notes shall have occurred and be continuing, the principal hereof (or, if this Note is an Original Issue Discount Security (as defined below), the Amortized Face Amount (as defined below)) and accrued interest (or, if this Note is an Original Issue Discount Security, any accrued interest the payment of which would constitute qualified stated interest within the meaning of Treasury Regulation Section 1.1273-1(c) under the Internal Revenue Code of 1986, as amended (the "Code"), as in effect on _______, 1996) hereon, may be declared, and upon such declaration shall become, due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Company, the Guarantor and the Trustee, with the consent of the Holders of a majority in aggregate principal amount of the Debt Securities at the time outstanding of each series to be affected, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or modifying in any manner the rights of the Holders of the Debt Securities; provided, however, that no -------- ------- such supplemental indenture shall, without the consent of the Holder of each outstanding Debt Security affected thereby: (i) except as otherwise permitted in the Indenture in connection with Debt Securities for which the Stated Maturity is extendible, change the Maturity of the principal of, or any installment of interest on, any Debt Security; (ii) reduce the principal amount of any such Debt Security or, except as otherwise permitted in the Indenture in connection with Debt Securities for which the interest rate may be reset, the interest thereon or any premium payable upon the redemption or repayment thereof; (iii) reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof; (iv) adversely affect any right of payment at the option of the 7 Holder of any such Debt Security; (v) reduce the amount of, or postpone the date fixed for, any payment under any sinking fund or analogous provisions for any Debt Security; (vi) change any Place of Payment, or the currency or currency unit of the payment of the principal of, premium, if any, or interest on any Debt Security; (vii) change or eliminate certain rights of Holders to receive payment in a designated currency; (viii) impair the right to institute suit for the enforcement of any required payment on or with respect to any Debt Security; (ix) reduce the percentage in aggregate principal amount of the Outstanding Debt Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of the Indenture or certain defaults thereunder and their consequences) provided for in the Indenture; (x) modify certain other provisions of the Indenture; or (xi) modify or affect in any manner adverse to the Holders the terms and conditions of the obligations of the Guarantor in respect of the due and punctual payment of principal of, or premium, if any, or interest on, the Debt Securities. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Debt Securities of any series, the Holders of a majority in aggregate principal amount of the Debt Securities of such series at the time outstanding may on behalf of the Holders of all of the Debt Securities of such series waive any past default or Event of Default and its consequences, except a default in the payment of the principal of, or premium, if any, or interest on, any Debt Security of such series or in respect of certain other covenants or provisions of the Indenture. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not any notation of such consent or waiver is made upon this Note or such other Notes. The Guarantor, or a Subsidiary thereof, may directly assume, by a supplemental indenture, the due and punctual payment of the principal of, and premium, if any, and interest on, all the Debt Securities, in which case the Company shall be released from its liability as obligor on the Debt Securities. No reference herein to the Indenture and no reference to any provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on, this Note at the places, at the respective times, at the rate and in the currency herein prescribed. The Notes are issuable in registered form without coupons in the minimum denomination of U.S. $1,000, or the equivalent thereof in the Specified Currency (if other than U.S. dollars), and in integral multiples of U.S. $1,000 in excess thereof, or the equivalent thereof in such Specified Currency, or such other minimum denomination as specified on the face hereof. Notes may be exchanged by the Holder hereof, without charge except for any tax, assessment or other governmental charge imposed in 8 connection therewith, for a like aggregate principal amount of Notes of other authorized denominations in the manner and subject to the limitations provided in the Indenture at the Corporate Trust Office of the Trustee. If this Note is subject to Optional Redemption as specified above, the Company may at its option redeem this Note in whole or, from time to time, in part in increments of U.S. $1,000 (provided that any remaining principal amount hereof shall not be less than the minimum denomination, as described above) on or after the Initial Redemption Date at the sum of (i) 100% of the unpaid principal amount hereof or the portion thereof redeemed (or, if this Note is an Original Issue Discount Security, the Amortized Face Amount determined as of the Redemption Date as provided below), plus (ii) the Initial Redemption Percentage specified above (as adjusted for the Annual Redemption Percentage Reduction, if applicable) multiplied by the unpaid principal amount or the portion thereof redeemed (or, if this Note is an Original Issue Discount Security, the Issue Price specified above, net of any portion of such Issue Price which has been deemed paid prior to redemption (by reason of any payments, other than a payment of qualified stated interest, in excess of original issue discount accrued to the date of such payment), or the portion of such Issue Price (or such net amount) proportionate to the portion of the unpaid principal amount of the Note redeemed), plus (iii) accrued interest to the Redemption Date (or, if this Note is an Original Issue Discount Security, any accrued interest to the Redemption Date the payment of which would constitute qualified stated interest payments within the meaning of Treasury Regulation Section 1.1273-1(c) under the Code). Such Initial Redemption Percentage shall decline at each anniversary of the Initial Redemption Date by an amount equal to the Annual Redemption Percentage Reduction, if any, specified above, until the Initial Redemption Percentage equals zero percent. The Company may exercise such option by causing the Trustee to mail a notice of such redemption to the Holder hereof not less than 30 but not more than 60 days prior to the Redemption Date. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If less than all of the Notes with like tenor and terms to this Note are to be redeemed, the Notes to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate. An "Original Issue Discount Security" means any Note that has been issued at an Issue Price lower, by an amount that equals or exceeds a de minimis -- ------- amount (as determined under United States Federal income tax rules applicable to original issue discount instruments), than the principal amount thereof. If this Note is an Original Issue Discount Note, the "Amortized Face Amount" of this Note shall be the amount equal to the sum of (a) the Issue Price plus (b) the aggregate of the portions of the original issue discount (the excess of the amounts considered as part of the "stated redemption price at maturity" of this Note within the meaning of Section 1273(a)(2) of the Code, whether denominated as principal or interest, over the Issue Price of this Note) which shall 9 theretofore have accrued pursuant to Section 1272 of the Code (without regard to Section 1272(a)(7) of the Code) from the Original Issue Date of this Note to the date of determination, minus (c) any amount considered as part of the "stated redemption price at maturity" of such Note which has been paid on this Note from the Original Issue Date to the date of determination. If this Note is subject to Optional Repayment as specified above, the Holder hereof may at its option require the Company to repay this Note in whole or from time to time in part in increments of U.S. $1,000 or the minimum denomination specified above (provided that any remaining principal amount hereof shall not be less than the minimum denomination, as described above) on any Optional Repayment Date specified above at the sum of (i) 100% of the unpaid principal amount hereof or the portion to be repaid thereof, plus (ii) accrued interest to the Repayment Date. In order for this Note to be repaid, this Note must be received, together with the form entitled "Option to Elect Repayment" duly completed, by the Trustee at its Corporate Trust Office (or such other address of which the Company shall from time to time notify the Holders of the Notes) not more than 60 nor less than 30 days prior to the Repayment Date. Exercise of such repayment option by the Holder hereof shall be irrevocable, except as otherwise provided above. Prior to due presentment of this Note for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor, or the Trustee may treat the Holder hereof as the owner of this Note for the purpose of receiving payment of the principal hereof and premium, if any, and interest hereon and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent of the Company, the Guarantor or the Trustee shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of, or premium, if any, or interest on, this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture against any incorporator, stockholder, officer, director or employee, as such, past, present or future, of the Company or the Guarantor or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. All terms used but not defined in this Note shall have the meanings assigned to them in the Indenture. The Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. 10 This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by or on behalf of the Trustee under the Indenture. IN WITNESS WHEREOF, Countrywide Home Loans, Inc. has caused this instrument to be signed in its name by the facsimile signatures of its duly authorized officers, and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. Date: COUNTRYWIDE HOME LOANS, INC. [SEAL] By:____________________________________ President Attest:__________________________________ Secretary 11 GUARANTEE OF COUNTRYWIDE CREDIT INDUSTRIES, INC. For value received, Countrywide Credit Industries, Inc., a corporation duly organized and existing under the laws of Delaware (the "Guarantor"), hereby unconditionally guarantees to the Holder of the Note upon which this Guarantee is endorsed the due and punctual payment of the principal of, and premium, if any, and interest on, and sinking fund payments, if any, required with respect to said Note, when and as the same shall become due and payable, whether on the Stated Maturity Date, by acceleration, redemption or repayment or otherwise, according to the terms thereof and of the Indenture referred to therein. In case of the failure of Countrywide Home Loans, Inc. (the "Company") punctually to pay any such principal, premium, interest, or sinking fund payment, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether on the Stated Maturity Date, by acceleration, redemption or repayment or otherwise, and as if such payment were made by the Company. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of said Note or said Indenture, any failure to enforce the provisions of said Note or said Indenture, or any waiver, modification, consent or indulgence granted to the Company with respect thereto, by the Holder of said Note or the Trustee under said Indenture, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to said Note or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged except by payment in full of the principal of, and premium, if any, and interest on, or any sinking fund payment required with respect to, said Note and the complete performance of all other obligations contained in said Note. The Guarantor shall be subrogated to all rights of the Holder of said Note against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided, however, that -------- ------- the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of, and premium, if any, and interest on, and any 12 sinking fund payments required with respect to, all Notes of this series issued under said Indenture shall have been paid in full and its other obligations under said Indenture completed. The Guarantor hereby certifies and warrants that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of this Guarantee and to constitute the valid obligation of the Guarantor have been done and performed and have happened in due compliance with all applicable laws. This Guarantee as endorsed on said Note shall not be entitled to any benefit under said Indenture or become valid or obligatory for any purpose until the certificate of authentication on said Note shall have been signed manually by or on behalf of the Trustee under said Indenture. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York. 13 IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed in facsimile by its duly authorized officer under its corporate seal. COUNTRYWIDE CREDIT INDUSTRIES, INC. By:________________________________________________ Vice Chairman and Executive Vice President Attest:______________________ Secretary CERTIFICATE OF AUTHENTICATION This is one of the Debt Securities of the series designated therein referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee Date: By: ______________________________________________ Authorized Officer 14 OPTION TO ELECT REPAYMENT The undersigned hereby irrevocably requests and instructs the Company to repay this Note (or portion hereof specified below) in accordance with the terms of this Note at a price equal to the principal amount hereof (or portion hereof to be repaid), together with interest to the Repayment Date, by payment to the undersigned at ________________________________________________________________________________ ________________________________________________________________________________ (Please print or typewrite name and address, including zip code, of the undersigned). In order for this Note to be repaid, the Trustee must receive at its Corporate Trust Office at 101 Barclay Street, New York, New York 10286, or at such other place or places of which the Company shall from time to time notify the Holders of the Notes, not more than 60 nor less than 30 days prior to the Repayment Date, this Note with this Option to Elect Repayment form duly completed. If less than the entire principal amount of this Note is to be repaid, specify the portion hereof (which shall be in increments of U.S. $1,000 or other increments specified above) to be repaid: ______________. If less than the entire principal amount of this Note is to be repaid, specify the denomination(s) of the Note(s) to be issued for the unpaid amount (which shall be U.S. $1,000 or increments of U.S. $1,000 in excess thereof, or such other minimum denomination specified above):______________. Date: ______________________________________ Note: The signature on this Option to Elect Repayment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement, or any change whatsoever. 15 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Please Print or Typewrite Name and Address Including Zip Code of Assignee - -------------------------------------------------------------------------------- the within Note and all rights thereunder, hereby irrevocably constituting and appointing - -------------------------------------------------------------------------------- to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated: _____________ Signature: ________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement, or any change whatsoever. 16 EX-4.4 4 FORM OF FLOATING RATE MEDIUM-TERM NOTE EXHIBIT 4.4 COUNTRYWIDE HOME LOANS, INC. CUSIP REGISTERED PRINCIPAL AMOUNT NO. FL- MEDIUM-TERM NOTE, SERIES E $ (FLOATING RATE) DUE NINE MONTHS OR MORE FROM DATE OF ISSUE PAYMENT OF THE PRINCIPAL, PREMIUM, IF ANY, AND INTEREST ON THIS NOTE IS UNCONDITIONALLY GUARANTEED BY COUNTRYWIDE CREDIT INDUSTRIES, INC. IF THE HOLDER OF THIS NOTE IS THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY, THIS NOTE IS A GLOBAL NOTE AND THE FOLLOWING LEGEND APPLIES: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH NOTE IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. ISSUE PRICE: REDEMPTION: [ ] NO ORIGINAL ISSUE DATE: [ ] YES PRINCIPAL AMOUNT: INITIAL REDEMPTION DATE: SPECIFIED CURRENCY: INITIAL REDEMPTION PERCENTAGE: MINIMUM DENOMINATION: ANNUAL REDEMPTION PERCENTAGE REDUCTION: EXCHANGE RATE AGENT: REPAYMENT: [ ] NO BASE RATE(S): [ ] YES IF CMT RATE, OPTIONAL REPAYMENT DATE(S): DESIGNATED CMT TELERATE PAGE: STATED MATURITY DATE: DESIGNATED CMT MATURITY INDEX: INITIAL INTEREST RATE: INDEX MATURITY: INTEREST RESET DATES: INTEREST FACTOR CONVENTION: INTEREST PAYMENT DATES: SPREAD (plus or minus): FIXED RATE COMMENCEMENT DATE: SPREAD MULTIPLIER: FIXED INTEREST RATE: MAXIMUM INTEREST RATE: CALCULATION AGENT: MINIMUM INTEREST RATE: OTHER/ADDITIONAL TERMS: OPTION TO RECEIVE PAYMENT IN U.S. DOLLARS: [ ] NO [ ] YES
-2- COUNTRYWIDE HOME LOANS, INC., a New York corporation (the "Company"), for value received, hereby promises to pay to _________________________________ or registered assignees, the principal sum of _______________________________ (_____________) on the Stated Maturity Date specified above (except to the extent redeemed or repaid prior to the Stated Maturity Date) at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, and such other place or places as may be provided for pursuant to the Indenture referred to below, and to pay interest in arrears at a rate per annum equal to the Initial Interest Rate specified above from the Original Issue Date specified above until the first Interest Reset Date specified above following the Original Issue Date and thereafter, except as specified herein, at a rate determined in accordance with the provisions below under the heading "Determination of Commercial Paper Rate," "Determination of LIBOR," "Determination of Certificate of Deposit Rate," "Determination of Federal Funds Rate," "Determination of Prime Rate," "Determination of Treasury Rate," "Determination of CMT Rate" or "Determination of 11th District Cost of Funds Rate" depending upon whether an applicable Base Rate specified above is the Commercial Paper Rate, LIBOR, the Certificate of Deposit Rate, the Federal Funds Rate, the Prime Rate, the Treasury Rate, the CMT Rate or the 11th District Cost of Funds Rate, respectively, until the principal hereof becomes due and payable. The Company will pay interest on the Interest Payment Dates specified above (each, an "Interest Payment Date"), commencing with the Interest Payment Date next succeeding the Original Issue Date, and on the Stated Maturity Date or, if applicable, any date of earlier redemption (the "Redemption Date") or repayment (the "Repayment Date") (the earliest of the Stated Maturity Date, the Redemption Date and the Repayment Date is hereinafter referred to as the "Maturity Date" with respect to the principal repayable on such date); provided, however, that -------- ------- if an Interest Payment Date other than the Maturity Date would fall on a day that is not a Business Day (as defined below), such Interest Payment Date shall be postponed to the next Business Day, except that if interest hereon is determined by reference to LIBOR and such next Business Day falls in the next calendar month, such Interest Payment Date shall be the immediately preceding Business Day; provided, further, that if the Maturity Date falls on a day that -------- ------- is not a Business Day, payment of principal, premium, if any, and/or interest to be made on the Maturity Date shall be made on the next Business Day with the same force and effect as if made on the Maturity Date, and no interest on such payment shall accrue to the next Business Day. "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (i) New York, New York or Los Angeles, California or (ii) if the Specified Currency specified above is other than U.S. dollars, the Principal Financial Center (as defined below) of the country issuing such Specified Currency, and if interest hereon is determined by reference to LIBOR, such day is also a London Banking Day (as defined below). "Principal Financial Center" means the capital city of the country issuing -3- the related Specified Currency, except that with respect to Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs, and European Currency Units ("ECU"), the "Principal Financial Center" shall be Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. "London Banking Day" means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to the person (the "Holder") in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the fifteenth day (whether or not a Business Day) immediately preceding such Interest Payment Date (each, a "Record Date"); provided, however, -------- ------- that interest payable on the Maturity Date will be payable to the person to whom principal is payable. Unless otherwise specified above, if this Note is originally issued between a Record Date and an Interest Payment Date the first payment of interest on this Note will be made on the Interest Payment Date following the next Record Date to the Holder hereof on such next Record Date. Unless otherwise specified above, payment of the principal of, premium, if any, and interest on, this Note due on the Maturity Date will be made in immediately available funds in the Specified Currency, upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee. If the Specified Currency is other than U.S. dollars, this Note must be presented and surrendered to the Trustee referred to below in time for the Trustee to make such payment in accordance with its normal procedures. Unless otherwise specified above, payment of interest on this Note due on any Interest Payment Date other than the Maturity Date will be made by mailing a check in the Specified Currency (from an account at a bank located outside the United States if such check is payable in a Specified Currency other than U.S. dollars) to the address of the Holder hereof as such address shall appear in the Security Register (as defined in the Indenture) on the applicable Record Date. Notwithstanding the foregoing, on any Interest Payment Date other than the Maturity Date, each Holder of U.S.$10,000,000 (or the equivalent thereof in a Specified Currency other than U.S. dollars) or more in aggregate principal amount of Notes (whether or not having identical terms and provisions) shall be entitled: (i) if the Specified Currency is U.S. dollars, to receive such payment by wire transfer of immediately available funds to an account maintained by the payee with a bank located in the United States, but only if appropriate wire transfer instructions have been received in writing by the Trustee not later than the Record Date immediately preceding such Interest Payment Date and (ii) if the Specified Currency is other than U.S. dollars, to receive such payment by wire transfer of immediately available funds to an account maintained by the payee with a bank located in a jurisdiction in which payment in such Specified Currency is then lawful. The Company shall pay any administrative costs imposed by banks in connection with making payments by wire transfer; provided, -------- -4- however, that any tax, assessment or other governmental charge imposed upon - ------- payments shall be borne by the Holder hereby in respect of which payments are made. All payments of principal, premium, if any, and interest, in respect of this Note will be made by the Company in the Specified Currency; provided, -------- however, that if the Specified Currency specified above is other than U.S. - ------- dollars, the Holder hereof may, if indicated above under "Option to Receive Payment in U.S. Dollars," elect to receive all payments of principal, premium, if any, and/or interest in respect of this Note in U.S. dollars by delivering a written request to the Trustee not later than the close of business on the Record Date immediately preceding the Interest Payment Date or the fifteenth day immediately preceding the Maturity Date, as the case may be. Upon such election by the Holder hereof, the Company shall tender payment in U.S. dollars at the Exchange Rate (as defined below), and any costs associated with the conversion of the Specified Currency into U.S. dollars shall be borne by the Holder hereof through deductions from such payments. The Holder's election to receive payments in U.S. dollars will remain in effect until revoked by written notice from the Holder to the Trustee, provided that any such revocation must be received by the Trustee not later than the close of business on the Record Date immediately preceding the Interest Payment Date or the fifteenth day immediately preceding the Maturity Date, as the case may be. Unless otherwise specified above or elsewhere herein, "Exchange Rate" means, with respect to a Specified Currency other than ECU, the noon Dollar buying rate for such Specified Currency for cable transfers quoted by the Exchange Rate Agent specified above in The City of New York on the Record Date or Special Record Date (as defined below) or the fifteenth day immediately preceding the Maturity Date or such other date provided herein or in the Indenture, as the case may be, as certified for customs purposes by the Federal Reserve Bank of New York. With respect to ECU, "Exchange Rate" means the exchange rate between U.S. dollars and ECU reported by the Council of the European Communities on the applicable Record Date or Special Record Date with respect to an Interest Payment Date or the fifteenth day immediately preceding the Maturity Date or such other date as provided herein or in the Indenture, as the case may be. If any payment of principal, premium, if any, or interest on this Note is to be made in a Specified Currency other than U.S. dollars and such Specified Currency is not available to the Company for making such payment due to the imposition of exchange controls or other circumstances beyond the control of the Company, the Company will be entitled to satisfy its obligations to the Holder hereof by making such payment in U.S. dollars on the basis of the Exchange Rate referred to below two Business Days prior to the Interest Payment Date or the Maturity Date, as the case may be (or, if no rate is quoted for such Specified Currency on such date, the last date such Exchange Rate is quoted). Any payment made under such circumstances in U.S. dollars where the required -5- payment is in a Specified Currency other than U.S. dollars will not constitute an Event of Default under the Indenture. For purposes of this paragraph and the immediately succeeding paragraph, the "Exchange Rate" for a foreign currency or ECU will be the noon Dollar selling rate for that foreign currency or ECU for cable transfers quoted by the Exchange Rate Agent in The City of New York, as certified for customs purposes by the Federal Reserve Bank of New York. If payment on this Note is required to be made in ECU and ECU is unavailable due to the imposition of exchange controls or other circumstances beyond the control of the Company, or is no longer used in the European Monetary System, all payments due on that due date with respect to this Note shall be made in U.S. dollars. The amount so payable on any date in ECU shall be converted into U.S. dollars, at a rate determined by the Exchange Rate Agent as of the second Business Day prior to the date on which such payment is due on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts which were components of the ECU as of the last date on which the ECU was used in the European Monetary System. The equivalent of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Components. The U.S dollar equivalent of each of the Components shall be determined by the Exchange Rate Agent on the basis of the most recently available Exchange Rate. If the official unit of any component currency is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies (in appropriate proportions) the sum of which shall be equal to the amount of the former component currency. All determinations referred to above made by the Exchange Rate Agent shall be at its sole discretion (except to the extent expressly provided that any determination is subject to approval) and, in the absence of manifest error, shall be conclusive for all purposes and binding on the Holder of this Note and the Exchange Rate Agent shall have no liability therefor. Any interest not punctually paid or duly provided for with respect to this Note ("Defaulted Interest") will forthwith cease to be payable to the Holder of this Note on the applicable Record Date and may either be paid to the person in whose name this Note is registered at the close of business on a special record date (the "Special Record -6- Date") for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to the Holder of this Note not less than ten days prior to such Special Record Date, or may be paid at any time in any other lawful manner, all as more completely provided in the Indenture. This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Company (collectively, the "Debt Securities"), of the series hereinafter specified, all issued or to be issued under and pursuant to an indenture, dated as of January 1, 1992, as amended, supplemented or modified from time to time, including Supplemental Indenture No. 1 thereto, dated as of June 15, below), and The Bank of New York, as trustee (the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture reference is hereby made for a description of the respective rights, limitation of rights, obligations, duties and immunities thereunder of the Trustee, the Company, the Guarantor and the Holders of the Notes. The Debt Securities may be issued in one or more series, which different series (and which Debt Securities issued within each series) may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates or formulas, may be subject to different redemption or repayment provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, and may otherwise vary as provided in the Indenture. This Note is one of a series designated as "Medium-Term Notes, Series E, Due Nine Months or More From Date of Issue" of the Company (collectively, the "Notes"), limited in aggregate issue amount to U.S.$1,000,000,000 or the equivalent thereof in one or more Specified Currencies other than U.S. dollars. The interest payable hereon on each Interest Payment Date will include interest accrued from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for, from and including the Original Issue Date, as the case may be, to, but excluding, the applicable Interest Payment Date or the Maturity Date, as the case may be (each, an "Interest Period"). Accrued interest will be calculated by multiplying the principal amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day in the Interest Period for which accrued interest is being calculated. The interest factor for each such day shall be computed by dividing the interest rate applicable to such day by 360 if an applicable Base Rate is the Commercial Paper Rate, LIBOR, Certificate of Deposit Rate, Federal Funds Rate, Prime Rate or 11th District Cost of Funds Rate or by the actual number of days in the year if an applicable Base Rate is the Treasury Rate or CMT Rate. If more than one Base Rate is applicable to this Note, the interest factor will be calculated in the same manner as if only the Base Rate specified above under "Interest Factor Convention" applied. -7- This Note will bear interest at the rate determined in accordance with the provisions set forth below by reference to the applicable Base Rate, or the lowest, highest or average of two or more Base Rates, as specified above, based on the Index Maturity, if any, specified above (i) plus or minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if any, in each case specified above. Commencing with the first Interest Reset Date specified above, the rate at which interest on this Note is payable shall be reset as of each Interest Reset Date; provided, however, that (i) the interest rate in effect for -------- ------- the period, if any, from the Original Issue Date to the first Interest Reset Date will be the Initial Interest Rate and (ii) if a Fixed Rate Commencement Date is specified above, the interest rate in effect for the period commencing on the Fixed Rate Commencement Date to the Maturity Date shall be the Fixed Interest Rate specified above or, if no Fixed Interest Rate is specified above, the interest rate in effect on the day immediately preceding the Fixed Rate Commencement Date. Except as set forth in the immediately preceding paragraph, the interest rate in effect on each day shall be (i) if such day is an Interest Reset Date, the interest rate determined as of the Interest Determination Date (as defined below) immediately preceding such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the interest rate determined as of the Interest Determination Date immediately preceding the most recent Interest Reset Date. If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next Business Day, except that if interest hereon is determined by reference to LIBOR and such next Business Day falls in the next calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, specified above. In addition, the interest rate hereon shall in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application. Subject to applicable provisions of law and except as specified herein, on each applicable Interest Reset Date the rate of interest will be calculated by the Calculation Agent specified below in accordance with the provisions of the applicable heading below. Determination of Commercial Paper Rate. If an applicable Base Rate is -------------------------------------- the Commercial Paper Rate, the "Commercial Paper Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a "Commercial Paper Rate Determination Date") and shall be the Money Market Yield (as defined below) on such date of the rate for commercial paper having the Index Maturity specified above as published by the Board of Governors of the -8- Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or any successor publication ("H.15(519)"), under the heading "Commercial Paper." In the event that such rate is not published prior to 3:00 P.M., New York City time, on the relevant Calculation Date (as defined below), then the Commercial Paper Rate shall be the Money Market Yield on such Commercial Paper Rate Determination Date of the rate for commercial paper of the specified Index Maturity as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" ("Composite Quotations") under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York City time, on such Commercial Paper Rate Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the specified Index Maturity, placed for an industrial issuer whose bond rating is "AA", or the equivalent, from a nationally recognized rating agency; provided, -------- however, that if the dealers selected as aforesaid by the Calculation Agent - ------- are not quoting offered rates as mentioned in this sentence, the Commercial Paper Rate for such Interest Reset Date will be the Commercial Paper Rate in effect on such Commercial Paper Rate Determination Date. "Money Market Yield" shall be a yield (expressed as a percentage) calculated in accordance with the following formula: Money Market Yield = D x 360 x 100 ----------------- 360 - (D x M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal and "M" refers to the actual number of days in the Interest Period for which interest is being calculated corresponding to the Index Maturity specified above. Determination of LIBOR. If an applicable Base Rate is LIBOR, "LIBOR" ---------------------- for each applicable Interest Reset Date will be determined by the Calculation Agent as follows: (i) If "LIBOR Reuters" is specified above, on the second London Banking Day prior to the applicable Interest Reset Date (a "LIBOR Determination Date"), the Calculation Agent will determine LIBOR as the arithmetic mean of the offered rates for deposits in U.S. dollars for the period of the Index Maturity specified above which appear on the "Reuters Screen LIBO Page" at approximately 11:00 A.M., London time, on such LIBOR Determination Date. "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuter Monitor Money Rates Service (or such other page as may -9- replace the LIBO Page on that service for the purpose of displaying London interbank offered rates of major banks). If "LIBOR Telerate" is specified above or if no other method for determining LIBOR is provided for, on the LIBOR Determination Date, the Calculation Agent will determine LIBOR as the rate for deposits in U.S. dollars for the period of the Index Maturity specified above which appears on "Telerate Page 3750" at approximately 11:00 A.M., London time, on such LIBOR Determination Date. "Telerate Page 3750" means the display page so designated on the Dow Jones Telerate Service (or such other page as may replace such page on that service for the purpose of displaying London interbank offered rates of major banks). (ii) If LIBOR Reuters is specified on the face hereof and if fewer than two offered rates for the applicable Index Maturity appear on the Reuters Screen LIBO Page or if LIBOR Telerate is applicable for determining LIBOR and no rate appears on Telerate Page 3750, the Calculation Agent will request the principal London offices of each of four major banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in U.S. dollars for the period of the Index Maturity specified above commencing on the second London Banking Day following such LIBOR Determination Date to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such LIBOR Determination Date and in a principal amount equal to an amount of not less than U.S.$1,000,000 that is representative of a single transaction in such market at such time. If at least two such quotations are provided, LIBOR will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR in respect of that LIBOR Determination Date will be the arithmetic mean of rates quoted by three major banks in The City of New York selected by the Calculation Agent (after consultation with the Company) at approximately 11:00 A.M., New York City time, on such LIBOR Determination Date for loans in U.S. dollars to leading European banks, for the period of the Index Maturity specified above commencing on the second London Banking Day following such LIBOR Determination Date and in the principal amount equal to an amount of not less than U.S.$1,000,000 that is representative for a single transaction in such market at such time; provided, however, that if fewer than three banks selected -------- ------- as aforesaid by the Calculation Agent are quoting rates as mentioned in this sentence, LIBOR in effect for such Interest Reset Date will be LIBOR in effect on such LIBOR Determination Date. Determination of Certificate of Deposit Rate. If an applicable Base -------------------------------------------- Rate is the Certificate of Deposit Rate, the "Certificate of Deposit Rate" for each applicable Interest Reset Date shall be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a "CD Rate Determination Date") and will be the rate for negotiable certificates of deposit having the Index Maturity specified -10- above, as published in H.15(519) under the heading "CDs (Secondary Market)." In the event that such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to such CD Rate Determination Date, then the Certificate of Deposit Rate will be the rate on such CD Rate Determination Date for negotiable certificates of deposit of the Index Maturity specified above as published in Composite Quotations under the heading "Certificates of Deposit." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the Certificate of Deposit Rate will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on such CD Rate Determination Date of three leading non-bank dealers in negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major United States money center banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity specified above in a denomination of U.S.$5,000,000; provided, however, that if the dealers selected as aforesaid by -------- ------- such Calculation Agent are not quoting offered rates as mentioned in this sentence, the Certificate of Deposit Rate for such Interest Reset Date will be the Certificate of Deposit Rate in effect on such CD Rate Determination Date. Determination of Federal Funds Rate. If an applicable Base Rate is ----------------------------------- the Federal Funds Rate, the "Federal Funds Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a "Federal Funds Rate Determination Date") and shall be the rate on such Federal Funds Rate Determination Date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)." In the event that such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to such Federal Funds Rate Determination Date, the Federal Funds Rate shall be the rate on such Federal Funds Rate Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the Federal Funds Rate will be calculated by the Calculation Agent and will be the arithmetic mean of the rates for transactions in overnight Federal Funds arranged by three leading brokers of Federal Funds transactions in The City of New York selected by the Calculation Agent as of 9:00 A.M., New York City time, on such Federal Funds Rate Determination Date; provided, however, that if the three brokers selected as -------- ------- aforesaid by the Calculation Agent are not quoting rates as mentioned in this sentence, the Federal Funds Rate for such Interest Reset Date will be the Federal Funds Rate in effect on such Federal Funds Rate Determination Date. Determination of Prime Rate. If an applicable Base Rate is the Prime --------------------------- Rate, the "Prime Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a -11- "Prime Rate Determination Date") and shall be the rate on such date as such rate is published in H.15(519) under the heading "Bank Prime Loan." If such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to such Prime Rate Determination Date, then the Calculation Agent shall determine the Prime Rate as the arithmetic mean of the rates of interest publicly announced by each bank that appears on the "Reuters Screen USPRIME1 Page" as such bank's prime rate or base lending rate as in effect for such Prime Rate Determination Date. "Reuters Screen USPRIME1 Page" means the display designated as page "USPRIME1" on the Reuter Monitor Money Rates Service (or such other page as may replace the USPRIME1 Page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). If fewer than four such rates but more than one such rate appear on the Reuters Screen USPRIME1 Page for such Prime Rate Determination Date, the Calculation Agent shall determine the Prime Rate as the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by a 360- day year as of the close of business in The City of New York on such Prime Rate Determination Date by three major money center banks in The City of New York selected by the Calculation Agent. If fewer than two such rates appear on the Reuters Screen USPRIME1 Page, the Calculation Agent will determine the Prime Rate as the arithmetic mean on the basis of the prime rates quoted as of the close of business in The City of New York on such Prime Rate Determination Date by three substitute banks or trust companies that are organized and doing business under the laws of the United States or any state thereof, have total equity capital of at least U.S.$1,000,000 and are subject to supervision or examination by Federal or state authorities; provided, however, that if fewer -------- ------- than three such substitute banks or trust companies are quoting prime rates as mentioned in this sentence, the Prime Rate for such Interest Reset Date will be the Prime Rate in effect on such Prime Rate Determination Date. Determination of Treasury Rate. If an applicable Base Rate is the ------------------------------ Treasury Rate, the "Treasury Rate" with respect to any Treasury Rate Determination Date (as defined below) will be the rate for the auction held on such Treasury Rate Determination Date of direct obligations of the United States ("Treasury bills") having the Index Maturity specified above as published in H.15(519) under the heading "Treasury bills--auction average (investment)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Treasury Rate Determination Date, the auction average rate (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the Index Maturity specified above are not published or reported as provided above by 3:00 P.M., New York City time, on such Calculation Date or if no such auction is held on the Treasury Rate Determination Date, then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond -12- equivalent, on the basis of a year of 365 or 366 days, as applicable and applied on a daily basis) of the arithmetic mean of the secondary market bid rates as of approximately 3:30 P.M., New York City time, on such Treasury Rate Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified above, provided, --------- however, that if the dealers selected as aforesaid by the Calculation Agent are - ------- not quoting bid rates as mentioned in this sentence, the Treasury Rate for such Interest Reset Date will be the Treasury Rate in effect on such Treasury Rate Determination Date. The "Treasury Rate Determination Date" shall be the day of the week in which the applicable Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday; provided, however, that if such auction -------- ------- is held on the preceding Friday, such Friday will be the Treasury Rate Determination Date pertaining to the Interest Reset Date occurring in the next week; and, provided further, that if an auction falls on an Interest Reset Date, -------- ------- then such Interest Reset Date will be the first Business Day following such auction. Determination of CMT Rate. If an applicable Base Rate is the CMT ------------------------- Rate, the "CMT Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (the "CMT Rate Determination Date") and will be the rate displayed on the Designated CMT Telerate Page (as defined below) under the caption "...Treasury Constant Maturities ... Federal Reserve Board Release H.15 ... Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the week or the month, as applicable, ended immediately preceding the week in which the applicable CMT Rate Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Rate Determination Date, then the CMT Rate for such CMT Rate Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published in the relevant H.15(519), or if not published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Rate Determination Date, then the CMT Rate for such CMT Rate Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the -13- Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Rate Determination Date, then the CMT Rate for such CMT Rate Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on such CMT Rate Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT Rate Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 P.M., New York City time, on such CMT Rate Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least U.S.$1,000. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than -------- ------- three Reference Dealers selected by the Calculation Agent are quoting as described herein, the CMT Rate for such Interest Reset Date will be the CMT Rate in effect on such CMT Rate Determination Date. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page specified above (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as published in H.15(519)), for the purpose of displaying Treasury Constant Maturities as published in -14- H.15(519). If no such page is specified above, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the Treasury Notes (either one, two, three, five, seven, ten, twenty or thirty years) specified above with respect to which the CMT Rate will be calculated. If no such maturity is specified above, the Designated CMT Maturity Index shall be two years. Determination of 11th District Cost of Funds Rate. If an applicable ------------------------------------------------- Base Rate is the 11th District Cost of Funds Rate, the "11th District Cost of Funds Rate" for each applicable Interest Reset Date will be determined by the Calculation Agent as of the last Business Day of the month prior to such Interest Reset Date (the "11th District Rate Determination Date") and will be the rate equal to the monthly weighted average cost of funds for the calendar month preceding such 11th District Rate Determination Date as set forth under the caption "11th District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such 11th District Rate Determination Date. If such rate does not appear on Telerate Page 7058 on any related 11th District Rate Determination Date, the 11th District Cost of Funds Rate for such 11th District Rate Determination Date shall be the monthly weighted average cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank District that was most recently announced by the Federal Home Loan Bank ("FHLB") of San Francisco as such cost of funds for the calendar month preceding the date of such announcement. If the FHLB of San Francisco fails to announce such rate for the calendar month immediately preceding such 11th District Rate Determination Date, then the 11th District Cost of Funds Rate for such Interest Reset Date will be the 11th District Cost of Funds Rate in effect on such 11th District Rate Determination Date. The "Interest Determination Date" means the Commercial Paper Rate Determination Date, the LIBOR Determination Date, the CD Rate Determination Date, the Federal Funds Rate Determination Date, the Prime Rate Determination Date, the Treasury Rate Determination Date, the CMT Rate Determination Date or the 11th District Rate Determination Date, as the case may be. If interest hereon is determined by reference to two or more Base Rates, the "Interest Determination Date" means the most recent Business Day which is at least two Business Days prior to the applicable Interest Reset Date on which each Base Rate shall be determinable. Each Base Rate shall be determined and compared as of such date, and the applicable interest rate shall take effect on the related Interest Reset Date. The Bank of New York shall be the Calculation Agent, unless a different Calculation Agent is specified above. At the request of the Holder hereof, the Calculation Agent will provide the interest rate then in effect and, if determined, the interest rate which will become effective on the next Interest Reset Date. -15- The "Calculation Date," if applicable, pertaining to any Interest Determination Date will be earlier of (i) the 10th calendar day after such Interest Determination Date or, if such day is not a Business Day, the next Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or the Maturity Date, as the case may be. If an Event of Default, as defined in the Indenture, with respect to the Notes shall have occurred and be continuing, the principal hereof (or, if this Note is an Original Issue Discount Security (as defined below), the Amortized Face Amount (as defined below)) and accrued interest (or, if this Note is an Original Issue Discount Security, any accrued interest the payment of which would constitute qualified stated interest payments within the meaning of Treasury Regulation Section 1.1273-1(c) under the Internal Revenue Code of 1986, as amended (the "Code"), as in effect on _____ __, 1996), may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Company, the Guarantor and the Trustee, with the consent of the Holders of a majority in aggregate principal amount of the Debt Securities at the time outstanding of each series to be affected, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or modifying in any manner the rights of the Holders of the Debt Securities; provided, however, that no -------- ------- such supplemental indenture shall, without the consent of the Holder of each outstanding Debt Security affected thereby: (i) except as otherwise permitted in the Indenture in connection with Debt Securities for which the Stated Maturity is extendible, change the Stated Maturity of the principal of, or any installment of interest on, any such Debt Security; (ii) reduce the principal amount of any such Debt Security or, except as otherwise permitted in the Indenture in connection with Debt Securities for which the interest rate may be reset, the interest thereon or any premium payable upon the redemption or repayment thereof; (iii) reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof; (iv) adversely affect any right of repayment at the option of the Holder of any such Debt Security; (v) reduce the amount of, or postpone the date fixed for, any payment under any sinking fund or analogous provisions for any Debt Security; (vi) change any Place of Payment, or the currency or currency unit of the payment of the principal of, premium, if any, or interest on any Debt Security; (vii) change or eliminate certain rights of Holders to receive payment in a designated currency; (viii) impair the right to institute suit for the enforcement of any required payment on or with respect to any Debt Security; (ix) reduce the percentage in aggregate principal amount of the Outstanding Debt Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of the -16- Indenture or certain defaults thereunder and their consequences) provided for in the Indenture; (x) modify certain other provisions of the Indenture; or (xi) modify or affect in any manner adverse to the Holders the terms and the conditions of the obligations of the Guarantor in respect of the due and punctual payment of principal, or premium, if any, or interest on, the Debt Securities. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Debt Securities of any series, the Holders of a majority in aggregate principal amount of the Debt Securities of such series at the time outstanding may on behalf of the Holders of all of the Debt Securities of such series waive any past default or Event of Default and its consequences, except a default in the payment of the principal of, or premium, if any, or interest on, any Debt Security of such series or in respect of certain other covenants or provisions of the Indenture. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not any notation of such consent or waiver is made upon this Note or such other Notes. The Guarantor, or a Subsidiary thereof, may directly assume, by a supplemental indenture, the due and punctual payment of the principal of, and premium, if any, and interest on, all the Debt Securities, in which case the Company shall be released from its liability as obligor on the Debt Securities. No reference herein to the Indenture and no reference to any provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on, this Note at the places, at the respective times, at the rate and in the currency herein prescribed. The Notes are issuable in registered form without coupons in the minimum denomination of U.S.$1,000, or the equivalent thereof in the Specified Currency (if other than U.S. dollars), and in integral multiples of U.S.$1,000 in excess thereof, or the equivalent thereof in such Specified Currency, or such other Minimum Denomination as specified on the face hereof. Notes may be exchanged by the Holder hereof, without charge except for any tax, assessment or other governmental charge imposed in connection therewith, for a like aggregate principal amount of Notes of other authorized denominations in the manner and subject to the limitations provided in the Indenture at the Corporate Trust Office of the Trustee. If this Note is subject to Optional Redemption as specified above, the Company may at its option, redeem this Note in whole or, from time to time, in part in increments of U.S.$1,000 (provided that any remaining principal amount hereof shall not be less than the minimum denomination, as described above) on or after the Initial Redemption Date specified above at the sum of (i) 100% of the unpaid principal amount hereof or the portion thereof redeemed (or, if this Note is an Original Issue Discount -17- Security, the Amortized Face Amount determined as of the Redemption Date as provided below), plus (ii) the Initial Redemption Percentage specified above (as adjusted for the Annual Redemption Percentage Reduction, if applicable) multiplied by the unpaid principal amount or the portion thereof redeemed (or, if this Note is an Original Issue Discount Security, the Issue Price specified above, net of any portion of such Issue Price which has been deemed paid prior to redemption (by reason of any payments, other than a payment of qualified stated interest, in excess of the original issue discount accrued to the date of such payment), or the portion of such Issue Price (or such net amount) proportionate to the portion of the unpaid principal amount of the Note redeemed), plus (iii) accrued interest to the Redemption Date (or, if this Note is an Original Issue Discount Security, any accrued interest to the Redemption Date the payment of which would constitute qualified stated interest payments within the meaning of Treasury Regulation Section 1.1273-1(c) under the Code). Such Initial Redemption Percentage shall decline at each anniversary of the Initial Redemption Date by an amount equal to the Annual Redemption Percentage Reduction, if any, specified above, until the Initial Redemption Percentage equals zero percent. The Company may exercise such option by causing the Trustee to mail a notice of such redemption to the Holder hereof not less than 30 but not more than 60 days prior to the Redemption Date. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If less than all of the Notes with like tenor and terms to this Note are to be redeemed, the Notes to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate. An "Original Issue Discount Security" means any Note that has been issued at an Issue Price lower, by an amount that equals or exceeds a de minimis -- ------- amount (as determined under United States Federal income tax rules applicable to original issue discount instruments), than the principal amount thereof. If this Note is an Original Issue Discount Note, the "Amortized Face Amount" of this Note shall be the amount equal to the sum of (a) the Issue Price plus (b) the aggregate of the portions of the original issue discount (the excess of the amounts considered as part of the "stated redemption price at maturity" of this Note within the meaning of Section 1273(a)(2) of the Code, whether denominated as principal or interest, over the Issue Price of this Note) which shall theretofore have accrued pursuant to Section 1272 of the Code (without regard to Section 1272(a)(7) of the Code) from the Original Issue Date of this Note to the date of determination, minus (c) any amount considered as part of the "stated redemption price at maturity" of this Note which has been paid on this Note from the Original Issue Date to the date of determination. If this Note is subject to Optional Repayment as specified above, the Holder hereof may at its option require the Company to repay this Note in whole or from time to time in part in increments of U.S.$1,000 or the minimum denomination specified above (provided that any remaining principal amount hereof shall not be less than the minimum -18- denomination, as described above) on any Optional Repayment Date specified above at the sum of (i) 100% of the unpaid principal amount hereof or the portion to be repaid thereof, plus (ii) accrued interest to the Repayment Date. In order for this Note to be repaid, this Note must be received, together with the form entitled "Option to Elect Repayment" duly completed, by the Trustee at its Corporate Trust Office (or such other address of which the Company shall from time to time notify the Holders of the Notes) not more than 60 nor less than 30 days prior to the Repayment Date. Exercise of such repayment option by the Holder hereof shall be irrevocable, except as otherwise provided above. Prior to due presentment of this Note for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor, or the Trustee may treat the Holder hereof as the owner of this Note, for the purpose of receiving payment of the principal hereof and premium, if any, and interest hereon and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent of the Company, the Guarantor, or the Trustee shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of, or premium, if any, or interest on, this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer, director or employee, as such, past, present, or future, of the Company or the Guarantor or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. All terms used but not defined in this Note shall have the meanings assigned to them in the Indenture. The Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by or on behalf of the Trustee under the Indenture. -19- IN WITNESS WHEREOF, Countrywide Home Loans, Inc. has caused this instrument to be signed in its name by the facsimile signatures of its duly authorized officers, and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. Date: COUNTRYWIDE HOME LOANS, INC. [SEAL] By:________________________________ President Attest:__________________________ Secretary -20- GUARANTEE OF COUNTRYWIDE CREDIT INDUSTRIES, INC. For value received, Countrywide Credit Industries, Inc., a corporation duly organized and existing under the laws of Delaware (the "Guarantor"), hereby unconditionally guarantees to the Holder of the Note upon which this Guarantee is endorsed the due and punctual payment of the principal of, and premium, if any, and interest on, and sinking fund payments, if any, required with respect to said Note, when and as the same shall become due and payable, whether on the Stated Maturity Date, by acceleration, redemption or repayment or otherwise, according to the terms thereof and of the Indenture referred to therein. In case of the failure of Countrywide Home Loans, Inc. (the "Company") punctually to pay any such principal, premium, interest, or sinking fund payment, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether on the Stated Maturity Date, by acceleration, redemption or repayment, or otherwise, and as if such payment were made by the Company. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of said Note or said Indenture, any failure to enforce the provisions of said Note or said Indenture, or any waiver, modification, consent or indulgence granted to the Company with respect thereto, by the Holder of said Note or the Trustee under said Indenture, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to said Note or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged except by payment in full of the principal of, and premium, if any, and interest on, or any sinking fund payment required with respect to, said Note and the complete performance of all other obligations contained in said Note. The Guarantor shall be subrogated to all rights of the Holder of said Note against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided, however, that -------- ------- the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such -21- right of subrogation until the principal of, and premium, if any, and interest on, and any sinking fund payments required with respect to, all Notes of this series issued under said Indenture shall have been paid in full and its other obligations under said Indenture completed. The Guarantor hereby certifies and warrants that all acts, conditions and things required to be done and performed and to have happened precedent to the creation and issuance of this Guarantee and to constitute the valid obligation of the Guarantor have been done and performed and have happened in due compliance with all applicable laws. This Guarantee as endorsed on said Note shall not be entitled to any benefit under said Indenture or become valid or obligatory for any purpose until the certificate of authentication on said Note shall have been signed manually by or on behalf of the Trustee under said Indenture. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York. -22- IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed in facsimile by its duly authorized officer under its corporate seal. COUNTRYWIDE CREDIT INDUSTRIES, INC. By:__________________________________ Vice Chairman and Executive Vice President Attest:_____________________________ Secretary CERTIFICATE OF AUTHENTICATION This is one of the Debt Securities of the series designated therein referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee Date: By:_________________________________ Authorized Officer -23- OPTION TO ELECT REPAYMENT The undersigned hereby irrevocably requests and instructs the Company to repay this Note (or portion hereof specified below) in accordance with the terms of this Note at a price equal to the principal amount hereof (or portion hereof to be repaid), together with interest to the Repayment Date, by payment to the undersigned at ________________________________________________________________________________ ________________________________________________________________________________ (Please print or typewrite name and address, including zip code, of the undersigned). In order for this Note to be repaid, the Trustee must receive at its Corporate Trust Office at 101 Barclay Street, New York, New York 10286, or at such other place or places of which the Company shall from time to time notify the Holders of the Notes, not more than 60 nor less than 30 days prior to the Repayment Date, this Note with this Option to Elect Repayment form duly completed. If less than the entire principal amount of this Note is to be repaid, specify the portion hereof (which shall be in increments of U.S.$1,000 or other increments specified above) to be repaid: ______________. If less than the entire principal amount of this Note is to be repaid, specify the denomination(s) of the Note(s) to be issued for the unpaid amount (which shall be U.S.$1,000 or increments of U.S.$1,000 in excess thereof, or such other minimum denomination specified above):______________. Date: _______________________________________________ Note: The signature on this Option to Elect Repayment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement, or any change whatsoever. -24- ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ------------------------------ - -------------------------------------------------------------------------------- Please Print or Typewrite Name and Address Including Zip Code of Assignee - -------------------------------------------------------------------------------- the within Note and all rights thereunder, hereby irrevocably constituting and appointing - -------------------------------------------------------------------------------- to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated: ____________________ Signature:________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement, or any change whatsoever. -25- EX-5.1 5 OPINION OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON EXHIBIT 5.1 FRIED, FRANK, HARRIS, SHRIVER & JACOBSON A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS ONE NEW YORK PLAZA NEW YORK, NEW YORK 10004-1980 212-859-8000 FAX 212-859-4000 WRITER'S DIRECT LINE May 15, 1996 212-859-8280 (FAX: 212-859-8586) Countrywide Credit Industries, Inc. Countrywide Homes Loans, Inc. 155 North Lake Avenue Pasadena, California 91101 Ladies and Gentlemen: We are acting as special counsel to Countrywide Credit Industries, Inc., a Delaware corporation (the "Guarantor"), and its wholly-owned subsidiary, Countrywide Home Loans, Inc., a New York corporation (the "Company"), in connection with Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (File No. 33-59559) of the Company and the Guarantor and the Registration Statement on Form S-3 (File No. 333-______) of the Company and the Guarantor (collectively, the "Registration Statement"), in each case, under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the contemplated issuance by the Company from time to time of up to U.S. $1,000,000,000 aggregate public offering price or the equivalent thereof in one or more foreign currencies, currency units or composite currencies of debt securities (the "Debt Securities"), which shall be guaranteed as to payment of principal, premium, if any, and interest by the Guarantor (the "Guarantees"), and which shall be issued pursuant to the Indenture, dated as of January 1, 1992, as supplemented by Supplemental Indenture No. 1 thereto, dated as of June 15, 1995, in each case among the Company, the Guarantor and The Bank of New York, as trustee (as so supplemented, the "Indenture"). Capitalized terms used herein have the meanings set forth in the Registration Statement, unless otherwise defined herein. We have examined the originals, or certified, conformed or reproduction copies, of all such records, agreements, instruments and documents as we have deemed relevant or necessary as the basis for the opinions hereinafter expressed. In all such examinations, we have assumed the genuineness of all Countrywide Credit Industries, Inc. -2- May 15, 1996 Countrywide Home Loans, Inc. signatures, the authenticity of all original or certified copies and the conformity to original or certified copies of all copies submitted to us as conformed or reproduction copies. We also have assumed, with respect to all parties to agreements or instruments relevant hereto other than the Company and the Guarantor, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. As to various questions of fact relevant to such opinions, we have relied upon, and have assumed the accuracy of, certificates and oral or written statements and other information of or from public officials, officers or representatives of the Company and the Guarantor, and others. Based upon the foregoing and subject to the limitations set forth herein, we are of the opinion that when the terms of the Debt Securities and their issue and sale and the related Guarantees have been duly established in conformity with the Indenture so as not to violate any applicable law or agreement or instrument then binding on the Company or the Guarantor, the Guarantees have been endorsed on the Debt Securities and executed in accordance with the terms of the Indenture and the Debt Securities have been duly executed and authenticated in accordance with the terms of the Indenture and issued and sold as contemplated in the Registration Statement, the Debt Securities will constitute legal, valid and binding obligations of the Company and the Guarantees will constitute legal, valid and binding obligations of the Guarantor, subject in each case to (i) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether considered in a proceeding in equity or at law. We express no opinion as to the legality, validity, binding effect or enforceability of any provision of the Debt Securities, the Indenture or the Guarantees providing for payments thereunder in a currency other than currency of the United States of America to the extent that a court of competent jurisdiction will under applicable law convert any judgment rendered in such other currency into currency of the United States of America or to the extent that payment in a currency other than currency of the United States of America is contrary to applicable law. In this connection, we note that, as of the date of this opinion, in Countrywide Credit Industries, Inc. -3- May 15, 1996 Countrywide Home Loans, Inc. the case of a Debt Security denominated in a foreign currency, a state court in the State of New York rendering a judgment on such Debt Security would be required under Section 27 of the New York Judiciary Law to render such judgment in the foreign currency in which the Debt Security is denominated, and such judgment would be converted into United States dollars at the exchange rate prevailing on the date of entry of the judgment. This opinion is expressly limited to the laws of the State of New York and, to the extent required by the foregoing opinion, the General Corporation Law of the State of Delaware. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to this firm under the captions "Validity of Securities" in the Prospectus and "Validity of Securities" in any Prospectus Supplement forming a part of the Registration Statement. In giving these consents, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act. The opinions expressed herein are solely for the benefit of the Company, the Guarantor and The Bank of New York, as trustee under the Indenture (who may rely on this letter as though it were an addressee) and may not be relied upon in any manner or for any purpose by any other person and may not be quoted in whole or in part without our prior written consent. Very truly yours, FRIED, FRANK, HARRIS, SHRIVER & JACOBSON By: /s/ Kenneth R. Blackman ---------------------------------------- Kenneth R. Blackman EX-8.1 6 OPINION OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON EXHIBIT 8.1 FRIED, FRANK, HARRIS, SHRIVER & JACOBSON A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS ONE NEW YORK PLAZA NEW YORK, NEW YORK 10004-1980 212-859-8000 FAX 212-859-4000 WRITER'S DIRECT LINE May 15, 1996 212-859-8171 (FAX: 212-859-8588) Countrywide Home Loans, Inc. Countrywide Credit Industries, Inc. 155 North Lake Avenue Pasadena, California 91101 Ladies and Gentlemen: We have acted as your special counsel in connection with the Prospectus and Prospectus Supplement dated , 1996 (the "Prospectus Supplement") pertaining to Post-Effective Amendment No. 1 to your Registration Statement on Form S-3 (File No. 33-59559) and your Registration Statement on Form S-3 (File No. 333 - _________) (collectively, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), being filed today with the Securities and Exchange Commission, with respect to the public offering of Medium Term Notes, Series E, of Countrywide Home Loans, Inc. (the "Notes"). We hereby confirm, based on the assumptions and subject to the qualifications and limitations set forth therein, that the statements in the section of the Prospectus Supplement captioned "Certain Federal Income Tax Considerations," to the extent that such statements constitute statements of law, reflect our opinion regarding the material federal income tax consequences of the purchase, ownership, and disposition of the Notes. No opinion is expressed on matters other than those specifically referred to herein. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act. Countrywide Home Loans, Inc. 2 May 15, 1996 The opinion expressed herein is solely for your benefit and may not be relied upon in any manner or for any purpose by any other person and may not be quoted in whole or in part without our prior written consent. Very truly yours, FRIED, FRANK, HARRIS, SHRIVER & JACOBSON By: /s/ Lee S. Parker ----------------------------------------------- Lee S. Parker EX-23.1 7 CONSENT OF GRANT THORNTON EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS --------------------------------------------------- We have issued our report dated April 23, 1996, accompanying the consolidated financial statements and schedules of Countrywide Credit Industries, Inc. and Subsidiaries appearing in the Annual Report on Form 10-K for the year ended February 29, 1996, which is incorporated by reference in this Post-Effective Amendment No. 1 to the Registration Statement (File No. 33-59559) and Registration Statement (File No. 333-__________________) (collectively, the "Registration Statement"). We consent to the incorporation by reference in this Registration Statement and of the aforementioned report and to the use of our name as it appears under the caption "Experts." GRANT THORNTON LLP /s/GRANT THORNTON LLP Los Angeles, California May 15, 1996 EX-25.1 8 FORM T-1 GENERAL ITEM 1. General Information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. 10006, New York and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20549 New York Clearing House Association New York, N.Y. (b) Whether it is authorized to exercise corporate trust powers: Yes. ITEM 2. Affiliations with Obligor If the obligor is an affiliate of the trustee, describe each such affiliation. None. (See Note on page 2.) _____________________________ ITEM 16. List of Exhibits: Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the Commission's Rules of Practice. 1. - A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (See Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. - A copy of the existing By-laws of the Trustee. (See Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. - The consent of the Trustee required by Section 321(b) of the Act. (See Exhibit 6 to Form T-1, Registration Statement No. 33-44051.) 7. - See Exhibit 7 Attached hereto. 1 NOTE ---- Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. ___________________________ SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 8th day of May, 1996. The Bank of New York By: /s/ Vivian Georges _____________________ Vivian Georges Assistant Vice President 2 --------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1995, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin......... $ 4,500,312 Interest-bearing balances................................... 643,938 Securities: Held-to-maturity securities................................. 806,221 Available-for-sale securities............................... 2,036,768 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank: Federal funds sold.......................................... 4,166,720 Securities purchased under agreements to resell............. 50,413 Loans and lease financing receivables: Loans and leases, net of unearned income...27,068,535 LESS: Allowance for loan and lease losses.....520,024 LESS: Allocated transfer risk reserve...........1,000 Loans and leases, net of unearned income and allowance, and reserve.................................... 26,547,511 Assets held in trading accounts............................... 758,462 Premises and fixed assets (including capitalized leases)...... 615,330 Other real estate owned....................................... 63,769 Investments in unconsolidated subsidiaries and associated companies................................................... 223,174 Customers' liability to this bank on acceptances outstanding................................................. 900,795 Intangible assets............................................. 212,220 Other assets.................................................. 1,186,274 ----------- Total assets.................................................. $42,711,907 =========== LIABILITIES DEPOSITS: In domestic offices......................................... $21,248,127 Noninterest-bearing.........................9,172,079 Interest-bearing...........................12,076,048 In foreign offices, Edge and Agreement subsidiaries, and IBFs.................................................... 9,535,088 Noninterest-bearing............................64,417 Interest-bearing............................9,470,671 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased..................................... 2,095,668 Securities sold under agreements to repurchase.............. 69,212 Demand notes issued to the U.S. Treasury...................... 107,340 Trading liabilities........................................... 615,718 Other borrowed money: With original maturity of one year or less.................. 1,638,744 With original maturity of more than one year................ 120,863 Bank's liability on acceptances executed and outstanding...... 909,527 Subordinated notes and debentures............................. 1,047,860 Other liabilities............................................. 1,836,573 ----------- Total liabilities............................................. 39,224,720 ----------- EQUITY CAPITAL Common Stock.................................................. 942,284 Surplus....................................................... 525,666 Undivided profits and capital reserves........................ 1,995,316 Net unrealized holding gains (losses) on available-for-sale securities............................... 29,668 Cumulative foreign currency translation adjustments........... (5,747) ----------- Total equity capital.......................................... 3,487,187 ----------- Total liabilities and equity capital.......................... $42,711,907 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been pre- pared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot } Thomas A. Renyl } Directors Alan R. Griffith } --------------- Reprinted from American Banker February 22, 1996 -----END PRIVACY-ENHANCED MESSAGE-----