DEALER MANAGER AGREEMENT

 

<PAGE>

 

                                                                     EXHIBIT 1.1

 

 

                            DEALER-MANAGER AGREEMENT

 

                        COUNTRYWIDE FINANCIAL CORPORATION

 

                                       AND

 

                          COUNTRYWIDE HOME LOANS, INC.

 

                                                                   July __, 2004

 

Lehman Brothers Inc.

745 Seventh Avenue, 3rd Floor

New York, New York  10019

 

Ladies and Gentlemen:

 

            1. THE EXCHANGE OFFER. Countrywide Financial Corporation, a Delaware

corporation (the "COMPANY"), intends to offer to exchange (together with any

amendments and extensions thereof, the "EXCHANGE OFFER") convertible securities

due 2031 (the "NEW CONVERTIBLE SECURITIES"), with the full and unconditional

guarantee (the "NEW GUARANTEE" and, together with the New Convertible

Securities, the "NEW SECURITIES") of Countrywide Home Loans, Inc. (the

"GUARANTOR" and, together with the Company, the "ISSUERS"), for any and all of

its outstanding LYONs due February 8, 2031 (the "OLD SECURITIES"), on the terms

and subject to the conditions set forth in the Prospectus and related Letter of

Transmittal (each as defined below) attached hereto as Exhibits A and B,

respectively.

 

            The New Securities will be issued pursuant to an indenture (the "NEW

Indenture") to be entered into by the Issuers and The Bank of New York, as

Trustee (the "NEW TRUSTEE"). The New Securities will be convertible into cash

and duly and validly issued, fully paid and nonassessable shares of common

stock, par value $0.05 per share (the "COMMON STOCK"), of the Company (such

shares, the "CONVERSION SHARES") on the terms, and subject to the conditions,

set forth in the New Indenture (including Exhibit A thereto).

 

            The Prospectus, the Letter of Transmittal, the Registration

Statement, the Schedule TO (each as defined below), all statements and other

documents filed or to be filed with any federal, state or local governmental or

regulatory agency or authority and such other documents (including, but not

limited to, any advertisements, press releases or summaries relating to the

Exchange Offer and any forms of letters to brokers, dealers, banks, trust

companies and other nominees relating to the Exchange Offer), in each case in

the form first authorized for use by the Issuers in connection with the Exchange

Offer and approved by the Dealer-Manager, and thereafter in each case together

with any amendments and supplements thereto made in accordance with the terms of

this agreement (this "Agreement"), are collectively referred to as the "EXCHANGE

OFFER MATERIALS".

 

<PAGE>

            2. APPOINTMENT AS DEALER-MANAGER. The Issuers hereby appoint Lehman

Brothers Inc. ("LEHMAN BROTHERS") as sole dealer-manager in connection with the

Exchange Offer (in such capacity, the "DEALER-MANAGER"), and the Issuers hereby

authorize Lehman Brothers to act as such in connection with the Exchange Offer.

On the basis of the representations and warranties and agreements of the Issuers

contained in this Agreement and subject to and in accordance with the terms and

conditions hereof, Lehman Brothers agrees in accordance with its customary

practice, and in accordance with all applicable United States laws and

regulations, to use its commercially reasonable efforts to solicit tenders of

the Old Securities pursuant to the Exchange Offer and to communicate with

brokers, dealers, banks, trust companies, nominees and other persons with

respect to the Exchange Offer.

 

            3. NO LIABILITY FOR ACTS OF BROKERS, DEALERS, BANKS, TRUST

COMPANIES, NOMINEES AND OTHERS. The Dealer-Manager shall not be subject to any

loss, claim, damage, liability or expense owed to the Issuers or any of the

Issuers' affiliates or subsidiaries for any act or omission on the part of any

broker or dealer in securities (other than itself), bank, trust company, nominee

or any other person, and the Dealer-Manager shall not be liable for its own acts

or omissions in performing its obligations as Dealer-Manager except for any

losses, claims, damages, liabilities and expenses determined in a final judgment

by a court of competent jurisdiction to have resulted directly from any such

acts or omissions undertaken or omitted to be taken by it (including its

employees and authorized agents) through its gross negligence or willful

misconduct. In soliciting or obtaining tenders of Old Securities, the Issuers

hereby acknowledge that Lehman Brothers, as Dealer-Manager, is acting as an

independent contractor and shall not be deemed to be acting as the agent of the

Issuers or as the agent of any broker, dealer, bank, trust company, nominee or

other person and no broker, dealer, bank, trust company, nominee or other person

shall be deemed to be acting as the agent of the Dealer-Manager, the Issuers or

any of the Issuers' affiliates or subsidiaries.

 

            4. THE EXCHANGE OFFER MATERIALS; COMMENCEMENT; WITHDRAWAL.

 

            (a) The Issuers have prepared and filed with the Securities and

Exchange Commission (the "COMMISSION"), under the Securities Act of 1933, as

amended (the "SECURITIES ACT"), and the applicable rules and regulations of the

Commission under the Securities Act, the Securities Exchange Act of 1934, as

amended (the "EXCHANGE ACT"), and the applicable rules and regulations of the

Commission under the Exchange Act, a registration statement on Form S-4 (File

No. 333- ), including a Prospectus, covering the registration of the exchange of

New Securities for Old Securities in the Exchange Offer. The term "REGISTRATION

STATEMENT" as used in this Agreement shall mean such registration statement,

including financial statements, schedules and exhibits, and the documents

incorporated by reference therein, in the form in which it became effective and,

in the event of any further amendment or supplement thereto made in accordance

with the terms of this Agreement, shall also mean (from and after the

effectiveness of such amendment or supplement) such registration statement as so

amended or supplemented. The term "PROSPECTUS" as used in this Agreement shall

mean the prospectus included in the Registration Statement and, in the event of

any further amendment or supplement thereto made in accordance with the terms of

this Agreement, shall also mean (from and after the time it is first provided by

the Issuers for use in connection with

 

 

 

                                       2

 

<PAGE>

the Exchange Offer) such prospectus as so amended or supplemented. Any reference

herein to the Prospectus shall be deemed to refer to and include the documents

incorporated by reference therein pursuant to Item 13 of Form S-4 under the

Securities Act, as of the date of the Prospectus, as the case may be, and any

reference to any amendment or supplement to the Prospectus shall be deemed to

refer to and include any documents filed after the date of the Prospectus under

the Exchange Act and incorporated by reference in the Prospectus. The term

"LETTER OF TRANSMITTAL" as used in this Agreement shall mean the letter of

transmittal to be used by holders of the Old Securities (the "HOLDERS")

tendering outstanding Old Securities pursuant to the Exchange Offer, in the form

included in the Registration Statement.

 

            (b) Upon the Commencement Date (as defined below), the Issuers will

file with the Commission under the Exchange Act and the rules and regulations

promulgated thereunder a Tender Offer Statement on Schedule TO with respect to

the Exchange Offer (including the exhibits thereto and any documents

incorporated by reference therein, the "SCHEDULE TO"), a copy of which Schedule

TO (including the documents required by Item 12 thereof to be filed as exhibits

thereto) in the form in which it is to be so filed, will be furnished to the

Dealer-Manager promptly upon the filing thereof.

 

            (c) The Exchange Offer Materials have been or will be prepared and

approved by, and are the sole responsibility of, the Issuers, except for

information provided by the Dealer-Manager in writing expressly for use in the

Exchange Offer Materials, it being understood that the only information so

provided by the Dealer-Manager expressly for use in the Exchange Offer Materials

is the name, address and telephone numbers of Lehman Brothers, as

Dealer-Manager. The Issuers hereby represent and warrant that they will commence

the Exchange Offer as soon as practicable by publicly announcing its

commencement and by distributing, mailing, or causing to be mailed on their

behalf, copies of, where necessary, the Exchange Offer Materials to the Holders

for delivery excluding the documents incorporated by reference in the Exchange

Offer Materials (the "INCORPORATED DOCUMENTS"), to the beneficial Holders (the

date of such announcement and of the commencement of such distribution, the

"COMMENCEMENT DATE").

 

            (d) The Issuers hereby (i) agree to furnish the Dealer-Manager with

as many copies as it may reasonably request of the final forms of all Exchange

Offer Materials filed with the Commission, mailed to Holders, or provided to any

other governmental authority or agency and, upon its request, any other

documents incorporated therein or otherwise filed or to be filed with any

federal, state or local governmental or regulatory agency or authority, any

stock exchange or any court and (ii) authorize the Dealer-Manager to use copies

of such Exchange Offer Materials in connection with the Exchange Offer. The

Dealer-Manager hereby agrees that it will not disseminate any written materials

in connection with the Exchange Offer other than such Exchange Offer Materials.

 

            (e) The Issuers hereby represent and agree that no solicitation

material in addition to the Exchange Offer Materials, which additional materials

shall be in the form which has been approved by the Dealer-Manager, will be used

in connection with the Exchange Offer or filed with any federal, state or local

governmental or regulatory agency or authority, including the Commission, by or

on behalf of the Issuers without the Dealer-Manager's prior approval, which

approval will not be unreasonably withheld. In the event that (i) the Issuers

use or permit the use of any solicitation material not so approved by

Dealer-Manager in connection with the Exchange

 

                                       3

<PAGE>

Offer or file any such solicitation material with any such federal, state or

local governmental or regulatory agency or authority without the

Dealer-Manager's prior approval, (ii) the Issuers withdraw, terminate or cancel

the Exchange Offer, (iii) if at any time the Dealer-Manager shall determine that

any condition set forth in Section 9 shall not be satisfied, (iv) the

Registration Statement containing all of the required information, including

pricing information, and a prospectus that meets the requirements of Section

10(a) of the Securities Act (including a letter of transmittal), shall not have

become effective on or prior to the expiration date of the Exchange Offer (the

"EXPIRATION DATE") or (v) at any time during the Exchange Offer, a stop order

suspending the effectiveness of the Registration Statement shall have been

issued or a proceeding for that purpose shall have been instituted or shall be

pending or threatened by the Commission, or a request for additional information

on the part of the Commission shall not have been satisfied to the reasonable

satisfaction of the Dealer-Manager or there shall have been issued, at any time

during the Exchange Offer, any temporary restraining order or injunction

restraining or enjoining Lehman Brothers from acting in its capacity as a

Dealer-Manager with respect to the Exchange Offer; then the Dealer-Manager (A)

shall have a reasonable period of time after discovering or being informed of

such event to elect whether to continue to act as Dealer-Manager and shall be

entitled to withdraw as Dealer-Manager in connection with the Exchange Offer

without any liability or penalty to it or any other person defined in Section 11

as an "Indemnified Person," (B) shall be entitled promptly to receive the

payment of all fees and expenses payable to it under this Agreement which have

accrued to the date of such withdrawal or which otherwise thereafter become

payable and (C) shall continue to be entitled to the indemnification and

contribution provisions contained in Section 11.

 

            5. COMPENSATION. Each of the Issuers hereby jointly and severally

agrees to pay the Dealer-Manager as compensation for its services as

Dealer-Manager the fees described in the engagement letter dated July 12, 2004,

(the "ENGAGEMENT LETTER"), between Lehman Brothers and the Issuers, payable in

accordance with the terms of the Engagement Letter. Nothing in this Agreement

shall affect Lehman Brothers' right to receive any other fees, compensation or

reimbursement set forth in the Engagement Letter. The fees set forth in this

Section shall be paid within three business days after the Expiration Date.

 

            6. REIMBURSEMENT OF EXPENSES AND PAYMENT OF OTHER COSTS. Each of the

Issuers hereby jointly and severally agrees (a) to reimburse Lehman Brothers in

connection with its services as Dealer-Manager for any out-of-pocket expenses

incurred by it in connection with the preparation, printing, filing, mailing and

publishing of the Exchange Offer Materials and for all out-of-pocket expenses

incurred by it as Dealer-Manager, including, without limitation, the fee for

special tax counsel described in the Engagement Letter; provided, however, that

the Issuers shall only be required to reimburse the reasonable fees and

disbursements of the Dealer-Managers' legal counsel, Simpson Thacher & Bartlett

LLP if the Exchange Offer is not consummated, (b) to pay all fees and expenses

of the Exchange Agent and Information Agent (each as defined below) in

connection with the Exchange Offer, (c) to reimburse brokers, dealers, banks,

trust companies and nominees for their customary mailing and handling expenses

incurred in forwarding Exchange Offer Materials to their customers, if any, and

(d) to pay any

 

                                       4

<PAGE>

reasonable advertising and public relations charges pertaining to the Exchange

Offer and the related transactions. The Issuers shall promptly reimburse the

Dealer-Manager for all amounts owing under Section 6(a) after such expenses have

been paid or accrued and an invoice therefor has been sent by the Dealer-Manager

to the Issuers, which may be sent from time to time as such expenses are paid

(but without duplication) or accrued, whether or not the Exchange Offer is

consummated and in addition to the amounts owing to the Dealer-Manager under the

preceding Section 5.

 

            7. THE EXCHANGE AGENT AND INFORMATION AGENT.

 

            (a) The Issuers (i) have arranged for The Bank of New York to serve

as exchange agent in connection with the Exchange Offer (the "EXCHANGE AGENT"),

(ii) will arrange for the Exchange Agent to advise the Dealer-Manager daily as

to such matters as it may reasonably request, including the aggregate principal

amount of Old Securities that have been tendered pursuant to the Exchange Offer

and (iii) will arrange for the Exchange Agent to be responsible for the payment

of the consideration offered by the Issuers to the Holders in connection with

the Exchange Offer pursuant and subject to the Prospectus.

 

            (b) The Issuers have arranged for D.F. King & Co., Inc. to serve as

information agent in connection with the Exchange Offer (the "INFORMATION

AGENT") and to perform services in connection with the Exchange Offer that are

customary for an information agent.

 

            (c) The Issuers will provide, or will cause the Exchange Agent and

Information Agent, as applicable, to provide, the Dealer-Manager with the

security listing position (or other cards or lists) containing the names and

addresses of, and the aggregate principal amount of Old Securities held by, the

Holders as of a recent date and will use their commercially reasonable efforts

to cause the Dealer-Manager to be advised, from time to time as it may request,

during the period of the Exchange Offer as to any transfers of record of Old

Securities. In addition, the Issuers hereby authorize the Dealer-Manager to

communicate with the New Trustee, the Exchange Agent and the Information Agent,

as applicable, with respect to matters relating to the Exchange Offer and to

cause the Exchange Agent and the Information Agent, as applicable, to advise the

Dealer-Manager daily as to such matters as it may reasonably request, including

the aggregate principal amount of Old Securities that have been tendered.

 

            8. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS. In addition to the

other representations and warranties made by the Issuers contained in this

Agreement, each of the Issuers jointly and severally represents and warrants to

the Dealer-Manager, and agrees with the Dealer-Manager, on each of the

Commencement Date, the Expiration Date, the Exchange Date (as defined herein)

and on the date of any post-effective amendment to the Registration Statement

(each, an "AMENDMENT DATE") and during the period of the Exchange Offer (i.e.,

the period commencing on the Commencement Date through and including the

Expiration Date), that:

 

            (a) Each of the Issuers has been duly organized and is validly

existing as a corporation in good standing under the laws of its jurisdiction of

incorporation and has corporate power and authority to own, lease and operate

its properties and to conduct its business as described in the Prospectus; and

each of the Issuers is duly licensed or qualified to do business and is in good

standing as a foreign corporation in each other jurisdiction in which such

licensing

 

                                       5

<PAGE>

or qualification is required, whether by reason of the ownership or leasing of

property or the conduct of business, except for such qualification and good

standing the failure of which individually or in the aggregate, would not be

likely to result in (i) a material adverse effect on the business, prospects,

financial condition or results of operations of either Issuer and their

respective subsidiaries taken as a whole or (ii) the material impairment of the

ability of either Issuer to consummate the Exchange Offer and the other

transactions contemplated in the Exchange Offer Materials and to perform in any

material respect its material obligations thereunder (each of (i) and (ii), a

"MATERIAL ADVERSE EFFECT").

 

            (b) Each of the Issuers has all necessary corporate power and

authority (i) to execute, deliver and perform its obligations under this

Agreement and (ii) to make and consummate the Exchange Offer in accordance with

its terms; and all necessary corporate action has been duly taken by it to

authorize the Exchange Offer, the execution, delivery and performance of this

Agreement, and the consummation of the transactions contemplated hereby and in

the Exchange Offer Materials. Each of the Issuers has taken or will take all

necessary corporate action to authorize any amendments or supplements to, or

modifications of, the Exchange Offer and the Exchange Offer Materials.

 

            (c) This Agreement has been duly authorized, executed and delivered

by each of the Issuers and constitutes a valid and binding obligation of each of

the Issuers enforceable in accordance with its terms, enforceable against each

of the Issuers in accordance with its terms, subject to the effects of

bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and

other similar laws relating to or affecting creditors' rights generally, general

equitable principles (whether considered in a proceeding in equity or at law)

and an implied covenant of good faith and fair dealing.

 

            (d) Each "significant subsidiary" of each of the Issuers (as such

term is defined in Rule 1-02 of Regulation S-X) (each a "SUBSIDIARY" and,

collectively, the "SUBSIDIARIES") has been duly organized and is validly

existing in good standing under the laws of the jurisdiction of its

organization, has all power and authority attendant to its form of organization

to own, lease and operate its properties and to conduct its business as

described in the Prospectus and is duly licensed or qualified to do business and

in good standing as a foreign entity in each other jurisdiction in which such

licensing or qualification is required, whether by reason of the ownership or

leasing of property or the conduct of business, except where the failure so to

qualify or to be in good standing or licensed would not result in a Material

Adverse Effect; except as otherwise disclosed in the Registration Statement, all

of the issued and outstanding capital stock of each such Subsidiary has been

duly authorized and validly issued, is fully paid and non-assessable and is

owned by the Issuers, directly or through subsidiaries, free and clear of any

security interest, mortgage, pledge, lien, encumbrance, claim or equity, except

as would not result in a Material Adverse Effect; none of the outstanding shares

of capital stock of any Subsidiary was issued in violation of applicable

preemptive or similar rights, except as would not result in a Material Adverse

Effect.

 

            (e) Neither of the Issuers, nor any of their respective

subsidiaries, is in violation of its charter or by-laws or in default in the

performance or observance of any obligation, agreement, covenant or condition

contained in any contract, indenture, mortgage, deed of trust, loan or credit

agreement, note, lease or other agreement or instrument to which the Issuers or

any

 

                                       6

<PAGE>

of their subsidiaries is a party or by which it or any of them may be bound,

or to which any of the property or assets of the Issuers or any of their

subsidiaries is subject, except for such defaults that would not result in a

Material Adverse Effect.

 

            (f) (i) The execution, delivery and performance by each of the

Issuers of this Agreement, (ii) the making and consummation of the Exchange

Offer by the Issuers, (iii) the use of the Exchange Offer Materials and the

filing of the Registration Statement, the Prospectus and the Schedule TO and any

amendments or supplement thereto and (iv) the consummation by the Issuers of the

transactions contemplated by this Agreement and in the Exchange Offer Materials

and compliance with the terms herein or therein (all of the foregoing,

collectively, the "TRANSACTIONS"), in each case, (x) do not violate and will not

result in a violation of any of the terms or provisions of the charter or

by-laws or similar organizational documents of either of the Issuers or any of

its Subsidiaries, (y) do not and will not conflict with, or result in a breach

or violation of any of the terms or provisions of, or constitute an event of

default (or an event which with notice or lapse of time or both would become an

event of default) under, or give to others any rights of termination, amendment,

acceleration or cancellation of, or result in the creation or imposition of any

lien, charge or encumbrance upon any property or assets of either of the Issuers

or any of its subsidiaries under, (A) the certificate of incorporation or

by-laws of either of the Issuers, (B) any material loan or credit agreement,

indenture, mortgage, note, deed of trust, lease or other material agreement or

instrument to which either of the Issuers or any of its subsidiaries is a party

or by which any of them may be bound or to which any of their properties or

assets are bound or affected, (C) any existing applicable law, rule, regulation,

judgment, order or decree of any government, governmental or regulatory

instrumentality or agency or court, domestic or foreign, having jurisdiction

over either of the Issuers or any of its subsidiaries or any of its properties,

assets or (D) result in the creation or imposition of any lien, charge, claim,

or encumbrance on any material asset or property of either of the Issuers or any

of its subsidiaries and (z) complies and will comply in all material respects

with all applicable laws, rules and regulations of any government or

governmental or regulatory instrumentality or agency.

 

            (g) None of the Exchange Offer or other Transactions require or will

require any consent, qualification or decree of, approval of, waiver by, license

or authorization from, or permit of, or other action by or filing or

registration with or notification to, any court or governmental or regulatory

authority or agency other than (i) such as have been already obtained or as may

be required under the Securities Act or the Exchange Act or state securities

laws and (ii) as described in the Prospectus.

 

            (h) Each of the Issuers meets the requirements for use of Form S-4

under the Securities Act. On the Exchange Date, the Registration Statement and

any post-effective amendment thereto, each in the form delivered to the

Dealer-Manager, and including all Incorporated Documents, shall have become

effective under the Securities Act and no stop order suspending the

effectiveness of the Registration Statement or any post-effective amendment

thereto has been issued under the Securities Act and no proceedings for that

purpose have been instituted or are pending or, to the knowledge of either of

the Issuers, are contemplated by the Commission, and any request on the part of

the Commission for additional information has been complied with or otherwise

satisfied. No stop order suspending the issuance or sale of the Common Stock

pursuant to the Exchange Offer has been issued and no proceedings for that

purpose are pending or, to the knowledge of either of the Issuers, are

contemplated. No other

 

                                       7

<PAGE>

stop order and no injunction, restraining order or denial of any application for

approval has been issued or proceedings, litigation or investigation initiated

or, to the best knowledge of either of the Issuers, threatened with respect to

the Exchange Offer by or before any governmental or regulatory agency, or any

court.

 

            (i) The Exchange Offer Materials, as then amended or supplemented

(other than the Prospectus and the Registration Statement, and any amendments

and supplements thereto, which are covered in subsection (j) below), (i)

complied and will comply in all material respects with the requirements of the

Securities Act and the Exchange Act; and (ii) did not and will not contain an

untrue statement of a material fact or omit to state any material fact required

to be stated therein or necessary to make the statements therein, in light of

the circumstances under which they were made, not misleading.

 

            (j) Neither the Prospectus nor any amendments or supplements

thereto, at the time the Prospectus or any such amendment or supplement was

issued and at the Exchange Date, included or will include an untrue statement of

a material fact or omitted or will omit to state any material fact necessary in

order to make the statements therein, in the light of the circumstances under

which they were made, not misleading. At the respective times the Registration

Statement and any post-effective amendments thereto became effective and at the

Exchange Date, the Registration Statement and any amendments and supplements

thereto complied and will comply in all material respects with the requirements

of the Securities Act and did not and will not contain an untrue statement of a

material fact or omit to state any material fact required to be stated therein

or necessary to make the statements therein not misleading. The representations

and warranties in this subsection (j) and in subsection (i) shall not apply to

statements contained in the Exchange Offer Materials furnished in writing by or

on behalf of Lehman Brothers for inclusion in the Exchange Offer Materials.

 

            (k) The Prospectus filed as part of the Registration Statement as

originally filed or as part of any amendment thereto, or filed pursuant to Rule

424(b) under the Securities Act, complied when so filed in all material respects

with the Securities Act and the Prospectus delivered to the Dealer-Manager for

use in connection with this offering was identical to the electronically

transmitted copies thereof filed with the Commission pursuant to Regulation S-T

promulgated by the Commission.

 

            (l) The Incorporated Documents, when they became effective or were

filed (or, if an amendment with respect to any such Incorporated Document was

filed or became effective, when such amendment was filed or became effective)