As filed with the Securities and Exchange Commission on February 26, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
WESTPAC SECURITISATION MANAGEMENT PTY LIMITED
(ACN 081 709 211)
(Exact name of registrant as specified in its governing instruments)
Level 5, 60 Martin Place
Sydney, NSW 2000
Australia
Telephone: 612-9226-3589
(Address, including zip code/post code, and telephone number, including area
code, of registrant's principal executive offices)
----------------------
Lewis E. Love, Jr.
Director & Secretary
Westpac Securitisation Management Pty Limited
575 Fifth Avenue, 39th Floor
New York, New York 10017-2422
Telephone: (212) 551-1905
(Name, address, including zip code and telephone number, including
area code, of agent for service)
----------------------
With a copy to:
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Kimberly Gire Diane Citron, Esq. Cathy M. Kaplan, Esq.
Director Mayer, Brown & Platt Brown & Wood LLP
Westpac Securitisation Management 190 South LaSalle Street One World Trade Center
Pty Limited Chicago, Illinois 60603 New York, New York 10048
Level 6, 60 Martin Place
Sydney, NSW 2000
Australia
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----------------------
Approximate date of commencement of proposed sale to the public:
From time to time on or after the effective date of the registration
statement, as determined by market conditions.
----------------------
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| __________
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 this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| __________
If delivery of the prospectus is expected to be made pursuant to Rule 434
check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to be Offering Price Aggregate Registration
Securities to Be Registered Registered Per Unit* Offering Price* Fee
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Mortgage Backed Floating Rate Notes... $1,000,000 100% $1,000,000 $295.00
=========================================================================================================
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* Estimated for the purpose of calculating the registration fee.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant 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.
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CROSS REFERENCE SHEET
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Name and Caption in Form S-11 Caption in Prospectus
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1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus.................................. Front Cover of Registration Statement; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus................................................ Inside Front Cover Page of Prospectus; Outside Back Cover
Page of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges................................. Summary of Terms; Risk Factors
4. Determination of Offering Price............................. *
5. Dilution.................................................... *
6. Selling Security Holders.................................... *
7. Plan of Distribution........................................ Underwriting
8. Use of Proceeds............................................. Use of Proceeds
9. Selected Financial Data..................................... *
10. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... The Trust Fund; The Trust Manager
11. General Information as to Registrant......................... Description of the Offered Notes; The Trust Manager
12. Policy with respect to Certain Activities.................... Description of the Offered Notes
13. Investment Policies of Registrant............................ Description of the Offered Notes
14. Description of Real Estate................................... The Trust Fund; Westpac Residential Loan Program
15. Operating Data............................................... *
16. Tax Treatment of Registrant and Its Security Holders......... United States Federal Income Tax Consequences; Certain
Australian Tax Matters
17. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters............... *
18. Description of Registrant's Securities....................... Description of the Offered Notes
19. Legal Proceedings............................................ *
20. Security Ownership of Certain Beneficial Owners and
Management................................................... The Trust Manager
21. Directors and Executive Officers............................. *
22. Executive Compensation....................................... *
23. Certain Relationships and Related Transactions............... *
24. Selection, Management and Custody of Registrant's
Investments.................................................. Description of the Offered Notes; Westpac Residential Loan
Program
25. Policies with Respect to Certain Transactions................ Description of the Offered Notes
26. Limitations of Liability..................................... Description of the Offered Notes
27. Financial Statements and Information......................... *
28. Interests of Named Experts and Counsel....................... *
29. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................... Part II of Registration Statement
30. Quantitative and Qualitative Disclosures about Market Risk... *
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* Not Applicable
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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 FEBRUARY 26, 1998
PRELIMINARY PROSPECTUS
US$_____________
Westpac Securities Administration Limited
(ACN 000 049 472)
Series 1998-1G WST Trust
US$___________ Class A Mortgage Backed Floating Rate Notes due ____
US$___________ Class B Mortgage Backed Floating Rate Notes due ____
Interest on the Class A Mortgage Backed Floating Rate Notes (the "Class A
Notes") and the Class B Mortgage Backed Floating Rate Notes (the "Class B Notes"
and together with the Class A Notes, the "Offered Notes") offered hereby and
issued by Westpac Securities Administration Limited solely in its capacity as
issuer trustee (the "Issuer Trustee") of the Series 1998-1G WST Trust (the
"Trust") will be payable quarterly on the 19th day of each of April, July,
October and January (or if such 19th day is not a Business Day (as defined
herein), the next succeeding Business Day in the same month or, if not in the
same month, the immediately preceding Business Day), commencing July 19, 1998
(each, a "Payment Date"). The principal of a class of Offered Notes will be
payable on its maturity date indicated above, subject to earlier redemption in
whole or in part as described herein. Only the Offered Notes are offered hereby.
The Offered Notes will be collateralized by a pool of variable and fixed
rate residential housing loans (the "Housing Loans") and other Trust Assets (as
defined herein). The Housing Loans are from a general portfolio of residential
Housing Loans which have been originated by Westpac Banking Corporation (ARBN
007 457 141) ("Westpac") in the ordinary course of their business. The Housing
Loans will be sold either by Westpac or the Seller Trustees (as defined herein)
to the Issuer Trustee.
(Continued on next page)
--------------------------
PROSPECTIVE INVESTORS IN THE NOTES SHOULD REVIEW THE INFORMATION SET FORTH UNDER
"RISK FACTORS" BEGINNING ON PAGE 23 HEREIN.
THE OFFERED NOTES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF WESTPAC, THE MORTGAGE COMPANY PTY LIMITED,
WESTPAC SECURITISATION MANAGEMENT PTY LIMITED, ANY OF THEIR RESPECTIVE
AFFILIATES (OTHER THAN THE ISSUER TRUSTEE) OR ANY GOVERNMENT OR GOVERNMENTAL
AGENCY. NEITHER THE OFFERED NOTES NOR THE HOUSING LOANS ARE INSURED OR
GUARANTEED BY ANY GOVERNMENT OR GOVERNMENTAL AGENCY EXCEPT TO THE LIMITED EXTENT
DESCRIBED HEREIN.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Price to Public Underwriting Discount Proceeds to Issuer Trustee(2)
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Class A Notes(1).. % % %
- ------------------------------------------------------------------------------------------
Class B Notes(1).. % % %
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Total ............ US$ US$ US$
==========================================================================================
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(1) Plus accrued interest, if any, at the applicable rate from __________.
(2) Before deducting expenses, estimated to be US$___________.
Application has been made to list the Offered Notes on the London Stock
Exchange.
The Offered Notes are offered by the Underwriters (as defined herein)
subject to prior sale when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to reject any order in whole or in part and to
withdraw, cancel or modify the offer without notice. It is expected that
delivery of the Offered Notes will be made in book-entry form through the
facilities of The Depository Trust Company ("DTC"), Cedel Bank, societe anonyme
("Cedel") and the Euroclear System ("Euroclear") on or about _____________,
against payment therefor in immediately available funds.
J.P. Morgan & Co. MORGAN STANLEY DEAN WITTER
J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated are acting as
joint bookrunners in connection with the activities relating to this offering.
The date of this Prospectus is ___________.
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(Continued from the cover page)
The Issuer Trustee was incorporated on 11th July 1944 as, and continues to
exist and operate as, a limited liability public company under the Corporations
Law of New South Wales, Australia. The Trust was formed pursuant to the Notice
of Creation of Trust (as defined herein) executed by the Issuer Trustee and the
Trust Manager on ________, 1998. The Trustee will cause the Trust to issue the
Offered Notes in its capacity as Issuer Trustee of the Trust. The assets of the
trust (the "Trust Assets") include the Housing Loans, rights under certain
insurance policies with respect to the Housing Loans, the Collections Account
and the Issuer Trustee's rights under the Transaction Documents (as defined
herein).
The Offered Notes shall be subject to mandatory redemption in part on any
Payment Date if on that date there are any Principal Collections (as defined
herein) available to be distributed in relation to the Offered Notes. The
Offered Notes are also subject to optional redemption in full in certain
circumstances described herein.
The Class A Notes rank pari passu and without any preference among
themselves and the Class B Notes rank pari passu and without any preference
among themselves. The right to payment of principal of and interest on the Class
B Notes is subordinated and may be limited as more particularly described
herein. In addition, under certain limited circumstances, the Trust may issue
certain additional debt securities, the Redraw Funding Securities ("RFSs"),
which in certain circumstances will convert to RFS Class A Notes. Upon
conversion, the RFS Class A Notes will rank pari passu in respect of priority of
principal and interest with the Class A Notes. The RFSs, along with repayments
under the Redraw Facility, will be senior in priority of distributions of
principal to the Class A Notes and the RFS Class A Notes. The RFSs, the RFS
Class A Notes and fees with respect to the Redraw Facility and the Class A Notes
will rank pari passu in respect to priority of payments of interest. Payments in
respect of principal and interest in respect of the Class B Notes are
subordinated to such payments in respect of the Class A Notes, RFSs and RFS
Class A Notes. See "DESCRIPTION OF THE OFFERED NOTES--Description of the Redraw
Facility, the Redraw Funding Securities and the RFS Class A Notes," "--Interest
Payable on the RFSs and the RFS Class A Notes" and "--Subordination of the Class
B Notes." The RFSs and the RFS Class A Notes are not being offered hereby.
The Offered Notes should not be acquired by any associate (as defined in
Section 128F of the Income Tax Act of 1936 of Australia) of the Issuer Trustee.
As a result of the issue of the Offered Notes, rights conferred upon DTC,
Euroclear or Cedel in relation to the Offered Notes will be created in favor of
the Noteholders (as defined herein).
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, THE SECURITIES IN THE OPEN MARKET. SEE
"UNDERWRITING."
Until 90 days after the date of this Prospectus, all dealers effecting
transactions in the Offered Notes, whether or not participating in this
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes (as defined herein) are issued,
quarterly and annual unaudited reports containing information concerning the
Issuer Trustee and the Offered Notes will be prepared by the Trust Manager and
sent on behalf of the Issuer Trustee to Cede & Co. ("Cede"), as nominee of DTC
as registered holder of the Offered Notes pursuant to the Note Trust Deed. See
"DESCRIPTION OF THE OFFERED NOTES--Book-Entry Registration" and "--Determination
Date Calculations and Reports to Noteholders." Such reports will be made
available by the Issuer Trustee to DTC and its participants to holders of
interests in the Offered Notes in accordance with the rules, regulations and
procedures creating and affecting DTC. However, such reports will not be sent
directly to each beneficial owner while the Offered Notes are in book-entry
form. Upon the issuance of fully registered, certificated Offered Notes, such
reports will be sent directly to each Noteholder. Such reports will not
constitute financial statements prepared in accordance with generally accepted
accounting principles. The Trust Manager, on behalf of the Issuer Trustee, will
file with the Securities and Exchange Commission (the "Commission") such
periodic reports as are required under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations of the Commission
thereunder. However, in accordance with the Exchange Act and the rules and
regulations of the Commission thereunder, the Trust Manager expects that the
Issuer Trustee's obligation to file such reports will be terminated following
the end of 1998.
2
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AUSTRALIAN DISCLAIMERS
(a) The Offered Notes do not represent deposits or other liabilities of
Westpac or associates of Westpac.
(b) The holding of the Offered Notes is subject to investment risk,
including possible delays in repayment and loss of income and principal
invested.
(c) Neither Westpac nor any associate of Westpac in any way stands behind
the capital value and/or performance of the Offered Notes or the assets of the
Trust except to the limited extent provided in the Transaction Documents for the
Trust.
(d) None of Westpac, the Issuer Trustee, the Servicer or the Trust Manager
guarantees the payment of interest or the repayment of principal due on the
Offered Notes.
(e) None of the obligations of the Trust Manager are guaranteed in any way
by Westpac or any associate of Westpac.
3
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AVAILABLE INFORMATION
The Trust Manager has filed with the Commission a Registration Statement
(together with all amendments and exhibits thereto, referred to herein as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Offered Notes offered pursuant to this
Prospectus. For further information, reference is made to the Registration
Statement and amendments thereof and to the exhibits thereto, which are
available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
and at the Commission's regional offices at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of the Registration Statement and
amendments thereof and exhibits thereto may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission also maintains a World Wide Web site
which provides on-line access to reports, proxy and information statements and
other information regarding registrants that file electronically with the
commission at the address "http://www.sec.gov."
ENFORCEMENT OF FOREIGN JUDGMENTS IN AUSTRALIA
Westpac Securitisation Management Pty Limited (the "Company") is an
Australian proprietary company incorporated with limited liability under the
Corporations Law. Any final and conclusive judgment of any New York State or
United States Federal Court sitting in the Borough of Manhattan in the City of
New York having jurisdiction recognized by the relevant Australian jurisdiction
in respect of an obligation of the Company in respect of an Offered Note, which
is for a fixed sum of money and which has not been stayed or satisfied in full,
would be enforceable by action against the Company in the courts of the relevant
Australian jurisdiction without a re-examination of the merits of the issues
determined by the proceedings in the New York State or United States Federal
Court, as applicable, unless: (a) the proceedings in New York State or United
States Federal Court, as applicable, involved a denial of the principles of
natural justice; (b) the judgment is contrary to the public policy of the
relevant Australian jurisdiction; (c) the judgment was obtained by fraud or
duress or was based on a clear mistake of fact; (d) the judgment is a penal or
revenue judgment; or (e) there has been a prior judgment in another court
between the same parties concerning the same issues as are dealt with in the
judgment of the New York State or United States Federal Court, as applicable. A
judgment by a court may be given in some cases only in Australian dollars. The
Company has expressly submitted to the jurisdiction of New York State and United
States Federal Courts sitting in the Borough of Manhattan in the City of New
York for the purpose of any suit, action or proceedings arising out of this
offering. Westpac Securitisation Management Pty Limited has appointed Lewis E.
Love, Jr., its Director and Secretary, 575 Fifth Avenue, New York, New York
10017-2422, as its agent upon whom process may be served in any such action.
The majority of the directors and executive officers of the Company, and
certain experts named herein, reside outside the United States (in the
Commonwealth of Australia). Substantially all or a substantial portion of the
assets of all or many of such persons are located outside the United States. As
a result, it may not be possible for holders of the Offered Notes to effect
service of process within the United States upon such persons or to enforce
against them judgments obtained in United States courts predicated upon the
civil liability provisions of Federal securities laws of the United States. The
Company has been advised by its Australian counsel, Allen Allen & Hemsley, that,
based on the restrictions referred to above, there is doubt as to the
enforceability in the Commonwealth of Australia, in original actions or in
actions for enforcement of judgments of United States courts, of civil
liabilities predicated upon the Federal securities laws of the United States.
EXCHANGE CONTROLS AND LIMITATIONS
Under temporary Australian foreign exchange controls, payments by an
Australian resident to, or on behalf of: (a) the Government of Iraq or its
agencies or nationals; (b) the authorities of the Federal Republic of Yugoslavia
(Serbia and Montenegro); or (c) the Government of Libya or any public authority
or controlled entity of the Government of Libya may only be made with Reserve
Bank of Australia approval. Such restrictions may change in the future. See
"RISK FACTORS--Risks of Currency Exchange Controls."
U.S. DOLLAR PRESENTATION
In this Prospectus, references to "U.S. dollars" and "US$" are references
to U.S. currency and references to "Australian dollars" and "A$" are references
to Australian currency. Unless otherwise stated herein, the translations of
Australian dollars into U.S. dollars have been made at a rate of US$[ ]=A$1.00,
the noon buying rate in New York City for cable transfers in Australian dollars
as certified for customs purposes by the Federal Reserve Bank of New York
4
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on _________, 1998. Use of such rate is not a representation that Australian
dollar amounts actually represent such U.S. dollar amounts or could be converted
into U.S. dollars at that rate.
5
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TABLE OF CONTENTS
Page
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SUMMARY OF TERMS............................................................. 10
STRUCTURAL CHART............................................................. 18
CASH FLOW SUMMARY............................................................ 19
Collections.............................................................. 19
Gross Principal Collections.............................................. 19
Principal Losses......................................................... 19
Income Collections....................................................... 20
Liquidity Support........................................................ 21
Currency Swap............................................................ 21
CASH FLOW CHART.............................................................. 22
RISK FACTORS................................................................. 23
Limited Liability under the Offered Notes................................ 23
Equitable Assignment..................................................... 23
Nature of Security....................................................... 24
Nature of Collateral..................................................... 24
Nature of Housing Loans as Security...................................... 24
Mortgage Insurance Policies.............................................. 25
Additional Risks Associated with the Housing Loans....................... 26
Westpac's Ability to Set Rates on Variable Rate Housing
Loans at its Discretion................................................ 26
Westpac's Ability To Change Housing Loan Features........................ 26
Risks of Currency Exchange Controls...................................... 26
Risks Related to a Termination of the Swap Agreements.................... 26
Delinquency and Default Risk............................................. 27
Risk of Early Defaults................................................... 28
Prepayment and Yield Considerations...................................... 28
Reinvestment Risk........................................................ 28
Breach of Representation or Warranty..................................... 29
Servicer Risk............................................................ 29
Priority of Redraw Funding Securities and RFS Class A Notes.............. 29
Credit Enhancement Provides Only Limited Protection Against Losses....... 29
Limitations on the Liquidity Support..................................... 29
Redemption of the Notes.................................................. 30
Geographic Concentration May Affect Performance.......................... 30
Consumer Credit Legislation.............................................. 30
Certain Insolvency Considerations........................................ 31
Limited Liquidity........................................................ 31
Ratings of the Notes; Factors Affecting Ability to Maintain Ratings...... 31
Book-Entry Notes......................................................... 31
Other Considerations..................................................... 32
FORMATION OF THE TRUST....................................................... 32
Westpac Securitisation Trust Programme................................... 32
Series 1998-1G WST Trust................................................. 32
Trust Assets............................................................. 33
SECURITY FOR THE NOTES....................................................... 33
Charge................................................................... 33
Security Trustee......................................................... 33
Enforcement.............................................................. 33
Priorities under the Security Trust Deed................................. 34
Security Trustee's Fees and Expenses..................................... 35
6
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Retirement and Removal................................................... 35
Additional Provisions of the Security Trust Deed......................... 36
THE TRUST FUND............................................................... 36
General.................................................................. 36
Transfer and Assignment of Housing Loans................................. 37
Representations and Warranties........................................... 37
Breach of Representations and Warranties................................. 39
Housing Loan Statistics.................................................. 39
THE ISSUER TRUSTEE........................................................... 44
Incorporation............................................................ 45
Share Capital............................................................ 45
Business................................................................. 45
Experience............................................................... 45
Directors................................................................ 45
Powers................................................................... 46
Duties................................................................... 46
Delegation............................................................... 47
Issuer Trustee Fees and Expenses......................................... 47
Removal of the Issuer Trustee............................................ 47
Voluntary Retirement of the Issuer Trustee............................... 47
Limitation of Issuer Trustee's Liability................................. 48
Rights of Indemnity...................................................... 48
Limitation of Seller Trustee's Liability and Rights of Indemnity......... 48
Rights of Indemnity...................................................... 49
ORIGINATOR OF THE HOUSING LOANS.............................................. 49
THE SERVICER................................................................. 49
General.................................................................. 49
Servicing of Housing Loans............................................... 49
Document Custody......................................................... 49
Collection and Enforcement Procedures.................................... 49
Delinquencies and Mortgagee in Possession ("MIP") with respect to
the Securitized Portfolios............................................. 50
THE TRUST MANAGER............................................................ 52
General.................................................................. 52
Incorporation............................................................ 52
Share Capital............................................................ 52
Business................................................................. 52
Directors................................................................ 52
Duties and Role of the Trust Manager..................................... 53
WESTPAC RESIDENTIAL LOAN PROGRAM............................................. 54
Origination of Housing Loans............................................. 54
Underwriting of Housing Loans............................................ 54
Servicing of Housing Loans............................................... 55
Housing Loan Products.................................................... 55
Housing Loan Features.................................................... 56
THE MORTGAGE INSURANCE POLICIES.............................................. 58
Mortgage Insurance Policies - General.................................... 58
The HLIC Mortgage Pool Insurance Policy.................................. 58
Primary Mortgage Insurance Policies...................................... 60
PREPAYMENT AND YIELD CONSIDERATIONS.......................................... 61
General.................................................................. 61
Prepayments.............................................................. 61
Weighted Average Lives................................................... 62
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DESCRIPTION OF THE OFFERED NOTES............................................. 63
General.................................................................. 63
Collections and Payment.................................................. 64
Collections.............................................................. 65
Calculation of Total Available Funds..................................... 65
Available Income......................................................... 65
Principal Draws.......................................................... 67
Liquidity Draws.......................................................... 67
Remaining Liquidity Shortfall............................................ 67
Distribution of Total Available Funds.................................... 68
Excess Available Income.................................................. 69
Gross Principal Collections.............................................. 70
Principal Collections.................................................... 71
Distribution of Principal Collections.................................... 71
Payments of Principal on the Notes....................................... 72
Application of Principal Charge Offs..................................... 74
Payments into US$ Account................................................ 75
Payments out of US$ Account.............................................. 75
Prepayment Costs and Prepayment Benefits................................. 76
Description of the Redraw Facility, the Redraw Funding Securities
and the RFS Class A Notes.............................................. 76
Redraw Facility.......................................................... 76
Issuance of Redraw Funding Securities ("RFS")............................ 79
RFS Class A Notes........................................................ 79
Form of the RFSs and the RFS Class A Notes............................... 80
Interest Payable on the RFSs and the RFS Class A Notes................... 80
Subordination of Class B Notes........................................... 80
Clean-up Offer........................................................... 80
Redemption of the Notes.................................................. 80
Termination of the Trust................................................. 81
Trust Accounts........................................................... 81
General.................................................................. 82
Determination Date - Calculations and Reports to Noteholders............. 82
Book-Entry Registration.................................................. 83
Definitive Notes......................................................... 86
Modification of Master Trust Deed Without Noteholder Consent............. 86
Modification of Master Trust Deed With Noteholder Consent................ 86
Meetings of Voting Mortgagees and Meetings of Class A Noteholders;
Modification; Consents; Waiver......................................... 87
Meetings of Voting Mortgagees and Meetings of Class B Noteholders;
Modifications; Consents; Waiver........................................ 87
Events of Default; Rights Upon Event of Default.......................... 88
Enforcement.............................................................. 89
Certain Covenants........................................................ 91
The Note Trustee......................................................... 92
Governing Law............................................................ 92
DESCRIPTION OF THE SERVICING AGREEMENT....................................... 92
General.................................................................. 92
Servicing................................................................ 92
Document Custody......................................................... 94
Amendment................................................................ 95
Termination of Servicing Agreement....................................... 95
THE LIQUIDITY FACILITY....................................................... 95
General Description...................................................... 95
Liquidity Draws.......................................................... 96
Conditions Precedent to a Liquidity Draw................................. 96
Deposit into a Collateral Account........................................ 96
Interest on Liquidity Draws.............................................. 96
Commitment Fee........................................................... 96
Repayment of Liquidity Drawings.......................................... 97
Events of Default........................................................ 97
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Consequences of Default.................................................. 97
Termination.............................................................. 97
DESCRIPTION OF THE SWAP AGREEMENTS........................................... 97
Description of Interest Rate Swap Agreements............................. 97
Description of Currency Swap............................................. 99
Replacement of Currency Swap.............................................100
Downgrade of Currency Swap Provider......................................101
CURRENCY SWAP PROVIDER.......................................................101
CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS...................................101
General..................................................................101
Enforcement of Housing Loans.............................................102
Penalties and Prohibited Fees............................................102
Consumer Credit Legislation..............................................103
Bankruptcy...............................................................103
Environmental............................................................103
USE OF PROCEEDS..............................................................104
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES................................104
General..................................................................104
Sales of Notes...........................................................104
Market Discount..........................................................105
Premium..................................................................105
Backup Withholding.......................................................105
CERTAIN AUSTRALIAN TAX MATTERS...............................................106
Payments of Principal, Premiums and Interest.............................106
Profit on Sale...........................................................106
Other Taxes..............................................................107
ERISA CONSIDERATIONS.........................................................107
RATINGS OF THE NOTES.........................................................107
LEGAL INVESTMENT CONSIDERATIONS..............................................108
UNDERWRITING.................................................................108
LISTING AND GENERAL INFORMATION FOR NON-U.S. INVESTORS.......................108
Representations of Issuer Trustee and Underwriters.......................108
Listing..................................................................109
Issuer Trustee...........................................................109
Documents Available for Collection and Inspection........................109
Authorization............................................................109
No Material Change.......................................................109
Litigation...............................................................109
Independent Accountants..................................................109
Euroclear and Cedel......................................................109
United States Law........................................................109
LEGAL MATTERS................................................................109
INDEX OF DEFINED TERMS.......................................................110
APPENDIX I - GLOSSARY OF AUSTRALIAN LEGAL TERMS....................Appendix I -1
9
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SUMMARY OF TERMS
This Summary of Terms is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain capitalized
terms used in this Summary of Terms are defined elsewhere in this Prospectus on
the pages indicated "Index of Defined Terms."
Issuer Trustee...................... Westpac Securities Administration Limited
(ACN 000 049 472), a limited liability
public company under the Corporations Law
of New South Wales, Australia, a wholly
owned, indirect subsidiary of Westpac
Banking Corporation, in its capacity as
issuer trustee (the "Issuer Trustee") of
the Series 1998-1G WST Trust (the "Trust")
will issue the Offered Notes.
Approved Seller..................... Either Westpac Banking Corporation (ARBN
007 457 141) ("Westpac"), a corporation
organized under the laws of New South
Wales in the Commonwealth of Australia, in
its capacity as seller under a notice of
sale (the "Sale Notice") between Westpac
and the Issuer Trustee, or Westpac
Securities Administration Limited, in its
capacity as seller trustee (in such
capacity, the "Seller Trustee") under a
Sale Notice between the Seller Trustee and
the Issuer Trustee. Westpac and Westpac
Securities Administration Limited, in its
capacity as Seller Trustee, are referred
to herein as "Approved Sellers."
Servicer............................ The Mortgage Company Pty Limited (ACN 070
968 302) (the "Servicer" or "TMC"), a
wholly owned indirect subsidiary of
Westpac, in its capacity as servicer under
the Servicing Agreement among Westpac, the
Servicer and the Issuer Trustee dated
February 18, 1997, as amended from time to
time (the "Servicing Agreement").
Trust Manager and Registrant........ Westpac Securitisation Management Pty
Limited (ACN 081 709 211) (the "Trust
Manager"), a wholly owned indirect
subsidiary of Westpac, in its capacity as
trust manager under the Master Trust Deed,
dated February 14, 1997 (the "Master Trust
Deed"), as amended by the Series Notice
(as defined herein), among the Issuer
Trustee and the Trust Manager dated on or
about the Closing Date. See "FORMATION OF
THE TRUST."
Securities Offered.................. The Issuer Trustee, in its capacity as
issuer trustee of the Series 1998-1G WST
Trust, which was formed under Australian
law, will issue and hereby offer the
following Mortgage Backed Floating Rate
Notes:
Class A Mortgage Backed Floating Rate
Notes due __________ in the aggregate
principal amount of US$________________
(the "Class A Notes").
Class B Mortgage Backed Floating Rate
Notes due _________ in the aggregate
principal amount of US$______________ (the
"Class B Notes").
The Class A Notes and the Class B Notes
are collectively referred to herein as the
"Offered Notes."
In addition to the Offered Notes, the
Issuer Trustee may from time to time issue
additional debt securities known as
"Redraw Funding Securities" or "RFSs."
Certain rights of payment of the holders
of the RFSs will be senior to those rights
of the holders of the Offered Notes. In
addition, if the RFSs remain outstanding
for a period of five or more Collection
Periods, they shall convert into RFS Class
A Notes (the "RFS Class A Notes"), the
holders of which will have certain rights
of payment senior to those rights of
holders of the Class B Notes. The RFSs,
RFS Class A Notes and the Offered Notes
are referred to herein as the "Notes." For
a description of the RFSs, the RFS Class A
Notes and the priority of their payment,
see "DESCRIPTION OF THE OFFERED
NOTES--Description of Redraw Facility,
Redraw Funding Securities and the RFS
Class A Notes," "--Interest Payable on the
RFSs and the RFS Class A Notes" and
"--Subordination of the Class B Notes"
herein.
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Cut-Off Date........................ April 9, 1998 (the "Cut-Off Date").
Closing Date........................ May ___, 1998 (the "Closing Date")
Maturity Date....................... May 8, 2029 (the "Maturity Date").
Terms of the Offered Notes
General........................... Payments of interest and principal on each
class ("Class") of Offered Notes will be
made quarterly on the 19th day of each of
April, July, October and January (or if
such 19th day is not a Business Day, the
next succeeding Business Day in the same
month or, if not in the same month, the
immediately preceding Business Day),
commencing on July 19, 1998 (each such
date, a "Payment Date").
As used in this Prospectus, "Business Day"
means any day, other than a Saturday,
Sunday or public holiday, on which banks
in Sydney, London, New York City or the
city in which the corporate trust office
of the paying agent is located are open.
Payments of interest and principal will be
made to the holders of the Offered Notes
(the "Offered Noteholders") of record as
of the day which is two Business Days
preceding the Payment Date (so long as the
Offered Notes are held in book-entry form)
or the last day of the prior calendar
month (if Definitive Notes have been
issued) (such day, the "Record Date").
Each Offered Note bears interest on its
Invested Amount. The "Invested Amount" of
an Offered Note is equal to the Initial
Invested Amount of such Offered Note less
all payments previously made in respect of
principal in respect of such Offered Note.
Each "Interest Period" (other than the
initial Interest Period and the final
Interest Period) with respect to the
Offered Notes commences on (and includes)
a Payment Date and ends on (but excludes)
the next Payment Date. The initial
Interest Period with respect to the
Offered Notes commences on (and includes)
the Closing Date and ends on (but
excludes) the first Payment Date. The
final Interest Period ends on (but
excludes) the Maturity Date.
The "Interest Rate" for the Class A Notes
for a particular Payment Date is equal to
USD-LIBOR-BBA on the related Interest
Determination Date (as defined herein)
plus ___%. The "Interest Rate" for the
Class B Notes for a particular Payment
Date is equal to USD-LIBOR-BBA on the
related Interest Determination Date plus
___%. See "DESCRIPTION OF THE OFFERED
NOTES--Calculation of USD-LIBOR- BBA"
herein.
With respect to any Payment Date, interest
on a Class of Notes will be calculated as
the product of (a) the Invested Amount of
such Class as of the first day of that
Interest Period after giving effect to any
payments of principal to be made thereon,
(b) the Interest Rate for such Class for
the related Interest Period; and (c) a
fraction, the numerator of which is the
actual number of days in that Interest
Period and the denominator of which is 360
days (such product with respect to a
Payment Date, "Interest"); provided,
however, that once the Stated Amount of
such Class has been reduced to zero, the
related Class will no longer accrue
interest because the related Class will
have been redeemed pursuant to the terms
of the Transaction Documents.
If Total Available Funds (as defined
herein) available after payment of any
Accrued Interest Adjustment (as defined
herein), interest or fees payable under
the Liquidity Facility, Trust Expenses and
certain amounts payable to any Swap
Provider are sufficient to pay Interest on
each Class of Offered Notes, Interest will
be payable in arrears on each Payment Date
to each Class of Offered Notes in respect
of the Interest Period ending on that
Payment Date. If Total Available Funds are
available on a Payment Date for the
payment of Interest on the Offered Notes,
failure to pay such Interest within 10
Business Days of the date such payment is
due will be an event of default under the
Security Trust Deed.
If Total Available Funds available after
payment of Trust Expenses and certain
amounts payable under any Fixed Rate and
Variable Rate Basis Swaps are insufficient
to pay full Interest on all Classes of
Notes for an Interest Period, Total
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Available Funds available for the payment
of Interest on the Notes on the Payment
Date will be paid in the following order
of priority either through a direct
payment in Australian dollars with respect
to the RFSs, the RFS Class A Notes or any
payment in respect of the Redraw Facility
or through a payment to the Currency Swap
Provider with respect to the Offered
Notes:
(i) pro rata, to the Class A Notes, RFS
Class A Notes (if any), RFSs (if any) and
any fee or outstanding amount payable
under the Redraw Facility, based on their
related interest or income entitlements,
as the case may be; and
(ii) any remaining Total Available Funds,
to the Class B Notes.
See "DESCRIPTION OF THE OFFERED NOTES"
herein.
Principal......................... On each Payment Date, Gross Principal
Collections (as described herein) will be
used first to reimburse Westpac for any
Redraws funded by Westpac during the
related Collection Period. Any amount of
Gross Principal Collections remaining
after such reimbursement will be
distributed in the following order of
priority:
(i) to Westpac as reimbursement for any
outstanding Redraws, to the extent not
otherwise reimbursed;
(ii) to the Redraw Facility Provider, to
repay any Principal Outstanding under the
Redraw Facility;
(iii) to fund any Principal Draw for such
Payment Date; and
(iv) to any holder of an RFS, in
chronological order of issuance, until
each such RFS is repaid in full.
Any amount of Gross Principal Collections
remaining after the distributions
described in clauses (i) through (iv)
above will be referred to herein as "Net
Principal Collections." On any Payment
Date, Net Principal Collections will be
available to pay any RFS Class A
Noteholder and the Currency Swap Provider
to enable the Issuer Trustee to make
payments to the Class A Noteholders and
Class B Noteholders in the amounts and
priorities set forth herein under
"DESCRIPTION OF THE OFFERED
NOTES--Payments of Principal on the
Notes."
Credit Enhancement.................. Credit enhancement with respect to the
Class A Notes will be provided by (i) the
Mortgage Insurance Policies, (ii)
subordination of the Excess Available
Income (as defined herein) and (iii) the
subordination of payments of the Class B
Notes to payments to the Class A Notes.
Credit enhancement with respect to the
Class B Notes will be provided by (i) the
Mortgage Insurance Policies and (ii)
subordination of the Excess Available
Income.
A. Mortgage Insurance
Policies..................... On or before the Closing Date, a mortgage
pool insurance policy (the "Mortgage Pool
Insurance Policy") will be provided by
Housing Loans Insurance Corporation
Limited (ACN 071 466 344) of 31 Market
Street, Sydney NSW 2000, Australia
("HLIC") to the Issuer Trustee to cover
losses in respect of each Housing Loan
that is not subject to a primary mortgage
insurance policy (a "PMI Policy" and,
together with the Mortgage Pool Insurance
Policy, the "Mortgage Insurance
Policies"). The Mortgage Pool Insurance
Policy generally applies to loans with an
LVR of 80% or less at the Cut-Off Date.
The Mortgage Pool Insurance Policy will
cover losses up to a maximum aggregate
amount of A$___________.
Each Housing Loan with an LVR of greater
than 80% at the time of origination (or a
lower LVR where required by Westpac's
standard credit policy) will have been
insured under a PMI Policy issued by one
of the following: Royal and SunAlliance
Lenders Mortgage Insurance Limited (ACN
001 825 725) of Level 9, 465 Victoria
Avenue, Chatswood NSW ("SunAlliance"),
MGICA Limited (ACN 000 511 017) of Level
23 AMP Centre, 50 Bridge Street, Sydney
NSW ("MGICA"), Westpac
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Lenders Mortgage Insurance Limited (ACN
074 042 934) of Level 11, 50 Pitt Street,
Sydney NSW ("WLMI") or HLIC. Approximately
___% of the Housing Loans are subject to a
PMI Policy. Each Approved Seller will
equitably assign its interest in each PMI
Policy to the Issuer Trustee on the
Closing Date. These Mortgage Insurance
Policies are intended to enhance the
likelihood of regular receipt by the
holders of the Notes of the full amount of
interest and principal payments due to
such holders and to provide holders of the
Notes limited protection against losses on
the Housing Loans. See "THE MORTGAGE
INSURANCE POLICIES" herein.
HLIC, SunAlliance, MGICA and WLMI are
referred to herein as "Mortgage Insurers."
B. Subordination of Excess
Available Income............. On each Payment Date, Excess Available
Income will be applied either in reduction
of any current or outstanding Principal
Charge Offs or as repayment of any
unrepaid Principal Draws on such Payment
Date. The application of such amounts, if
any, will reduce the likelihood of the
Offered Noteholders receiving less than
their Invested Amount on or prior to the
Maturity Date.
C. Subordination of Class B
Notes........................ The rights of the holders of the Class B
Notes to receive payments of Interest on
each Payment Date will be subordinated to
such rights of the holders of the Class A
Notes, RFSs (if any), RFS Class A Notes
(if any) and the Redraw Facility Provider.
In addition, the rights of the holders of
the Class B Notes to receive distributions
of principal on each Payment Date
generally will be subordinated to such
rights of the holders of the Class A
Notes, RFSs (if any), RFS Class A Notes
(if any), repayment to Westpac with
respect to any Redraws and the Redraw
Facility Provider. Further, any Principal
Charge Offs will be applied first in
reduction of the principal balance of the
Class B Notes. The subordination described
above is intended to enhance the
likelihood of regular receipt by the
holders of the Class A Notes of the full
amount of interest and principal payments
due to such Noteholders and to afford such
holders protection against losses on the
Housing Loans. See "DESCRIPTION OF THE
OFFERED NOTES--Collections and Payments"
herein.
Security for the Offered Notes
General........................... The Offered Notes are debt obligations of
the Issuer Trustee in its capacity as
trustee of the Trust. They are issued with
the benefit of, and subject to the
Transaction Documents. The Issuer
Trustee's liability in respect of the
Offered Notes is limited to the assets of
the Trust available in accordance with the
terms of the Transaction Documents to meet
its obligations in relation to the Offered
Notes and, except in certain limited
circumstances, the Issuer Trustee will not
be personally liable in respect of the
Offered Notes. The assets of the Trust
include the Housing Loans, rights under
certain insurance policies with respect to
the Housing Loans, the Collections Account
and the Issuer Trustee's rights under the
Transaction Documents.
A. The Housing Loans............. The Housing Loans will consist of _______
Housing Loans with an aggregate Balance
Outstanding on the Cut-Off Date of
A$_______________. The Housing Loans will
be secured by Mortgaged Properties located
in any of the six states or two
territories of Australia. The "Mortgaged
Property" means the land, including all
improvements thereon, that is the subject
of a Mortgage.
Each Housing Loan is secured by a
registered first ranking mortgage over the
related Mortgaged Property. See "APPENDIX
I -- GLOSSARY OF AUSTRALIAN LEGAL TERMS."
Each Housing Loan requires that borrowers
on such Housing Loan (each, a "Borrower")
make a minimum payment (the "Scheduled
Payment") on or before the due date for
such Scheduled Payment under the relevant
Housing Loan documents. Scheduled Payments
not received with respect to certain
Housing Loans on the
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related due date may cause either a
default rate of interest to be charged or
a compounding interest effect.
All weighted averages specified herein are
weighted based on the Cut-Off Date
Balances Outstanding of the Housing Loans.
With respect to each Housing Loan, the
"Cut-Off Date Balance Outstanding" is the
unpaid principal balance of such Housing
Loan as of the close of business on the
Cut-Off Date. All Housing Loan statistics
set forth herein are based on principal
balances, interest rates, terms to
maturity, mortgage loan counts and similar
statistics as of the Cut-Off Date, unless
indicated to the contrary herein.
References to percentages of the Housing
Loans mean percentages of the Cut-Off Date
Balance Outstanding.
The Housing Loans bear interest at
variable and fixed rates (the "Mortgage
Rates") which range from approximately
_______ to ________. The weighted average
Mortgage Rate of the Housing Loans on the
Cut-Off Date is approximately ____% per
annum. The Cut-Off Date Balances
Outstanding of the Housing Loans ranged
from approximately A$_____________ to
A$______________. The average Cut-Off Date
Balance Outstanding of the Housing Loans
is approximately A$________________. The
weighted average original term to stated
maturity of the Housing Loans was
approximately ____ months. The weighted
average remaining term to stated maturity
of the Housing Loans was approximately
____ months. As of the Cut-Off Date, the
weighted average number of months that had
elapsed since origination of the Housing
Loans is approximately ___ months.
The lowest and highest Loan to Value Ratio
("LVR") as of the Cut-Off Date of the
Housing Loans were approximately ___% and
___%. LVR is calculated as a fraction,
expressed as a percentage, the numerator
of which is the outstanding amount of the
Housing Loan, plus any other amount
serviced on the Mortgage Servicing System
and secured by the relevant Mortgage
Property at the Cut-Off Date and the
denominator of which is the aggregate
value of the Mortgaged Property subject to
the related Mortgage for that Housing
Loan.
B. Mortgage Insurance
Policies..................... See "Mortgage Insurance Policies" in this
summary and "THE MORTGAGE INSURANCE
POLICIES" herein.
C. Collections Account........... Westpac or the Servicer will be required
to remit Collections received with respect
to the Housing Loans during a Collection
Period to one or more accounts in the name
of the Issuer Trustee (the "Collections
Account"). Under certain conditions
described herein, such remittances may be
made on a quarterly basis, two Business
Days prior to the related Payment Date. If
such conditions are not met, the Servicer
shall deposit all Collections in its
possession or control into the Collections
Account no later than five Business Days
following receipt. See "DESCRIPTION OF THE
OFFERED NOTES--Collections and Payment."
D. Liquidity Support............. 1. Principal Draws: If the Trust Manager
determines on any Collection Determination
Date that the Available Income of the
Trust for a Collection Period is
insufficient to meet Total Payments of the
Trust on the following Payment Date (a
"Payment Shortfall"), then Principal
Collections collected during that
Collection Period can be used to fund the
Payment Shortfall (a "Principal Draw").
See "DESCRIPTION OF THE OFFERED
NOTES--Principal Draws" below.
Amounts paid from any Principal
Collections in this way will be reimbursed
through any Excess Available Income to the
extent available in subsequent periods
after all Principal Charge Offs and
Carryover Charge Offs have been met out of
that Excess Available Income for the
relevant period. If there is insufficient
Excess Available Income to reimburse
Principal Draws, the principal repayable
on the Notes at maturity may be reduced in
respect of such shortfall.
2. Liquidity Facility: Under the Liquidity
Facility, Westpac in its capacity as the
provider of the Liquidity Facility (the
"Liquidity Facility Provider") agrees to
make advances to the Issuer Trustee for
the purpose of funding certain income
shortfalls
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in the Trust, up to an aggregate amount
being the lesser of: (1) A$____________,
(2) the Unpaid Balance of all Performing
Loans from time to time, and (3) any
lesser amount as is agreed in writing
between the Liquidity Facility Provider,
the Issuer Trustee, the Trust Manager and
the Rating Agencies, as such amount may be
reduced or cancelled under the Liquidity
Facility (the "Liquidity Limit"). The
"Unpaid Balance" of a Housing Loan, means
the sum of (a) the unpaid principal amount
of that Housing Loan; and (b) the unpaid
amount of all finance charges, interest
payments and other amounts accrued on or
payable under or in connection with that
Housing Loan or the related Mortgage or
other rights relating to the Housing Loan.
A "Performing Loan" at any date is a
Housing Loan which is not Delinquent or
has been Delinquent for less than 90
consecutive days, or if it has been
Delinquent for 90 or more consecutive
days, was insured under a Mortgage
Insurance Policy at the date of the
Liquidity Facility. A Housing Loan is
"Delinquent" if the related Borrower fails
to pay any amount due on the related due
date. Delayed payments arising from agreed
payment holidays based on early
repayments, or from maternity or paternity
leave repayment reductions will not, by
themselves, lead to a Housing Loan being
considered Delinquent. See "WESTPAC
RESIDENTIAL LOAN PROGRAM--Housing Loan
Features" and "THE LIQUIDITY FACILITY"
herein.
E. Transaction Documents......... Master Trust Deed and Series Notice: The
Master Trust Deed, which is governed by
the laws of New South Wales, Australia,
provides for the creation of an unlimited
number of WST trusts. Each WST trust is a
separate and distinct trust fund. The
Series 1998-1G WST Trust (the "Trust") was
created pursuant to the Master Trust Deed
and a series notice (the "Series Notice")
which sets forth specific provisions
regarding the Trust and details the
provisions of the Notes. See "FORMATION OF
THE TRUST" and "DESCRIPTION OF THE OFFERED
NOTES."
Security Trust Deed: Pursuant to the
Security Trust Deed, the Issuer Trustee
has granted a first ranking floating
charge to the Security Trustee, in order
to secure the Issuer Trustee's obligations
to the Noteholders, the Note Trustee, the
Trust Manager, the Swap Providers, the
Security Trustee, and each provider of a
Support Facility (other than the provider
of a Mortgage Insurance Policy) to an
Approved Seller and in respect of any
Accrued Interest Adjustment, to Westpac in
respect of Redraws and to the holders of
the RFSs (if any) and the holders of the
RFS Class A Notes (if any) (such
creditors, together the "Mortgagees"). A
"Support Facility" is any of the Liquidity
Facility, the Redraw Facility, the Swap
Agreements or any of the Mortgage
Insurance Policies. See "SECURITY FOR THE
NOTES."
Servicing Agreement: Under the Servicing
Agreement, TMC is appointed as the initial
Servicer of the Housing Loans and
custodian of the documents relating to the
Housing Loans and Mortgages. See
"DESCRIPTION OF THE SERVICING AGREEMENT."
Note Trust Deed: The Note Trust Deed
provides for the issuance and registration
of the Offered Notes. See "DESCRIPTION OF
THE OFFERED NOTES."
The Master Trust Deed, the Series Notice,
the Servicing Agreement, the Security
Trust Deed, the Note Trust Deed, the Swap
Agreements and the Agency Agreement (as
defined below) are collectively referred
to herein as the "Transaction Documents."
F. Swap Agreements............... The rights of the Issuer Trustee under the
Swap Agreements will be subject to the
security created by the Security Trust
Deed. The "Swap Agreements" include the
1991 ISDA Master Agreement (the "ISDA
Master Agreement") and amended schedules
and Swap confirmations covering the
Variable Rate Basis Swap, two Fixed Rate
Basis Swaps and the Currency Swap. See
"DESCRIPTION OF THE SWAP AGREEMENTS."
G. Agency Agreement.............. Pursuant to the Agency Agreement, the
Issuer Trustee will appoint paying agents
with respect to the Offered Notes.
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Clearance and Settlement............ Noteholders may elect to hold their Notes
through any of DTC (in the United States)
or Cedel or Euroclear (in Europe).
Transfers within DTC, Cedel or Euroclear,
as the case may be, will be in accordance
with the usual rules and operating
procedures of the relevant system.
Crossmarket transfers between persons
holding directly or indirectly through
DTC, on the one hand, and counterparties
holding directly or indirectly through
Cedel or Euroclear, on the other, will be
effected in DTC through the Relevant
Depositaries of Cedel or Euroclear. See
"DESCRIPTION OF THE OFFERED
NOTES--Book-Entry Registration."
Clean-up Offer...................... If at any time the aggregate Housing Loan
Principal, expressed as a percentage of
the aggregate Housing Loan Principal as of
the Cut-Off Date, is less than 10%, then,
if instructed by the Trust Manager, the
Seller Trustee, as trustee of certain
other trusts under the Master Trust Deed,
may repurchase, on the following Payment
Date, the equitable title to the Housing
Loans held by the Trust for an amount
equal to the Unpaid Balance (in the case
of performing Housing Loans) or the Fair
Market Value (in the case of
non-performing Housing Loans). The
proceeds of sale will be applied by the
Issuer Trustee to repay moneys owing to
Noteholders at that time in accordance
with the priorities for applying payments
of Interest and principal between the
Classes of Notes. The "Fair Market Value"
with respect to any non- performing
Housing Loans is the fair market value of
such Housing Loan agreed on by the Trust
Manager (based on appropriate expert
advice) and the Approved Seller.
Legal Investment
Considerations.................... The Offered Notes will not constitute
"mortgage related securities" for purposes
of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). No
representation is made as to whether the
Offered Notes constitute legal investments
under any applicable statute, law, rule,
regulation or order for any entity whose
investment activities are subject to
investment laws and regulations or to
review by certain regulatory authorities.
Prospective purchasers are urged to
consult with their counsel concerning the
status of the Offered Notes as legal
investments for such purchasers. See
"LEGAL INVESTMENT CONSIDERATIONS" herein.
Tax Status.......................... In the opinion of Mayer, Brown & Platt,
special tax counsel for the Trust, the
Offered Notes will be characterized as
debt for U.S. federal income tax purposes
and the Trust will not be characterized as
an association (or a publicly traded
partnership) taxable as a corporation for
federal income tax purposes. Each Offered
Noteholder, by acceptance of an Offered
Note, will agree to treat the Offered
Notes as indebtedness. See "CERTAIN UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES"
herein.
ERISA Considerations................ Subject to the considerations discussed
under "ERISA CONSIDERATIONS," the Offered
Notes are eligible for purchase by
employee benefit plans. See "ERISA
CONSIDERATIONS" herein.
Ratings of the
Offered Notes..................... It is a condition to the issuance of the
Class A Notes that they be rated "AAA" by
Standard & Poor's Ratings Group, a
division of The McGraw-Hill Companies
("Standard & Poor's") and "Aaa" by Moody's
Investors Service, Inc. ("Moody's" and
together with Standard & Poor's, the
"Rating Agencies"). It is a condition to
the issuance of the Class B Notes that
they be rated "AA-" by Standard & Poor's.
The security ratings of the Offered Notes
should be evaluated independently from
similar ratings on other types of
securities. A security rating is not a
recommendation to buy, sell or hold
securities and may be subject to revision
or withdrawal at any time by the Rating
Agencies. See "RATINGS OF THE NOTES"
herein.
Governing Law....................... The Notes and the Transaction Documents
(other than the Security Trust Agreement)
are governed by, and shall be construed in
accordance with, the laws of New South
Wales, Australia. The Security Trust Deed
is governed by, and shall be construed in
accordance with, the laws of the
Australian Capital Territory.
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16
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The Issuer Trustee has, under the Note
Trust Deed, submitted to the non-exclusive
jurisdiction of the courts of New South
Wales for all purposes in connection with
the Offered Notes.
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STRUCTURAL CHART
[Insert chart which shows parties and general structure]
18
<PAGE>
CASH FLOW SUMMARY
The following is a brief summary of the allocation of cashflows in relation to
the Trust. This Cash Flow Summary is qualified in its entirety by reference to
the detailed information appearing elsewhere in this Prospectus -- see
"DESCRIPTION OF THE OFFERED NOTES" for a full description of cashflow
allocation. Terms defined below are defined in more detail elsewhere - the
definitions below are for convenience only.
Collections
Amounts collected by or on behalf of the Issuer Trustee in respect of the
Trust are calculated for each Collection Period and include, for the relevant
Collection Period:
1. scheduled payments (of interest, principal and fees) and prepayments
of principal under the Housing Loans;
2. proceeds from enforcement of Housing Loans and related Mortgages;
3. amounts payable under Mortgage Insurance Policies with respect to
losses on Housing Loans and related Mortgages;
4. amounts received from an Approved Seller or the Servicer for
breaches of representations or undertakings; and
5. interest on amounts in the Collections Account.
These amounts are known as "Collections", which will be attributed between
income and principal. The Collections attributed to income, less certain
amounts, are "Available Income". The Collections attributed to principal, less
certain amounts, are "Gross Principal Collections."
The cashflow allocation methodology treats Available Income and Gross
Principal Collections in two separate "streams". Generally, the two streams are
treated separately. However, in some circumstances, principal will be treated as
income and applied in the income stream, and in other circumstances income will
be treated as principal and applied in the principal stream.
Gross Principal Collections
Gross Principal Collections are applied first to repay Westpac for any
Redraws funded by Westpac in the relevant Collection Period. The balance of
Gross Principal Collections remaining after such repayment of Westpac is known
as "Principal Collections". Those Principal Collections are applied:
1. First, to repay Westpac for any Redraws funded by Westpac to the
extent not previously reimbursed (i.e., not restricted to Redraws
funded during the relevant Collection Period);
2. Second, to repay amounts outstanding under the Redraw Facility
Agreement;
3. Third, to be treated as income to the extent necessary if there is
insufficient income for the Collection Period to make required
income payments (this application of principal as income is a
"Principal Draw");
4. Fourth, to pay principal outstanding under the RFSs until repaid in
full;
5. Fifth, to pay principal outstanding under the Class A Notes and the
RFS Class A Notes. Those payments may be either sequential or serial
with respect to Class B Notes, depending on whether certain
threshold tests have been satisfied.
Where the sequential method applies, all principal will be applied
to the Class A Notes and RFS Class A Notes until they have been
repaid in full. There are two serial methods, which apply when the
ratio of amounts outstanding under the Class B Notes when compared
to amounts outstanding under the Class A Notes has reached a certain
level. Where either one of the serial method applies, Class B Notes
will be entitled to a proportion of Principal Collections; and
6. Sixth, to pay principal outstanding under the Class B Notes under
the sequential or serial methods referred to above.
Principal Losses
It may be that principal losses are incurred in respect of a Housing Loan
during a Collection Period.
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If (i) a Borrower defaults; (ii) the relevant Housing Loan and related
Mortgage are enforced; and (iii) the amount recovered (after payment of
enforcement expenses) will not satisfy the Unpaid Balance of the Housing Loan,
there will be a "Liquidation Loss". A Liquidation Loss will usually comprise
both income and principal. To the extent that it relates to principal, a
Liquidation Loss is known as a "Principal Loss". If, following a Principal Loss,
the relevant Mortgage Insurance Policy does not cover that loss and the Issuer
Trustee does not have a right to recover any amounts from an Approved Seller or
the Servicer due to a breach of representation or undertaking, there will be a
loss on the underlying principal in the pool. Such a loss is a "Mortgage
Shortfall". The total amount of all Mortgage Shortfalls in a Collection Period
is known as the "Principal Charge Off" for that Collection Period.
Any Principal Charge Off for a Collection Period may be met by any excess
income which is available from the income stream for that purpose (as summarized
below). If the Principal Charge Off cannot be satisfied in full from that excess
income, the principal loss represented by the balance of the Principal Charge
Off which is not so satisfied must be "carried over" into succeeding periods.
This is a "Carryover Charge Off".
Each Carryover Charge Off must be represented by a reduction in the
principal amount of the Notes. Thus, the principal amount of the Notes (the
"Invested Amount") is reduced:
(a) First, in respect of Class B Notes; and
(b) Second, if the Class B Notes are reduced to zero, pro rata, in
respect of the Class A Notes, the RFSs, the RFS Class A Notes and
the Redraw Facility Agreement.
The "Stated Amount" of a Note is thus the Invested Amount of the Note less
the Carryover Charge Offs applied against it as set out above.
Excess income may be used to recover principal which has been reduced
following a Carryover Charge Off. The application of income for this purpose is
summarized below.
Income Collections
Available Income is applied in the following order of priority:
(a) first, in respect of the first Collection Period, to the Approved
Seller for income received by the Issuer Trustee on the pool
relating to the period prior to the Closing Date. This is the
"Accrued Interest Adjustment";
(b) second, to trust expenses which have not previously been paid;
(c) third, to repay amounts outstanding under the Support Facilities
(other than the Currency Swap and fees under the Liquidity Facility
Agreement);
(d) fourth, to repay Liquidity Draws under the Liquidity Facility
Agreement;
(e) fifth, pari passu and ratably, to interest on the Class A Notes, the
RFSs and the RFS Class A Notes and to fees under the Redraw Facility
Agreement; and
(f) sixth, to interest on the Class B Notes.
These payments are "Total Payments".
Any Available Income in excess of Total Payments for a Collection Period
is "Excess Available Income", and is applied in the following order of priority:
(i) First, against Principal Charge Offs for the Collection Period;
(ii) Second, pari passu and ratably, against Carryover Charge Offs for
Class A Notes, RFSs, RFS Class A Notes and fees or amounts owing
under the Redraw Facility Agreement;
(iii) Third, against Carryover Charge Offs for Class B Notes; and
(iv) Fourth, to Principal Draws which have not previously been repaid.
Any amount remaining after application of these payments is an "Excess
Collections Distribution", and will be paid to Westpac as beneficiary of the
Trust.
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Liquidity Support
If there are insufficient interest Collections to meet Total Payments for
a Collection Period, principal may be used to provide liquidity by way of a
"Principal Draw" (see above).
If Principal Draws are not available to meet Total Payments, a drawing
must be made under the Liquidity Facility Agreement up to its facility limit
(being A$__________) to provide liquidity to allow Total Payments to be made.
Currency Swap
All payments required to be made to Noteholders will be made in Australian
dollars to the Currency Swap Provider, who will swap the amounts into US
dollars.
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CASH FLOW CHART
[Insert chart which summarizes cash flows]
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RISK FACTORS
In addition to the matters described elsewhere in this Prospectus,
prospective investors should carefully consider the following factors before
deciding to invest in the Offered Notes.
Limited Liability under the Offered Notes
The Offered Notes are debt obligations of the Issuer Trustee in its
capacity as trustee of the Trust. They are issued with the benefit of, and
subject to the Master Trust Deed, the Series Notice, the Security Trust Deed and
the Note Trust Deed. The Issuer Trustee's liability in respect of the Offered
Notes is limited to the assets of the Trust available in accordance with the
terms of the Master Trust Deed, the Series Notice, the Note Trust Deed and the
Security Trust Deed to meet its obligations in relation to the Offered Notes
and, except in certain limited circumstances, the Issuer Trustee will not be
personally liable in respect of the Offered Notes. See "THE ISSUER
TRUSTEE--Limitation of Issuer Trustee's Liability."
In addition, the Offered Notes will not represent an interest in or
obligation of the Servicer, the Trust Manager, the Approved Sellers, the Note
Trustee, the Security Trustee or any of their respective affiliates (other than
the Issuer Trustee). The only obligations of the foregoing entities with respect
to the Offered Notes or any Housing Loan will be the obligations of the Approved
Sellers pursuant to certain limited representations and warranties made with
respect to the Housing Loans, of the Servicer with respect to its servicing
obligations under the Servicing Agreement and the Trust Manager in respect of
its undertakings in the Transaction Documents. The Offered Notes will not be
guaranteed or insured by any governmental agency or instrumentality, or by the
Servicer, the Trust Manager, the Approved Sellers, the Note Trustee, the
Security Trustee or any of their respective affiliates. The Housing Loans are
subject to certain mortgage insurance policies, but only limited losses are
covered. Housing Loans insured by HLIC prior to December 12, 1997 will have the
benefit of a Commonwealth Government Guarantee. WLMI is an indirect subsidiary
of Westpac and provides PMI on some of the Housing Loans. See "THE MORTGAGE
INSURANCE POLICIES." Proceeds of the assets included in the Trust (including the
Housing Loans) will be the sole source of payments on the Offered Notes, and
there will be no recourse to the Servicer, the Trust Manager, the Approved
Sellers, the Note Trustee, the Security Trustee or any other entity in the event
that such proceeds are insufficient or otherwise unavailable to make all
payments provided for under the Offered Notes.
Equitable Assignment
The Housing Loans and the related Mortgages will initially be equitably
assigned by the Approved Sellers to the Issuer Trustee. If a Title Perfection
Event (as defined below) occurs, the Issuer Trustee, with the assistance of the
Servicer, must take such steps as are necessary to perfect the Issuer Trustee's
legal title in the Housing Loans. Until such time, the Issuer Trustee is not
permitted to take any steps to perfect legal title and it will not notify the
Borrowers of the equitable assignment of the Housing Loans to the Issuer
Trustee.
The delay in the notification to a Borrower of the assignment of the
Housing Loans to the Issuer Trustee may have the following consequences:
(1) until a Borrower has notice of the assignment, that Borrower is not
bound to make payments under the relevant Housing Loan to anyone
other than Westpac and can obtain a valid discharge from Westpac.
However, the Servicer, a delegate of Westpac, will act as the
initial Servicer of the Housing Loans and is obligated to deal with
all moneys received from the Borrowers in accordance with the
Servicing Agreement and the Master Trust Deed;
(2) for so long as the Issuer Trustee holds only an equitable interest
in the Housing Loans, the Issuer Trustee's interest in them may
become subject to the interests of third parties created after the
creation of the Issuer Trustee's equitable interest but prior to it
acquiring a legal interest in the Housing Loans. However, the
Servicer undertakes not to consent to the creation or existence of
any higher or equal ranking security interest over the Mortgaged
Property; and
(3) for so long as the Issuer Trustee holds only an equitable interest
in the Housing Loans, it must join Westpac as a party to any legal
proceedings against any Borrower in relation to the enforcement of
any Housing Loan. In this regard, Westpac undertakes in the
Servicing Agreement to co-operate with the Servicer in connection
with the enforcement of any Housing Loans. Westpac has granted an
irrevocable power of attorney to the Issuer Trustee to perfect its
interest in the Housing Loans.
A "Title Perfection Event" in relation to the Housing Loans occurs if:
(i) Westpac ceases to have a long term credit rating of at least
"BBB" from Standard & Poor's and "Baa2" from Moody's;
(ii) an Insolvency Event occurs with respect to Westpac; and
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(iii) Westpac fails to pay Collections within five Business Days
after receiving notice from the Issuer Trustee or the Trust Manager to do
so.
Nature of Security
If a company grants a fixed security over any of its assets, those assets
may not be dealt with by the company without the consent of the relevant
mortgagee. In this way, the security is said to "fix" over the specific assets.
Fixed securities are usually given over real property, marketable securities and
other assets which will not be dealt with by the company.
Unlike fixed securities, floating charges do not attach to specific assets
but instead "float" over a class of assets which may change from time to time,
allowing the person or entity granting the charge (the "Chargor") to deal with
those assets and to give third parties title to those assets free from any
encumbrance in the event of sale, discharge or modification, for example. The
security created by the Security Trust Deed is a floating charge over the Trust
Assets. The Security Trust Deed provides that the Issuer Trustee may not deal
with the assets of the Trust subject to the floating charge, except in the
ordinary course of its business. It is common in Australia for special purpose
securitization vehicles to give floating charges rather than fixed charges. If
the Issuer Trustee disposes of any of the Trust Assets (including any Housing
Loan) in the ordinary course of its business, the acquirer of that property will
take them free of the floating charge.
The floating charge created by the Security Trust Deed may "crystallize"
and become a fixed charge over the relevant class of assets owned by the Issuer
Trustee at the time of crystallization. Crystallization will occur automatically
following the occurrence of specific events set out in the Security Trust Deed,
including, among other events, notice to the Issuer Trustee from the Security
Trustee following an event of default. See "SECURITY FOR THE NOTES" and "CERTAIN
LEGAL ASPECTS OF THE HOUSING LOANS" herein.
Nature of Collateral
Even assuming that a Housing Loan and the related Mortgage are enforced
and the proceeds from such enforcement are in an amount equal to the Unpaid
Balance of such Housing Loan, substantial delays could be encountered in
connection with the liquidation of such Housing Loan and result in shortfalls in
distributions to Noteholders to the extent not covered by a Mortgage Insurance
Policy or if the relevant Mortgage Insurance Policy provider fails to perform
its obligations. Further, liquidation expenses such as legal fees, real estate
taxes, and maintenance and preservation expenses (to the extent not covered by a
Mortgage Insurance Policy) will reduce the net amounts recoverable by the Issuer
Trustee from an enforced Housing Loan and mortgage and will reduce Excess
Available Income. In the event any of the Mortgaged Properties fail to provide
adequate security for the related Housing Loans, Noteholders could experience a
loss to the extent not covered by a Mortgage Insurance Policy or if the relevant
Mortgage Insurance Policy provider fails to perform its obligations and the
subordination of Excess Available Income is not sufficient.
Nature of Housing Loans as Security
There are a number of different forms of title to land in Australia. The
most common forms of title in Australia, and the only form of title which may
constitute Mortgaged Property is "Torrens title."
Torrens title
Torrens title land is freehold title, interests in which are created by
registration in a central land registry of the relevant State or Territory. Each
parcel of land is represented by a specific certificate of title. The original
certificate is retained by the registry, and in most States a duplicate
certificate is issued to the owner. Any dealing with the relevant land is
carried out by pro forma instruments which become effective on registration.
Ordinarily the relevant certificate of title (or any registered plan
referred to in it) will reveal the position and dimensions of the land, the
present owner, and any leases, mortgages and registered easements to which it is
subject. The certificate is conclusive evidence (except in limited
circumstances, such as fraud) of the matters stated in it.
Strata title
Strata title was developed to facilitate the creation of, and dealings
with, apartment units (which are similar to condominiums in the United States)
and is governed by the legislation of the State or Territory in which the
property is situated. Under strata title, the relevant land is divided into the
relevant number of units. Each proprietor has title to, and may freely dispose
of, their unit. All proprietors are members of a "body corporate", which
monitors compliance with rules governing the apartment block. Certain parts of
the property, such as stairwells, entrance lobbies and the like are known as
"common property" and are owned by the body corporate as a whole rather than by
individual proprietors.
Only Torrens title land can be the subject of strata title in this way,
and so the provisions referred to in this section in relation to Torrens title
apply to the title in a unit held by a strata proprietor.
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Taking Security Over Land
The law relating to the granting of securities over real property is made
complex by the fact that each State and Territory has separate governing
legislation. The following is a brief overview of general issues involved in
taking security over land.
Under Torrens title, registration of a mortgage using the prescribed form
executed by the mortgagor is required in order for the mortgagee to obtain the
remedies of a mortgagee granted by statute and the relevant priorities against
other secured creditors. To this extent the mortgagee is said to have a legal
(i.e., registered) title. However, registration does not transfer title in the
property -- the mortgagor remains as legal owner. Rather, the Torrens mortgage
operates as a statutory charge. The mortgagee does not obtain an estate in the
property but does have an interest in the land which is marked on the register
and the "certificate of title" for the property. A search of the register by any
subsequent lender will reveal the existence of the prior mortgage.
A mortgagee will retain the relevant certificate of title until the
mortgage is discharged. Although the certificate is not a document of title as
such, the procedure for replacement is sufficiently onerous to act as a
deterrent against most mortgagor fraud. Failure to retain the certificate may in
certain circumstances constitute negligent conduct resulting in a postponement
of the mortgagee's priority to a later secured creditor.
Once the mortgagor has repaid the debt, a discharge executed by the
mortgagee is lodged with the registrar by the mortgagor or the mortgagee and the
mortgage is noted as having been released.
Enforcing Security Over Land
A mortgagee may enforce a defaulted registered mortgage in a number of
ways. For example, it can:
(a) enter into possession of the property;
(b) lease the property;
(c) foreclose on the property -- that is, extinguish the mortgagor's
title to the property so that the mortgagee becomes the absolute
owner of the property (a remedy that is, because of procedural
constraints, rarely used); or
(d) appoint a receiver to the property; or
(e) sell the property, subject to various duties to ensure that the
mortgagee exercises proper care in relation to the sale. Once
registered, the purchaser becomes absolute owner of the property.
A mortgagee's ability to enforce a mortgage which is subject to the
Consumer Credit Legislation is limited by various demand and notice procedures
which are required to be followed. For example, as a general rule enforcement
cannot occur unless the relevant default is not remedied within 30 days after a
default notice is given. Borrowers may also be entitled to initiate negotiations
with the mortgagee for a postponement of enforcement proceedings.
Westpac as Mortgagee
Westpac is, and until a Title Perfection Event occurs intends to remain,
the registered mortgagee of all the Mortgages. The relevant Borrowers will not
be aware of the equitable assignment of the Housing Loans and Mortgages to the
Issuer Trustee.
Prior to any Title Perfection Event Westpac, or the Servicer on its
behalf, will undertake any necessary enforcement action with respect to
defaulted Housing Loans and Mortgages. Following a Title Perfection Event, the
Issuer Trustee is entitled (under an irrevocable power of attorney granted to it
by Westpac) to be registered as mortgagee of the Mortgages. Until that
registration is achieved, the Issuer Trustee or the Trust Manager is entitled to
lodge caveats on the register to notify its interest publicly. See "APPENDIX I
- -- GLOSSARY OF AUSTRALIAN LEGAL TERMS."
Mortgage Insurance Policies
The liability of each of the Mortgage Insurers under the Mortgage Pool
Insurance Policy and the PMI Policies, as applicable, is subject to certain
exclusions. Each of them also has the right to cancel the coverage of, or
terminate its Mortgage Insurance Policy in respect of, a Housing Loan in certain
circumstances. The exclusions and rights vary among the different Mortgage
Insurance Policies and may affect the ability of the Issuer Trustee to make
timely and full payments of principal and Interest on the Notes.
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Under a Management Agreement and Quota Share Reinsurance Agreement between
WLMI and Royal and SunAlliance Mortgage Insurance Limited both dated August 27,
1996 SunAlliance agrees to provide management and administration services to
WLMI and accepts 65% of the obligation on each and every policy issued by WLMI.
Under a Deed of Guarantee, SunAlliance will unconditionally and irrevocably
guarantee the obligations of WLMI arising under policies issued by WLMI prior to
the termination of the deed, and to the extent that those obligations are not
recovered or met by contracts of reinsurance.
See "THE MORTGAGE INSURANCE POLICIES" for further details.
Additional Risks Associated with the Housing Loans
Approximately ___% of the Housing Loans by aggregate principal balance of
the related Housing Loans as of the CutOff Date, had an LVR in excess of 80%.
Housing Loans with higher LVRs may present a greater risk of delinquency and if
such Housing Loans are liquidated due to the Borrower's failure to make
payments, proceeds from such liquidation may be insufficient to cover the Unpaid
Balance thereof. As a result, Noteholders may experience losses including
Principal Charge Offs (as defined herein) with respect to the Offered Notes.
However, each Housing Loan in the Trust with an LVR in excess of 80% or lower as
required by Westpac's standard Credit Policy at the origination date of each
Housing Loan is covered by a PMI Policy which insures the full amount of the
Unpaid Balance of the related Housing Loan. For a description of such coverage,
see "THE MORTGAGE INSURANCE POLICIES."
Westpac's Ability to Set Rates on Variable Rate Housing Loans at its Discretion
The interest rates with respect to the Variable Rate Housing Loans are not
tied to an objective interest index but rather may be set at the sole discretion
of Westpac, as originator of the Housing Loans. See "WESTPAC RESIDENTIAL LOAN
PROGRAM - Housing Loan Features." In the event that Westpac increases interest
rates on the Variable Rate Housing Loans, Borrowers may be unable to meet their
Scheduled Payment and accordingly, may be delinquent or default on their
respective Housing Loans. In addition, if such increase raises interest rates
above market interest rates, Borrowers may refinance their loans with another
lender to obtain a lower interest rate, which in turn could cause investors in
the Offered Notes to experience higher rates of principal prepayment on the
Offered Notes than anticipated.
Westpac's Ability To Change Housing Loan Features
During the term of any Housing Loan, Westpac may from time to time or at
the request of the related Borrower change any of the features of such Housing
Loan, including the Mortgage Rate and whether the Mortgage Rate is fixed or
variable. As a result, the characteristics of the Housing Loans as of the
Cut-Off Date may differ from the characteristics of the Housing Loans at any
other point in time. In addition, if Westpac elects to change certain features
of their Housing Loans, Borrowers may elect to refinance their loan with another
lender to obtain more favorable features, which in turn could cause investors in
the Offered Notes to experience higher rates of principal prepayment on the
Offered Notes than anticipated. See "WESTPAC RESIDENTIAL LOAN PROGRAM--Housing
Loan Features."
Risks of Currency Exchange Controls
The Issuer Trustee will receive Australian dollar payments on the Housing
Loans in Australia and, under the Currency Swap, is required to pay certain
collections to the Currency Swap Provider as required under the Series Notice.
It is possible that in the future Australia may impose exchange controls that
affect the availability of Australian dollar payments for making payments under
the Currency Swap. The Noteholders will bear the risk of the imposition of
foreign exchange controls by the Australian government that impact Issuer
Trustee's ability to exchange the Collections for U.S. dollars. The Issuer
Trustee has no control over such risk, which will generally be affected by
economic and political events in Australia. If the Issuer Trustee does not pay
some or all the amounts, _________ in Australian dollars which it is required by
the Transaction Documents to pay to the Currency Swap Provider under the
Currency Swap, the Currency Swap Provider is only required to pay the U.S.
dollar equivalent of the amounts it actually receives. In such event, it is
unlikely that the Trust would have sufficient U.S. dollars to make the payments
due on the Offered Notes.
Risks Related to a Termination of the Swap Agreements
By entering into the Swap Agreements, the Trust intends to transfer to the
Interest Rate Swap Provider and Currency Swap Provider, as applicable, the risks
set forth below that the Trust would otherwise have with respect to the Offered
Notes and the Housing Loans.
(a) Currency Exchange Risk. Interest and principal on the Offered
Notes is payable in U.S. dollars and the Trust's primary source for funding its
payments on the Offered Notes is its collections on the Housing Loans, which
will be in Australian dollars. If the Currency Swap Provider were to fail to
perform under the Currency Swap or were to be discharged from such performance
because of a default thereunder by the Trust, the Trust might have to exchange
its Australian dollars for U.S. dollars at an exchange rate that is less
favorable to the Trust than the original Swap Currency
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Exchange Rate (which is ____ Australian dollars for each U.S. dollar) and might
therefore not have sufficient U.S. dollars to make timely payments on the
Offered Notes, even though the delinquency and loss experience on the Housing
Loans may be acceptable.
(b) Risks specific to the Variable Rate Basis Swap. The basis risk
between the floating rate obligations of the Trust (including Interest payable
on the Notes) and the variable administered rates set by Westpac will be hedged
by means of the Variable Rate Basis Swap. Pursuant to the Variable Rate Basis
Swap, each month Westpac will pay the Trust the three month Bank Bill Rate plus
a fixed margin and receive from the Trust the weighted average variable housing
rate. The margin is fixed for the life of the swap and has been set having
regard for the ongoing expenses of the Trust.
If Westpac is downgraded below A1+/A2 and fails to provide eligible
collateral or arrange for a suitable alternative swap provider, it will be an
Additional Termination Event under the terms of the ISDA Master Agreement. If
the Variable Rate Basis Swap is terminated, the Trust Manager is required to
calculate each month the minimum interest rate required to be set on the
variable rate Housing Loans in order to cover amounts payable by the Issuer
Trustee (including anticipated Trust Expenses and taxes) and amounts due to the
Issuer Trustee, the Trust Manager, the Servicer, the Liquidity Facility
Provider, the Redraw Facility Provider and the Noteholders (the "Threshold
Rate"). In this situation, the Trust may set Housing Loan rates above market
interest rates on the variable housing loans to meet Trust Expenses which could
result in the affected Borrowers refinancing their loan with another bank, which
in turn could cause Noteholders to experience higher rates of principal
repayment on the Offered Notes than anticipated.
(c) Risks Specific to the Fixed Rate Swaps. Two Fixed Rate Swaps
will be used to hedge the interest rate risk between the floating rate
obligations of the Trust (including Interest payable on the Notes) and the
discretionary fixed rate set by Westpac on those Housing Loans being charged a
fixed rate of interest (a "Fixed Rate") (not including those loans with a
Concessional Fixed Rate). A Housing Loan is being charged a "Concessional Fixed
Rate" when it has a fixed rate of interest for the first 12 months, which
converts to the standard variable rate after that period. Loans subject to a
Concessional Fixed Rate are included under the Variable Rate Basis Swap. An
amortizing Fixed Rate Swap will be entered into as at Closing Date to hedge that
portion of the pool earning a Fixed Rate of interest as at Cutoff Date. The
Issuer Trustee will pay the applicable daily weighted average fixed rate and
receive the three month Bank Bill Rate plus a fixed margin. The margin is fixed
for the life of the swap and has been set based on the actual margin on the
underlying Fixed Rate Housing Loans and the prevailing market rate existing on
the Closing Date. A further Fixed Rate Basis Swap will be entered into to hedge
the interest rate risk occurring when the Borrowers switch from a variable rate
of interest to a fixed rate of interest. Under that second Fixed Rate Basis
Swap, the Issuer Trustee will pay the applicable daily weighted average fixed
rate and receive the three month Bank Bill Rate plus a fixed margin. The margin
is fixed for the life of the swap.
If Westpac is downgraded below A1+/A2 and fails to provide eligible
collateral or arrange for a suitable alternative swap provider, it will be an
Additional Termination Event under the terms of the ISDA Master Agreement only
at the discretion of the Issuer Trustee. If the swap remains in place, the
Rating Agencies may consider downgrading the Offered Notes and an investor may
then be holding Offered Notes which have been downgraded. If the swap is
terminated, the investor is exposed to the risk of the possible narrowing of the
spread between the customer rate applicable on the Housing Loans and the
floating rate obligations of the Trust (including the Interest on the Notes).
Delinquency and Default Risk
If Borrowers fail to make Scheduled Payments under Housing Loans when due
there is a possibility that the Issuer Trustee may have insufficient funds to
make full payments of Interest and principal due to the Noteholders.
The Issuer Trustee's obligation to pay principal in respect of the Offered
Notes in full is limited by reference to, among other things, receipts by the
Issuer Trustee of amounts due under or in respect of the outstanding Housing
Loans. Noteholders must rely for payment of principal and interest under the
Offered Notes on Borrowers making payments under the Housing Loans and on
amounts being available under the Mortgage Insurance Policies and any amounts
payable by an Approved Seller or the Servicer in respect of any breach of a
representation and warranty or undertaking respectively and, in addition, in the
case of Interest, on receipts of principal and required payments under the
Liquidity Facility. Furthermore, the Issuer Trustee is not required to make any
advances to cover shortfalls. See "DESCRIPTION OF THE OFFERED NOTES" and "THE
LIQUIDITY FACILITY."
A wide variety of factors of a legal, economic, political or other nature
could affect the performance of Borrowers in making payments of principal and
interest under the Housing Loans. In particular, if interest rates increase
significantly, Borrowers may experience distress and increased default rates on
the Housing Loans may result. Under the Consumer Credit Legislation, among other
remedies, a court may order a Housing Loan to be varied on the grounds of
hardship. See "CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS." Any such variance
may reduce the principal or interest payable under a particular Housing Loan.
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If a Borrower defaults on payments under a Housing Loan and the Servicer
enforces the Housing Loan and takes possession of the relevant Mortgaged
Property, many factors may affect the price for which the Mortgaged Property is
sold and the length of time required to realize the proceeds of sale. Any delay,
and any loss incurred as a result of the realized proceeds of the sale of a
Mortgaged Property being less than the amount due under the Housing Loan, may
affect the ability of the Issuer Trustee to make payments, or the timing of
those payments, in respect of the Offered Notes, notwithstanding any amounts
that may be claimed under a Mortgage Insurance Policy or otherwise allocated
from Principal Collections or drawn under the Liquidity Facility.
Risk of Early Defaults
No more than ___% of the Housing Loans were originated within ___ months
prior to the Cut-Off Date. The weighted average remaining term to stated
maturity of such Housing Loans (by Cut-Off Date Balance Outstanding) is
approximately ___ months. Although little data is available and no empirical
verification has been made by the Registrant, the Underwriters or the Issuer
Trustee, defaults on mortgage loans, including mortgage loans similar to the
Housing Loans, are generally expected to occur with greater frequency in the
early years of the terms of mortgage loans.
Prepayment and Yield Considerations
The yield to maturity experienced by a Noteholder may be affected by the
rate of payment of principal of the Housing Loans. The Trust may receive early
payments of principal on the Housing Loans and, therefore, pay Principal
Collections to the Noteholders earlier than would otherwise have been the case.
For example, early payments of principal may occur in the following situations:
(1) receipt by the Issuer Trustee of enforcement proceeds due to a
Borrower having defaulted on its Housing Loan;
(2) receipt by the Issuer Trustee of insurance proceeds in relation to a
claim under a Mortgage Insurance Policy in respect of a Housing
Loan;
(3) repurchase by Westpac of Housing Loans as a result of a breach by it
of certain representations (see "THE TRUST FUND--Representations and
Warranties" and "--Breach of Representations and Warranties");
(4) repurchase of the Housing Loans as a result of a Clean-Up Offer (see
"DESCRIPTION OF THE OFFERED NOTES--Clean-Up Offer");
(5) receipt of proceeds of enforcement of the Security Trust Deed prior
to the Maturity Date of the Notes (see "DESCRIPTION OF THE OFFERED
NOTES--Redemption of the Notes"); or
(6) receipt of proceeds of the sale of Housing Loans if the Trust is
terminated while Notes are outstanding (for example, if required by
law) and the Housing Loans are then either (a) repurchased by
Westpac under its right of first refusal or (b) sold to a third
party.
Additionally, in certain limited circumstances (for example, if the
principal amount of a Housing Loan is increased other than as a result of a
Redraw (see "DESCRIPTION OF THE OFFERED NOTES--Description of the Redraw
Facility, the Redraw Funding Securities and the Class A RFS Notes"), the Issuer
Trustee may transfer Housing Loans which comprise assets of the Trust to another
WST trust. The consideration for that transfer, to the extent it constitutes
principal, will form part of Gross Principal Collections (as defined herein)
during the related Collection Period and will be distributed as if it were a
prepayment of principal by the relevant Borrower.
Also, the Trust's prepayment experience may be affected by a wide variety
of factors, including general economic conditions, interest rates, the
availability of alternative financing and homeowner mobility.
Reinvestment Risk
If a prepayment is received on a Housing Loan during any Collection
Period, interest at the then current interest rate on the Housing Loan will
cease to accrue on that part of the Housing Loan prepaid from the date of the
prepayment. The amount prepaid will be invested in Authorized Investments for
the balance of the Collection Period at a rate that may be less than the then
rate on the Housing Loan. Interest will, however, continue to be payable in
respect of an Invested Amount of principal on the Notes until the next Payment
Date following the prepayment. Accordingly, the difference between the rate
earned on the prepaid amount of the Housing Loan and the amount of interest
payable on the Notes may affect the ability of the Issuer Trustee to pay
interest in full on the Notes. Certain Principal Collections and the Liquidity
Facility may cover such shortfalls in whole or in part but there is no assurance
that sufficient amounts will be available. For further details see "DESCRIPTION
OF THE OFFERED NOTES--Available Income and "--Principal Draws."
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Breach of Representation or Warranty
Westpac will make certain representations and warranties to the Issuer
Trustee in relation to the Housing Loans to be equitably assigned by it to the
Issuer Trustee, as of the Cut-Off Date and the Closing Date. Westpac also made
representations and warranties in relation to the Housing Loans to be sold by
the Seller Trustee at the time those Housing Loans were first transferred by
Westpac to each relevant Seller Trust, and the benefit of those representations
and warranties will be passed on to the Issuer Trustee. The Servicer will make
certain representations and warranties to the Issuer Trustee in relation to the
servicing of the Housing Loans pursuant to the Series Notice. These
representations and warranties cover the period from when those Housing Loans
were first transferred by Westpac to other Seller Trusts until the Cut-Off Date.
The Seller Trustee will make certain limited representations and warranties in
relation to the Housing Loans to be assigned by it (e.g., as to title). See "THE
TRUST FUND--Representations and Warranties."
The Issuer Trustee has not investigated or made any inquiries regarding
the accuracy of the representations and warranties, and under the Master Trust
Deed is under no obligation to do so. The Issuer Trustee is entitled to rely
entirely upon the representations and warranties being correct (unless it has
actual notice of any event to the contrary). The rights of the Issuer Trustee in
respect of any representation or warranty being incorrect are described in "THE
TRUST FUND--Breach of Representations and Warranties."
Servicer Risk
The appointment of the Servicer under the Master Trust Deed and Servicing
Agreement may be terminated under certain circumstances or the Servicer may
resign (see "DESCRIPTION OF THE SERVICING AGREEMENT"). If the Servicer is
removed for any reason, the Issuer Trustee is obligated to appoint a suitably
qualified person as Servicer whose appointment would not materially prejudice
the interests of Noteholders (an "Eligible Servicer") to assume responsibility
for servicing the Housing Loans in accordance with the Master Trust Deed and the
Servicing Agreement. There is no guarantee that an Eligible Servicer will be
found who would be willing to service the Housing Loans on the terms of the
Master Trust Deed and the Servicing Agreement, in which case the Issuer Trustee
must act as the Eligible Servicer. The ability of the Eligible Servicer (whether
it is the Issuer Trustee or a third party) to perform the servicing functions
under the Master Trust Deed and Servicing Agreement would depend on the
information and records available to it.
Priority of Redraw Funding Securities and RFS Class A Notes
In certain limited circumstances, the Trust will issue RFSs which will be
senior to the Class A Notes with respect to payments of principal and which will
rank pari passu with the Class A Notes with respect to Interest. In addition, on
each Payment Date, Gross Principal Collections will be used to reimburse Westpac
for any Redraws funded by Westpac during the related Collection Period prior to
payments to the Class A Notes. The RFS Class A Notes will rank pari passu with
the Class A Notes with respect to payments of both principal and Interest. In
addition, payments due on the Redraw Facility, RFSs and RFS Class A Notes, if
any, will be senior in right of payment to the Class B Notes with respect to
Interest and principal. See "DESCRIPTION OF THE OFFERED NOTES--Description of
the Redraw Facility, the Redraw Funding Securities and the RFS Class A Notes."
Credit Enhancement Provides Only Limited Protection Against Losses
Credit enhancement with respect to the Class A Notes will be provided by
(i) the Mortgage Insurance Policies, (ii) subordination of the Excess Available
Income and (iii) the subordination of payments of the Class B Notes to payments
to the Class A Notes. Credit enhancement with respect to the Class B Notes will
be provided by (i) the Mortgage Insurance Policies and (ii) subordination of the
Excess Available Income. Although the credit enhancement is intended to reduce
the risk of delinquent payments or losses to the Noteholders entitled to the
benefit thereof, the amount of such enhancement is limited, will decline and
could be depleted under certain circumstances prior to the payment in full of
the Offered Notes. As a result , the available credit enhancement may be
insufficient to reduce the risk of delinquent payments of losses to the
Noteholders. See "THE MORTGAGE INSURANCE POLICIES" and "DESCRIPTION OF THE
NOTES".
Limitations on the Liquidity Support
If on any Collection Determination Date, the Available Income of the Trust
is insufficient to meet Total Payments of the Trust for a Collection Period,
Principal Collections collected during such Collection Period may be used to
provide liquidity by way of a Principal Draw. If Principal Draws are not
available to meet Total Payments, a drawing must be made under the Liquidity
Facility up to the Liquidity Limit (as defined herein). In the event that there
are shortfalls in excess of the Liquidity Limit prior to the payment in full of
the Offered Notes, Noteholders may suffer losses. See "DESCRIPTION OF THE
OFFERED NOTES--Principal Draws" and "THE LIQUIDITY FACILITY."
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Redemption of the Notes
If an Event of Default occurs under the Security Trust Deed while the
Notes are outstanding, the Security Trustee may (subject to the prior written
consent of the Note Trustee in accordance with the provisions of the Security
Trust Deed), and will (if so directed by the Note Trustee alone where it is the
only Voting Mortgagee or, otherwise by a resolution of 75% of the Voting
Mortgagees) enforce the security created by the Security Trust Deed. That
enforcement can include the sale of some or all of the Housing Loans. There is
no guarantee that the Security Trustee will be able to sell the Housing Loans
for their then Unpaid Balance. Accordingly, the Security Trustee may not be able
to realize the full value of the Housing Loans and this may have an impact upon
the Issuer Trustee's ability to repay all amounts outstanding in relation to the
Notes. Any proceeds from the enforcement of the security will be applied in
accordance with the order of priority of payments as set out in the Security
Trust Deed. See "SECURITY FOR THE NOTES."
If the Trust terminates while Notes are outstanding, Westpac has a right
of first refusal to acquire the Housing Loans. The price to be paid by Westpac
for performing and non-performing Housing Loans must be not less than their fair
market value. In the case of performing Housing Loans, the Issuer Trustee is
required to offer to sell them to Westpac under its right of first refusal for
their then Unpaid Balance. Where the fair market value of a Housing Loan is less
than its then Unpaid Balance, its acquisition by Westpac will be subject to
prior approval by an Extraordinary Resolution (as defined herein) of
Noteholders. This is because in such circumstances there may be a shortfall in
the amount available to the Issuer Trustee to fully repay all amounts
outstanding in relation to the Notes. See "DESCRIPTION OF THE OFFERED
NOTES--Termination of the Trust."
Geographic Concentration May Affect Performance
Approximately _____%, _____% and _____% (by Cut-Off Date Principal
Balance) of the Housing Loans are secured by Mortgaged Properties in the regions
of New South Wales, Victoria and Queensland, respectively. To the extent that
one or more of such regions has experienced or may experience in the future
weaker economic conditions or greater rates of decline in real estate values
than Australia generally, such a concentration of the Housing Loans may be
expected to increase the risk of delinquencies and losses on the Housing Loans
with respect to such region. None of the Issuer Trustee, the Approved Sellers
nor the Servicer can quantify the impact of any recent property value declines
on the Housing Loans or predict whether, to what extent or for how long such
declines may continue.
Consumer Credit Legislation
Some of the Housing Loans are regulated by consumer credit legislation
(the "Consumer Credit Legislation"). Under that legislation, a Borrower may have
a right to apply to a court to:
(1) vary the terms of his or her Housing Loan on the grounds of hardship
or that it is an unjust contract;
(2) reduce or cancel any interest rate payable on the Housing Loan which
is unconscionable;
(3) have certain provisions of the Housing Loan or relevant Mortgage
which are in breach of the legislation declared unenforceable; or
(4) obtain restitution or compensation from the Issuer Trustee, in
relation to any breaches of the Consumer Credit Legislation in
relation to the Housing Loan or relevant Mortgage.
Any such order may affect the timing or amount of interest or principal
payments or repayments under the relevant Housing Loan (which might in turn
affect the timing or amount of interest or principal payments or repayments
under the Offered Notes).
Breaches of the Consumer Credit Legislation may also lead to civil
penalties or criminal fines being imposed on Westpac, for so long as it holds
legal title to the Housing Loans and the Mortgages. If the Issuer Trustee
acquires legal title, it will then become primarily responsible for compliance
with the Consumer Credit Legislation. The Issuer Trustee will (subject to
limited exceptions) be indemnified out of the assets of the Trust for its
liabilities under the Consumer Credit Legislation. If the Issuer Trustee is
indemnified with respect to such liabilities out of the assets of the Trust,
proceeds of the Trust may be insufficient to make all payments provided for
under the Offered Notes.
Westpac will give, or has given, certain representations and warranties
that the Housing Loans and related Mortgages comply in all material respects
with the Consumer Credit Legislation in force at the time documents were entered
into. The Servicer has undertaken to comply with the Consumer Credit Legislation
in connection with servicing the Housing Loans and related Mortgages where
failure to do so would have an Adverse Effect. An "Adverse Effect" is an event
which will materially and adversely affect the amount of any payment to be made
to any Noteholder, or will materially and adversely affect the timing of such
payment. In certain circumstances the Issuer Trustee may have the right to claim
damages from Westpac or the Servicer, as the case may be, where the Issuer
Trustee suffers loss in connection with a breach of the
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Consumer Credit Legislation which is caused by a breach of a relevant
representation or undertaking. See "CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS."
Certain Insolvency Considerations
Once the Housing Loans are equitably assigned by Westpac to the Issuer
Trustee (including, without limitation, payment of the purchase price by the
Issuer Trustee to Westpac), those Housing Loans will not be considered assets of
Westpac in the event that Westpac is dissolved. Therefore, the Housing Loans
will not be available to the liquidator or creditors of Westpac in the event of
the insolvency of Westpac.
An Insolvency Event in respect of Westpac will constitute a Title
Perfection Event and will entitle the Issuer Trustee to perfect title in the
Housing Loans and Mortgages and to become the registered mortgagee in relation
to the Mortgages. In that event, the Issuer Trustee may direct Borrowers to make
payments to it as it directs.
Collections under the Housing Loans are received by Westpac or the
Servicer. As described in "DESCRIPTION OF THE OFFERED NOTES--Collections,"
provided Westpac has a short term rating of at least "A-1+" from Standard &
Poor's and "P-1" from Moody's and the Collections Account is maintained with
Westpac or a subsidiary of Westpac, neither Westpac nor the Servicer is required
to pay the Collections into the Collections Account until two (2) Business Days
before the relevant Payment Date. If Westpac does not have the relevant rating,
Collections must be paid into the Collections Account within five (5) Business
Days (if the Collection Account is with Westpac or one of its subsidiaries) or
two (2) Business Days (in any other case) following receipt. In each of these
circumstances, the Collections may be commingled with the assets of the Servicer
or Westpac (as the case may be) and, in the event of the insolvency of Westpac
or the Servicer (as relevant), the Issuer Trustee may only be able to claim
those Collections as an unsecured creditor of the insolvent company.
If any Insolvency Event occurs with respect to the Issuer Trustee, the
Security Trust Deed may be enforced by the Security Trustee at the direction of
the Voting Mortgagees (see "SECURITY FOR THE NOTES--Enforcement"). The security
created by the Security Trust Deed will stand outside any liquidation of the
Issuer Trustee, and the assets the subject of that security will not be
available to the liquidator or any creditor of the Issuer Trustee (other than a
creditor which has the benefit of the Security Trust Deed) in priority to the
Security Trust Deed. The proceeds of enforcement of the Security Trust Deed are
to be applied by the Security Trustee as set out in "SECURITY FOR THE
NOTES--Priorities under the Security Trust Deed". If the proceeds from
enforcement of the Security Trust Deed are not sufficient to redeem the Notes in
full, some or all of the Noteholders will incur a loss.
Limited Liquidity
There will be no market for the Offered Notes prior to the issuance
thereof, and there can be no assurance that a secondary market will develop, or
if it does develop, that it will provide the Noteholders with liquidity of
investment or that it will remain for the term of any Notes. The Underwriters
presently expect to make a secondary market in the Offered Notes, but have no
obligation to do so.
Ratings of the Notes; Factors Affecting Ability to Maintain Ratings
It is a condition to the issuance of the Class A Notes that they be rated
"Aaa" by Moody's and "AAA" by Standard & Poor's and that the Class B Notes be
rated at least "AA-" by Standard & Poor's. A rating is not a recommendation to
purchase, hold or sell the Offered Notes, inasmuch as such rating does not
comment as to market price or suitability for a particular investor. The rating
of the Offered Notes addresses the likelihood of the payment of principal and
interest on the Offered Notes pursuant to their terms. There is no assurance
that a rating will remain for any given period of time or that a rating will not
be lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances (including without limitation a reduction in the credit rating of
the Interest Rate Swap Provider, the Currency Swap Provider, the Mortgage
Insurance Providers or a reduction in the domestic currency rating of Australia)
in the future so warrant. The ratings of the Offered Notes will be based
primarily on the creditworthiness of the Housing Loans, the subordination
provided by the Class B Notes with respect to the Class A Notes, the
availability of Excess Available Income, if any, the Mortgage Pool Insurance
Policy and the PMI Mortgage Insurance Policies, the availability of the
Liquidity Facility, the creditworthiness of the Interest Rate Swap Provider, the
Currency Swap Provider and the Mortgage Insurer Providers and the domestic
currency rating of Australia. In the context of an asset securitization, the
domestic currency rating of a country reflects, in general, a Rating Agency's
view of the likelihood that cash flow on the assets in such country's currency
will be permitted to be sent outside of that country.
Book-Entry Notes
Issuance of the Offered Notes in book-entry form may reduce the liquidity
of such Notes in the secondary trading market since investors may be unwilling
to purchase Offered Notes for which they cannot obtain physical certificates.
Since transactions in the Offered Notes can be effected only through DTC, Cedel,
Euroclear, participating organizations,
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indirect participants and certain banks, the ability of a Noteholder to pledge
an Offered Note to persons or entities that do not participate in the DTC, Cedel
or Euroclear systems or otherwise to take actions in respect of such Notes, may
be limited due to lack of a physical certificate representing the Offered Notes.
Noteholders may experience some delay in their receipt of distributions of
interest and principal on the Offered Notes since such distributions will be
forwarded by the Note Trustee to DTC and DTC will credit such distributions to
the accounts of its Participants (as defined herein) which will thereafter
credit them to the accounts of Noteholders either directly or indirectly through
indirect participants. See "DESCRIPTION OF THE OFFERED NOTES--Book-Entry
Registration" herein.
Other Considerations
There is no assurance that the market value of the Housing Loans will at
any time be equal to or greater than the Invested Amount of the Notes then
outstanding, plus accrued interest thereon. Moreover, upon an Event of Default
under the Security Trust Deed and a sale of the Trust Assets, the Security
Trustee, the Note Trustee, the Liquidity Facility Provider, the Swap Providers
and any other service provider generally will be entitled to receive the
proceeds of any such sale to the extent of unpaid fees and expenses and other
amounts owing to such persons prior to distributions to holders of the Notes.
After such payment of fees and expenses, the remaining proceeds thereof may be
insufficient to pay in full the principal of and interest on the Notes.
FORMATION OF THE TRUST
Westpac Securitisation Trust Programme
The Westpac Securitisation Trust Programme was established pursuant to the
Master Trust Deed for the purpose of enabling Westpac Securities Administration
Limited as issuer trustee of each Trust established pursuant thereto, to invest
in pools of consumer assets originated from time to time by the Westpac Banking
Corporation group (the "Westpac Group"). The Master Trust Deed provides for the
creation of an unlimited number of WST trusts. Each WST trust will be a separate
and distinct trust fund and will be created subject to the Master Trust Deed and
a supplemental series notice establishing specific provisions of the relevant
WST trust and the instruments to be issued by that trust. The Trust Assets are
not available to meet the liabilities of any other trust formed under the Master
Trust Deed. Likewise, the assets of any other trust formed under the Master
Trust Deed are not available to meet the liabilities of the Trust. Multiple
classes of notes may be issued by the Issuer Trustee in relation to each WST
trust that differ among themselves as to priority of payments and ratings.
Series 1998-1G WST Trust
The detailed terms of the Trust are as set out in the Series Notice and
the Master Trust Deed. The Master Trust Deed establishes the general framework
under which WST trusts may be established from time to time. It does not
actually establish any trusts. To establish a trust, the Trust Manager and the
Issuer Trustee execute a notice of creation of trust which, in the case of the
Trust, was executed on _____________ 1998.
In order to supplement the general framework under the Master Trust Deed
with respect to the Trust, all relevant parties (including the Trust Manager,
the Issuer Trustee and each Approved Seller) will execute the Series Notice,
which (among other things) specifies the details of the Notes, establishes the
cashflow allocation, sets out various representations and undertakings of the
parties specific to the Housing Loans, which are additional to those in the
Master Trust Deed, and amends the Master Trust Deed to the extent necessary to
give effect to the specific aspects of the Trust and the issue of the Notes.
The Transaction Documents should therefore be read together when
determining the rights, powers and obligations of the Issuer Trustee, the Trust
Manager and the Approved Sellers in relation to the Trust. Forms of the Master
Trust Deed and the Series Notice have been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The summaries herein
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all of the provisions of such documents.
The issuance of the Notes will fund the purchase by the Trust of a pool of
residential housing loans originated by Westpac, which will be specified in a
Sale Notice from each of Westpac in its capacity as originator of the Housing
Loans or Westpac Securities Administration Limited in its capacity as trustee of
any other WST trusts established under the Master Trust Deed (in that capacity,
the "Seller Trustee").
In addition, the Trust may issue certain additional debt securities as
discussed herein under "DESCRIPTION OF THE OFFERED NOTES--Description of the
Redraw Facility, the Redraw Funding Securities and the RFS Class A Notes."
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Trust Assets
The Trust Assets will include:
1. a pool of Housing Loans, including all monies at any time paid or
payable thereon or in respect thereof from and after the Cut-Off Date with
respect to payments of principal and after the Closing Date with respect
to payments of interest;
2. rights under certain insurance policies with respect to the
Housing Loans;
3. amounts on deposit in (and Authorized Investments allocated to)
certain accounts established pursuant to the Master Trust Deed, including
the Collections Account; and
4. the Issuer Trustee's rights under the Transaction Documents.
SECURITY FOR THE NOTES
Charge
Under the Security Trust Deed, dated among the Issuer Trustee, the Trust
Manager, the Note Trustee and the Security Trustee, the Issuer Trustee has
granted a first ranking floating charge, to be registered with the Australian
Securities Commission, over all of the Trust Assets in favor of Perpetual
Trustee Company Limited (ACN 000 001 007) (the "Security Trustee"), a company
within the Perpetual group with its holding company being Perpetual Trustees
Australia Limited (ACN 000 431 827), in order to secure the Issuer Trustee's
obligations to the Noteholders, the Note Trustee, the Trust Manager, the
Interest Rate Swap Provider, the Currency Swap Provider, the Security Trustee,
each Paying Agent and each provider of a Support Facility (other than any
provider of a Mortgage Insurance Policy) to the Issuer Trustee and in respect of
any Accrued Interest Adjustment (as defined herein) owed to an Approved Seller
and Westpac in respect of Redraws and the holders of the RFSs (if any) and the
holders of the RFS Class A Notes (if any) (such creditors, together the
"Mortgagees").
Security Trustee
The Security Trustee is appointed to act as trustee on behalf of the
Mortgagees on the terms and conditions of the Security Trust Deed. It holds the
benefit of the charge over the secured property (as defined herein) and the
benefit of each of the Transaction Documents to which the Issuer Trustee is a
party in trust for each Mortgagee in accordance with the terms and conditions of
the Security Trust Deed.
If there is a conflict between the duties owed by the Security Trustee to
any Mortgagees or class of Mortgagees, the Security Trustee must give priority
to the interests of the holders of the RFSs (if any) and the RFS Class A Notes
(if any) and the Class A Noteholders and the Class B Noteholders (which in the
case of the Class A Noteholders and the Class B Noteholders shall be determined
by the Note Trustee acting on their behalf). Subject to the provisions of the
Security Trust Deed (other than the provision in the previous sentence), the
Security Trustee must give priority to the interests only of the Class A
Noteholders and the holders of the RFSs (if any) and the holders of the RFS
Class A Notes (if any) if, in the Security Trustee's opinion, there is a
conflict between the interests of Class A Noteholders and the holders of the
RFSs (if any) and the holders of the RFS Class A Notes (if any) and the
interests of the Class B Noteholders or other Mortgagees. Provided that the
Security Trustee acts in good faith, it shall not incur any liability to any
Mortgagee for giving effect or seeking to give effect to the preceding
provisions of this paragraph.
The Security Trustee has had no involvement in the preparation of any part
of this Prospectus, other than the particular reference to the Security Trustee
in this section and the disclosure of additional provisions of the Security
Trust Deed set forth herein. The Security Trustee makes no statement or
representation in this Prospectus, has not authorized or caused the issue of any
part of it and takes no responsibility for any part of it.
Enforcement
The Security Trustee must promptly convene a meeting of the Voting
Mortgagees (as defined herein) after it receives notice, or has actual knowledge
of, an Event of Default (as defined herein). The Security Trustee may waive
(such waiver, being subject to the prior written consent of the Note Trustee in
accordance with the provisions of the Security Trust Deed), an Event of Default
before it is required to convene a meeting of Mortgagees if that Event of
Default is not (in the opinion of the Security Trustee) materially prejudicial
to the Mortgagees' interests.
At the meeting, the Voting Mortgagees must vote by Extraordinary
Resolution (being a resolution passed at a duly convened meeting by a majority
consisting of not less than 75% of the votes capable of being cast by Voting
Mortgagees
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present in person or by proxy or by written resolution signed by all of the
Voting Mortgagees) on whether to direct the Security Trustee to:
(1) declare the charge to be enforceable;
(2) declare all amounts owing by the Issuer Trustee which are secured by
the Security Trust Deed (including amounts outstanding under the
Notes plus accrued and unpaid interest) to be immediately due and
payable on demand;
(3) crystallize the floating charge created under the Security Trust
Deed in relation to any or all of the Secured Property; and/or
(4) appoint a receiver over the Trust's assets or itself exercise the
powers that a receiver would otherwise have under the Security Trust
Deed.
With respect to voting, every person who is present at a meeting shall
have one vote in respect of each US$ in principal amount of the Stated Amount of
the Offered Notes then outstanding of the Class A Notes or the Class B Notes, as
the case may be, so produced or represented by the voting certificate so
produced or in respect of which he is a proxy.
See "APPENDIX I -- GLOSSARY OF AUSTRALIAN LEGAL TERMS."
The Security Trustee cannot exercise the powers referred to above unless
directed by an Extraordinary Resolution in the manner outlined above or unless,
in the reasonable opinion of the Security Trustee, it is necessary to do so to
protect the interests of the Security Trustee in its personal capacity. The
Security Trustee is not obligated to act unless it obtains an indemnity from the
Voting Mortgagees, and funds have been deposited on behalf of the Security
Trustee to the extent to which it may become liable for the relevant enforcement
actions. For so long as the Note Trustee is the only Voting Mortgagee it may
direct the Security Trustee to do any act which the Security Trustee is required
to do, or may only do, at the direction of an Extraordinary Resolution of Voting
Mortgagees. Neither the Security Trustee nor the Trust Manager may call a
meeting of Voting Mortgagees while the Note Trustee is the only Voting
Mortgagee, unless the Note Trustee otherwise consents.
The Note Trustee will be the only Voting Mortgagee for so long as the
amounts outstanding under the Notes are 75% or more of all amounts secured by
the Security Trust Deed.
Upon the occurrence of an Event of Default: (i) if the Note Trustee is not
the only Voting Mortgagee; and (ii) the Note Trustee directs the Security
Trustee to enforce the charge (whether directed to do so by Class A Noteholders
or as the Note Trustee determines on behalf of the Class A Noteholders), the
Security Trustee shall enforce the charge as if directed to do so by an
Extraordinary Resolution of Voting Mortgagees. For the purposes of the Security
Trust Deed and the Note Trust Deed, a reference to Class A Noteholders include
RFS Class A Noteholders, if any.
No Mortgagee is entitled to enforce the charge under the Security Trust
Deed, or appoint a receiver or otherwise exercise any power conferred by any
applicable law on charges, other than in accordance with the Security Trust
Deed.
Priorities under the Security Trust Deed
The proceeds from the enforcement of the Security Trust Deed (which will
not include amounts required by law to be paid to the holder of any prior
ranking security interest, the proceeds of or amounts credited to the collateral
account under the Liquidity Facility and payable to the Liquidity Facility
Provider and the proceeds of cash collateral lodged with and payable to a
provider of a Swap Agreement or provider of another Support Facility to the
Issuer Trustee) are to be applied in the order of priority set forth below,
subject to any other priority which may be required by statute or law. Priority
of proceeds in enforcement over secured creditors includes certain federal
taxes, unpaid wages, long service leave, annual leave and similar employee
benefits and certain auditor's fees.
(1) first, to pay all costs, charges, expenses and disbursements
properly incurred in the exercise of any power by the Security
Trustee, the Note Trustee, a receiver or an attorney or other
amounts (other than those referred to in paragraph (4) below)
payable to the Security Trustee or the Note Trustee under the
Security Trust Deed;
(2) second, to pay pro rata based on their respective entitlements:
(i) any fees and other expenses due to the Security Trustee, the
Note Trustee or the Principal Paying Agent;
(ii) any fees and unpaid expenses, due to the Issuer Trustee; and
(iii) the receiver's remuneration;
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(3) third, to pay pro rata any unpaid Accrued Interest Adjustment due to
an Approved Seller;
(4) fourth, to pay pro rata based on their respective entitlements:
(i) all Secured Moneys (as defined herein) owing to the providers of
each Support Facility to the Issuer Trustee (other than the Currency
Swap Provider);
(ii) all Secured Moneys owing to the holders of RFSs (if any);
(iii) all Secured Moneys owing to the holders of RFS Class A Notes
(if any);
(iv) all the Secured Moneys owing to the Class A Noteholders (as at
the date of payment);
(v) all Secured Moneys owed by the Issuer Trustee as trustee of the
Trust to a trust other than the Trust;
(vi) all Secured Moneys owing in relation to any Redraws made by
Westpac for which it has not been reimbursed under the Transaction
Documents; and
(vii) all Secured Moneys owing to the Currency Swap Provider under a
confirmation relating to Class A Notes (but without double counting
with payments under sub-paragraph (iv));
(5) fifth, all Secured Moneys owing to the Class B Noteholders (as at
the date of payment) and to the Currency Swap Provider under a
confirmation relating to the Class B Notes, but without double
counting;
(6) sixth, to pay (pari passu and rateably) any amounts not covered
above owing to any Mortgagee under any Transaction Document;
(7) seventh, to pay the holder of any subsequent security interest over
the assets charged by the Security Trust Deed of which the Security
Trustee has notice of the amount properly secured by the security
interest;
(8) eighth, to pay any surplus to the Issuer Trustee to be distributed
in accordance with the Master Trust Deed.
The surplus will not carry interest. If the Security Trustee pays the
surplus to the credit of an account in the name of the Issuer Trustee with
any bank carrying on business in Australia, the Security Trustee,
receiver, Mortgagee or attorney (as the case may be) will be under no
further liability in respect of it.
The "Accrued Interest Adjustment" represents interest and fees which have
accrued on the relevant Housing Loans but which are unpaid as at (and excluding)
the Closing Date, and all amounts received by the relevant Approved Seller under
those Housing Loans applied by the Servicer to payment of interest and fees
under those Housing Loans for the period from (but excluding) the Cut-Off Date
to (but excluding) the Closing Date. During the period between the Cut-Off Date
and the Closing Date, the Housing Loans continue to be owned by the Approved
Sellers. However, any Collections with respect to the period from the Cut-Off
Date through the Closing Date will not be paid back to Westpac until after the
assignment of the Housing Loans to the Trust. The purchase price for the Housing
Loans excludes any such accrual. Therefore, an amount equal to that accrued
interest and fees and Collections in respect of interest and fees for the period
between the Cut-Off Date and the Closing Date will be paid to the Approved
Sellers on the first Payment Date as a priority payment from Total Available
Funds.
Security Trustee's Fees and Expenses
The Issuer Trustee shall reimburse the Security Trustee for all costs and
expenses of the Security Trustee properly incurred in acting as Security
Trustee. The Security Trustee shall be entitled to a fee payable quarterly (the
"Security Trustee Fee") in the amount agreed from time to time by the Issuer
Trustee, the Security Trustee and the Trust Manager. The Issuer Trustee has
agreed to indemnify the Security Trustee against any loss, cost, liability,
expense or damage under or in relation to the Transaction Documents, except
where arising from the Security Trustee's fraud, negligence or willful default.
Retirement and Removal
The Security Trustee may retire on three months' notice in writing to the
Issuer Trustee, the Trust Manager, the Note Trustee and the Rating Agencies.
The Trust Manager may remove the Security Trustee if any of the following
occurs in relation to the Security Trustee: (i) an Insolvency Event occurs in
relation to the Security Trustee in its personal capacity; (ii) the cessation by
the Security Trustee of its business; (iii) the failure by the Security Trustee
to remedy within 14 days after written notice by the Trust
35
<PAGE>
Manager any material breach of duty on the part of the Security Trustee; or (iv)
if without the prior written consent of the Trust Manager there occur certain
changes in the control or management of the Security Trustee.
An Extraordinary Resolution of the Voting Mortgagees may at any time
remove the Security Trustee.
Additional Provisions of the Security Trust Deed
The Security Trust Deed may be amended by the Issuer Trustee and the
Security Trustee with the approval of the Trust Manager and the Note Trustee in
the manner (and subject to the restrictions) set out in the Security Trust Deed.
The Security Trust Deed contains a range of provisions regulating the
scope of the Security Trustee's duties and liability. These include the
following:
(1) The Security Trustee is not responsible for the adequacy or
enforceability of the Security Trust Deed or other Transaction
Documents.
(2) The Security Trustee is not required to exercise its powers under
the Security Trust Deed without being directed to do so by the Note
Trustee or by an Extraordinary Resolution (as referred to above) of
the Voting Mortgagees.
(3) The Security Trustee may rely on documents provided by the Issuer
Trustee or Trust Manager and others, and the advice of consultants
and advisors.
(4) The Security Trustee is not required to monitor whether an event of
default has occurred or compliance by the Issuer Trustee or Trust
Manager with the Transaction Documents, or their other activities.
(5) The Security Trustee is not required to do anything unless its
liability is limited in a manner satisfactory to it.
(6) The Security Trustee need not give Mortgagees information concerning
the Issuer Trustee which comes into the possession of the Security
Trustee.
(7) The rights, remedies and discretion of the Noteholders including all
rights to vote or give instructions or consents to the Security
Trustee and to enforce its undertakings and warranties may only be
exercised by the Note Trustee and the Security Trustee may rely on
any instructions or directions given to it by Note Trustee as being
given on behalf of the Noteholders without enquiry about compliance
with the Note Trust Deed.
(8) The Security Trustee has no duties or responsibilities except those
expressly set out in the Security Trust Deed or any collateral
security.
(9) Any action taken by the Security Trustee under the Security Trust
Deed or any collateral security binds all the Mortgagees.
(10) Each Mortgagee must make its own investigations, without reliance on
the Security Trustee, as to the affairs of the Issuer Trustee and
whether or not to take action under any Transaction Document.
(11) The Security Trustee in its capacity as a Mortgagee can exercise its
rights and powers as such as if it were not acting as the Security
Trustee. It and its affiliates may engage in any kind of business
with the Issuer Trustee, the Trust Manager, Mortgagees and others as
if it were not Security Trustee and may receive consideration for
services in connection with any Transaction Document or otherwise
without having to account to the Mortgagees.
THE TRUST FUND
General
The Housing Loans are expected to include ___________ Housing Loans
secured by registered first ranking mortgages (collectively, the "Mortgages") on
Mortgaged Properties located in Australia. This subsection describes generally
the characteristics of the Housing Loans. The Mortgaged Properties consist of
owner-occupied properties and non-owner- occupied investment properties. The
Mortgaged Properties do not include mobile homes which are not permanently
affixed to the ground, commercial properties or unimproved land. With respect to
each Housing Loan, the "Cut-Off Date Balance Outstanding" is the unpaid
principal balance of such Housing Loan as of the close of business on the
Cut-Off Date. Housing Loans included in the Trust Fund consist of floating and
fixed rate loans originated by Westpac.
36
<PAGE>
Transfer and Assignment of Housing Loans
On the Closing Date, the Housing Loans purchased by the Trust will be
those specified in a Sale Notice from each of the Approved Sellers to the Issuer
Trustee. The Housing Loans to be sold by either the Seller Trust or by Westpac
from Westpac's general portfolio of residential Housing Loans have been in both
cases originated by Westpac in the ordinary course of its business. Each Housing
Loan may have some or all of the product features set out in "WESTPAC
RESIDENTIAL LOAN PROGRAM--Housing Loan Features" below. The Housing Loans are,
generally, required to be secured by a registered first ranking real property
mortgage and, in certain circumstances, there may also be a second ranking
mortgage in favor of Westpac. For more information on the Housing Loans, see
"WESTPAC RESIDENTIAL LOAN PROGRAM" below.
On the Closing Date, the Approved Sellers will equitably assign the
Housing Loans, the Mortgages and the Related Securities (as defined herein)
securing those Housing Loans to the Issuer Trustee, pursuant to the Sale Notices
substantially in the form annexed to the Master Trust Deed, after which the
Issuer Trustee will be entitled to receive (with the assistance of TMC in its
capacity as servicer (the "Servicer") of the Housing Loans and custodian of
Related Documents (as defined herein), including the mortgage documents relating
to the Housing Loans Collections on the Housing Loans. If a Title Perfection
Event occurs, the Issuer Trustee must take certain actions to perfect its legal
title in the Housing Loans pursuant to an irrevocable power of attorney granted
by Westpac.
"Related Security" in relation to a Housing Loan means: (a) any Relevant
Document for that Housing Loan; (b) any insurance policy or insurance proceeds
with respect to the Housing Loan; (c) any Mortgage Insurance Policy or Mortgage
Insurance Proceeds with respect to the Housing Loan; or (d) any other agreement
specified as "Related Security" for the Housing Loan in the Series Notice.
"Relevant Document" means, with respect to a Housing Loan, (a) the loan
agreement relating to that Housing Loan; (b) the mortgage document in relation
to such Housing Loan, (c) the certificate of title for the Mortgaged Property
secured by such mortgage, (d) any amendment or replacement of such documents and
any other document which is entered into by or executed in favor of the Approved
Seller or Issuer Trustee in connection with that Housing Loan after the Cut-Off
Date, or (e) any other document specified as a "Relevant Document" in the Series
Notice.
An Approved Seller may in some instances assign to the Issuer Trustee a
Housing Loan secured by an "all moneys" Mortgage, which may also secure
financial indebtedness that has not been sold into the Mortgage Pool and is
instead retained by Westpac. The Issuer Trustee will hold the benefit of the
relevant Mortgage as bare trustee in relation to that other financial
indebtedness, although the Mortgage will secure the assigned Housing Loan in
priority to that other financial indebtedness.
Representations and Warranties
Westpac will make certain representations and warranties to the Issuer
Trustee in relation to the Housing Loans to be assigned by it to the Issuer
Trustee. Westpac also made representations and warranties in relation to the
Housing Loans to be sold by the Seller Trustee at the time those Housing Loans
were first transferred by Westpac to each relevant Seller Trust, and the benefit
of those prior representations and warranties will be passed on to the Issuer
Trustee. The Servicer will make certain representations and warranties to the
Issuer Trustee in relation to the servicing of the Housing Loans to be sold by
the Seller Trustee to the Issuer Trustee. These representations and warranties
cover the period from when those Housing Loans were first transferred by Westpac
to other Seller Trusts until the Cut-Off Date. The Seller Trustee will make
certain limited representations and warranties in relation to the Housing Loans
to be assigned by it (e.g., as to title) to the Issuer Trustee.
Westpac Representations
Westpac will make the following representations and warranties with
respect to each Housing Loan as of the Cut-Off Date and (except as specified
below) the Closing Date:
(1) it is subject to a Mortgage Insurance Policy;
(2) it is the sole legal and beneficial owner of each Housing Loan, free
and clear of any security interest (unless arising solely as a
result of action by the Security Trustee);
(3) in relation to the Housing Loans to be sold by Westpac to the Issuer
Trustee as at the Cut-Off Date, each Housing Loan satisfies the
following eligibility criteria ("Eligibility Criteria"):
(i) it was approved and originated in the ordinary course of
its business;
(ii) the Mortgage securing each Housing Loan constitutes (a) a
registered first ranking mortgage over residential property, or (b)
where the Mortgage is not, or will not be when registered, a first
ranking mortgage, Westpac has made an offer to the Issuer Trustee in
relation to all prior ranking registered mortgages to sell such
37
<PAGE>
Mortgages to the Issuer Trustee and upon such sale, the Mortgage
will constitute a registered first ranking mortgage;
(iii) it is denominated and payable only in Australian dollars
in Australia;
(iv) it has an LVR less than or equal to 95%;
(v) it has less than A$750,000.00 outstanding under it;
(vi) it is repayable within 30 years of the Cut-Off Date;
(vii) it is not Delinquent for more than 30 consecutive days;
(viii) it is subject to the terms and conditions of a Premium
Option Home Loan, a First Option Home Loan, a Basic Option Home
Loan, a Fixed Option Home Loan, a Special Offer Fixed Option Home
Loan, a Fixed Rate Investment Property Loan, an Investment Property
Loan earning a variable rate of interest, a Special Offer Fixed Rate
Investment Property Loan or any other similar loan product, however
named, with some or all of the features referred to under "WESTPAC
RESIDENTIAL LOAN PROGRAM--Housing Loan Features";
(ix) it is secured by a Mortgage over a Mortgaged Property
which has erected on it a residential dwelling;
(x) the sale of an equitable interest in the Housing Loan, or
the sale of an equitable interest in any related Mortgage for the
Housing Loan, does not contravene or conflict with any law;
(xi) together with the related Mortgage, it has been or will
be stamped, or has been taken by the relevant stamp duties authority
to be stamped, with all applicable duty;
(xii) it is not governed or regulated by the Credit Act 1984
(NSW) (or the corresponding legislation for any other Australian
jurisdiction) or any rural, primary production, moratorium or
mediation legislation, other than the Consumer Credit Legislation;
(xiii) it is not a loan with an interest only payment type and
a bullet principal repayment at the end of the interest only period
as set out in the letter of offer relating to that Housing Loan; and
(xiv) the Borrower is a resident of Australia.
Servicer Representations
In relation to the Housing Loans to be sold by the Seller Trust to the
Issuer Trustee, the Servicer has made representations and warranties for the
benefit of the Issuer Trustee including that:
(1) as of the Cut-Off Date, each Housing Loan meets the Eligibility
Criteria;
(2) each Housing Loan is the subject of a Mortgage Insurance Policy; and
(3) each Housing Loan originally sold to the Seller Trustee, has been
serviced by the Servicer in accordance with the Servicing Agreement,
in some cases as the Servicing Agreement has been amended, until the
Closing Date. That servicing includes, without limitation, ensuring
compliance with the Consumer Credit Legislation in connection with
servicing the Housing Loans where failure to do so would have an
Adverse Effect.
Seller Trustee Representations
In relation to the Housing Loans to be sold by the Seller Trustee to the
Issuer Trustee, the Seller Trustee will make representations and warranties for
the benefit of the Issuer Trustee including that:
(1) it has good equitable title to the Housing Loans free and clear of
any security interest other than under the Security Trust Deed given
by the Seller Trustee in favor of the Security Trustee. That
Security Trust Deed created only a floating charge over the Housing
Loans; and
(2) the sale, transfer and assignment of the Seller Trustee's interest
in the Housing Loans will not constitute a breach of any documents
binding on the Seller Trustee.
38
<PAGE>
General
The Issuer Trustee has not investigated or made any inquiries regarding
the accuracy of the representations and warranties, and under the Master Trust
Deed is under no obligation to do so. The Issuer Trustee is entitled to rely
entirely upon the representations and warranties being correct (unless it has
actual notice of any event to the contrary). The rights of the Issuer Trustee in
respect of any representation or warranty being incorrect are described in
"--Breach of Representations" below.
Breach of Representations and Warranties
If Westpac, the Trust Manager or the Issuer Trustee becomes aware within
120 days after the Closing Date that a representation or warranty from Westpac
relating to any Housing Loan or Mortgage is incorrect, it must notify the other
parties and the Rating Agencies within five Business Days of becoming so aware.
If such a notice in relation to a breach is given not later than five Business
Days before 120 days after the Closing Date and the breach is not waived or
remedied to the satisfaction of the Issuer Trustee within five Business Days
then, without any action being required by either party, Westpac shall be
obligated to repurchase the affected Housing Loan and Mortgage for an amount
equal to its Unpaid Balance.
On payment of that amount the Issuer Trustee shall cease to have any
interest in the affected Housing Loan and Mortgage, and Westpac shall hold both
the legal and beneficial interest in such Housing Loan and Mortgage and be
entitled to all interest and fees that accrue in respect of them from (and
including) the date of repurchase.
In any other case, the Issuer Trustee's rights in relation to a breach of
a representation or warranty shall give rise only to a claim for damages,
limited to an amount equal to the Unpaid Balance of that Housing Loan at the
time Westpac pays the damages.
Housing Loan Statistics
The Housing Loans will consist of ________ Housing Loans secured by
Mortgages on Mortgaged Properties located in the six states and two territories
in Australia, being New South Wales ("NSW"), Victoria ("Vic"), Queenslands
("QLD"), South Australia ("SA"), Western Australia ("WA"), Tasmania ("TAS"),
Northern Territory ("NT"), the Australian Capital Territory ("ACT"). 100% of the
Housing Loans by Cut-Off Date Balances Outstanding are secured by first ranking
mortgages on the related Mortgaged Properties. The aggregate Cut-Off Date
Balances Outstanding of the Housing Loans (the "Cut-Off Date Pool Balance")
totaled approximately A$____________. The Housing Loans bear interest at
variable and fixed rates. As of the Cut-Off Date, ____% of the Housing Loans by
Cut-Off Date Loan Balance are variable rate loans (the "Variable Rate Housing
Loans") and ____% of the Housing Loans by Cut-Off Date Loan Balance are fixed
rate loans (the "Fixed Rate Housing Loans"). The weighted average Mortgage Rate
for the Fixed Rate Housing Loans as of the Cut-Off Date was approximately ____%
per annum. The weighted average Mortgage Rate for the Variable Rate Housing
Loans as of the Cut-Off Date was approximately ____% per annum. The lowest
Cut-Off Date Balance Outstanding of any Housing Loan was approximately
A$__________ and the highest was approximately A$____________. The average
Cut-Off Date Balance Outstanding of the Housing Loans was approximately
A$_____________. The weighted average original term to stated maturity of the
Housing Loans was approximately ___ months. The weighted average remaining term
to stated maturity of the Housing Loans was approximately ____ months. As of the
Cut-Off Date, the weighted average number of months that have elapsed since
origination of the Housing Loans was approximately ____ months. The lowest and
highest LVR of the Housing Loans at origination were approximately ____% and
______%, respectively. The weighted average LVR of the Housing Loans was
approximately ____%.
Housing Loans representing approximately _____% of the Cut-Off Date Pool
Balance are secured by non-owner- occupied (including second homes) Mortgaged
Properties (based solely upon statements made by the related Mortgagors at the
time of origination of the related Housing Loans).
As of the Cut-Off Date, no Housing Loans were greater than 30 days
Delinquent.
Set forth below is a description of certain additional characteristics
with respect to the Housing Loans held by the Trust and are not indicative of
the entire portfolio of Westpac. All percentages are approximate and may not
total 100% due to rounding.
39
<PAGE>
(All amounts expressed in Australian dollars)
(All %'s are approximate and may not total 100% due to rounding)
BALANCE OUTSTANDING DISTRIBUTION
<TABLE>
<CAPTION>
Total
Number Security Balance Average Average % by % by
Balance of Loans Value A$ Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
A$10,001-A$20,000................
A$20,001-A$30,000................
A$30,001-A$40,000................
A$40,001-A$50,000................
A$50,001-A$100,000...............
A$100,001-A$150,000..............
A$150,001-A$200,000..............
A$200,001-A$250,000..............
A$250,001-A$300,000..............
A$300,001-A$350,000..............
A$350,001-A$400,000..............
A$400,001-A$450,000..............
A$450,001-A$500,000..............
Above A$500,000..................
------- --------- -------------- ---------- --------- --------- --------
Total........................
======= ========= ============== ========== ========= ========= --------
</TABLE>
LOAN RATES OF THE FIXED RATE HOUSING LOANS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
Loan Rate(%) Number of Loans % by Balance
- ---------------------------------------------------------- --------------------- ---------------------
<S> <C> <C>
6.001- 6.500%.............................................
6.501- 7.000%.............................................
7.001- 7.500%.............................................
7.501- 8.000%.............................................
8.001- 8.500%.............................................
8.501- 9.000%.............................................
9.001- 9.500%.............................................
9.501- 10.000%............................................
10.001- 10.500%...........................................
10.501- 11.000%...........................................
11.001- 11.500%...........................................
11.501- 12.000%...........................................
12.001- 12.500%...........................................
12.501- 13.000%...........................................
13.001- 13.500%...........................................
13.501- 14.000%...........................................
--------------------- ---------------------
Total.................................................
===================== =====================
</TABLE>
- ----------
* Each Fixed Rate Housing Loan can convert to a Variable Rate Housing Loan
subject to certain related penalties.
40
<PAGE>
GEOGRAPHIC DISTRIBUTION BY REGION*
<TABLE>
<CAPTION>
Total
Number Security Current Average Average % by % by
Region of Loans Value A$ Balance A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- ---------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
ACT-Metro........................
NSW-Metro........................
NSW-Other........................
NT-Metro.........................
NT-Other.........................
QLD-Metro........................
QLD-Other........................
SA-Metro.........................
SA-Other.........................
TAS-Metro........................
TAS-Other........................
Vic-Metro........................
Vic-Other........................
WA-Metro.........................
WA-Other.........................
------- --------- ------------- ---------- --------- --------- --------
Total........................
======= ========= ============= ========== ========= ========= ========
</TABLE>
- ----------
* Geographic distributions are split by State or Territory and by
metropolitan (Metro) or country (Other). The distributions are based on
the post code of the Mortgaged Property. "Metro" areas comprise the city
and surrounding suburbs of the capital city of each State or Territory and
"Other" comprises all other areas within the State or Territory.
LVR RATIO DISTRIBUTION
<TABLE>
<CAPTION>
Total Current
Number Security Balance Average Average % by % by
LVR of Loans Value A$* Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- --------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
0% <= 5%.........................
5% <= 10%........................
10% <= 15%.......................
15% <= 20%.......................
20% <= 25%.......................
25% <= 30%.......................
30% <= 35%.......................
35% <= 40%.......................
40% <= 45%.......................
45% <= 50%.......................
50% <= 55%.......................
55% <= 60%.......................
60% <= 65%.......................
65% <= 70%.......................
70% <= 75%.......................
75% <= 80%.......................
80% <= 85%.......................
85% <= 90%.......................
90% <= 95%.......................
------- ----------- --------------- ---------- --------- -------- --------
Total........................
======= =========== =============== ========== ========= ======== ========
</TABLE>
- -----------
* Total Security Value is determined by either contract of sale or valuation
by a registered panel. See "WESTPAC RESIDENTIAL LOAN PROGRAM--Underwriting
of Housing Loans."
41
<PAGE>
MORTGAGE INSURER DISTRIBUTION
<TABLE>
<CAPTION>
Total Current
Number Security Balance Average Average % by % by
Insurer of Loans Value A$ Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
None.............................
HLIC (post 12/12/97).............
HLIC (prior to 12/12/97).........
MGICA............................
Sun Alliance/WLMI................
------- --------- -------------- ---------- --------- --------- --------
Total........................
======= ========= ============== ========== ========= ========= ========
</TABLE>
PRODUCT DISTRIBUTION
<TABLE>
<CAPTION>
Total Current
Number Security Balance Average Average % by % by
Product of Loans Value A$ Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Basic Option
Home Loan......................
First Option
Home Loan......................
Fixed Options
Home Loan......................
IPL - First Option...............
IPL - Fixed Rate.................
IPL - Special
Fixed Rate.....................
IPL - Variable Rate..............
Premium Option
Home Loan......................
Special Options Fixed
Rate Home Loan.................
------- --------- -------------- ---------- --------- --------- --------
Total........................
======= ========= ============== ========== ========= ========= ========
</TABLE>
SETTLEMENT PERIOD DISTRIBUTION
<TABLE>
<CAPTION>
Total Current
Settlement Number Security Balance Average Average % by % by
Period of Loans Value A$ Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
------- --------- -------------- ---------- --------- --------- --------
Total........................
======= ========= ============== ========== ========= ========= ========
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Month/Year of Conversion from
Fixed Rate Housing Loan to Current Balance % by
Variable Rate Housing Loan Number of Loans Outstanding A$ Balance
- ----------------------------------------------- --------------------- ---------------------- ------------
<S> <C> <C> <C>
...............................................
...............................................
...............................................
...............................................
...............................................
...............................................
...............................................
...............................................
...............................................
...............................................
...............................................
--------------------- ---------------------- ------------
Total.....................................
===================== ====================== ============
</TABLE>
MORTGAGES BY YEAR OF MATURITY
<TABLE>
<CAPTION>
Total Current
Number Security Balance Average Average % by % by
Year of Maturity of Loans Value A$ Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1999.............................
2000.............................
2001.............................
2002.............................
2003.............................
2004.............................
2005.............................
2006.............................
2007.............................
2008.............................
2009.............................
2010.............................
2011.............................
2012.............................
2013.............................
2014.............................
2015.............................
2016.............................
2017.............................
2018.............................
2019.............................
2020.............................
2021.............................
2022.............................
2023.............................
2024.............................
2025.............................
2026.............................
2027.............................
2028.............................
------- ---------- --------------- ---------- --------- --------- -------
Total.......................
======= ========== =============== ========== ========= ========= =======
</TABLE>
43
<PAGE>
YEAR OF ORIGINATION (Quarterly)
<TABLE>
<CAPTION>
Total Current
Number Security Balance Average Average % by % by
Origination of Loans Value A$ Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
------- --------- -------------- ---------- --------- --------- --------
Total.......................
======= ========= ============== ========== ========= ========= ========
</TABLE>
OCCUPANCY OF MORTGAGE PROPERTY DISTRIBUTION*
<TABLE>
<CAPTION>
Total Current
Number Security Balance Average Average % by % by
Loan Type of Loans Value A$ Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment.......................
Owner Occupied...................
------- --------- -------------- ---------- --------- --------- --------
Total.......................
======= ========= ============== ========== ========= ========= ========
</TABLE>
- ----------
* Based solely on statements of Mortgagors at time of origination.
PAYMENT TYPE DISTRIBUTION
<TABLE>
<CAPTION>
Total Current
Number Security Balance Average Average % by % by
Payment Type of Loans Value A$ Outstanding A$ Balance A$ LVR (%) Number Balance
- --------------------------------- -------- -------- -------------- ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Only....................
Principal & Interest.............
------- --------- ------------- --------- --------- -------- --------
Total.......................
======= ========= ============= ========= ========= ======== ========
</TABLE>
HOUSING LOAN PROPERTY TYPES
<TABLE>
<CAPTION>
Total Current
Number Security Balance % by
Property Type of Loans Value Outstanding A$ Balance
- ----------------------------------------------------- -------------- ---------- ---------------- -------
<S> <C> <C> <C> <C>
Detached houses......................................
Semi-detached houses.................................
Townhouses...........................................
Strata title units...................................
-------------- ---------- ---------------- --------
Total...........................................
============== ========== ================ ========
</TABLE>
THE ISSUER TRUSTEE
Westpac Securities Administration Limited (the "Issuer Trustee") will act
as trustee under the Trust and, in such capacity, as issuer of the Notes on the
terms set out in the Transaction Documents.
44
<PAGE>
Incorporation
The Issuer Trustee was incorporated on 11th July 1944 as, and continues to
exist and operate as, a limited liability public company under the Corporations
Law of New South Wales, Australia. The Australian Company Number ("ACN") of the
Issuer Trustee is 000 049 472, and its registered office is at Level 36, 60
Margaret Street, Sydney with its principal office at Level 10, 130 Pitt Street,
Sydney.
The Issuer Trustee will issue Notes in its capacity as trustee of the
Trust.
Share Capital
The authorized share capital of the Issuer Trustee is A$10,000,000 divided
into 5,000,000 shares of A$2.00 each. The issued share capital of the Issuer
Trustee is 92,000 fully paid shares of A$2.00 each. Those shares are held by
Westpac Financial Services Group Limited (ACN 000 326 312), a wholly owned
subsidiary of Westpac.
Business
The Issuer Trustee is indirectly a wholly owned subsidiary of Westpac and
is dedicated to supporting core bank activities of Westpac by providing trustee
and custody services. The Issuer Trustee currently holds funds under
administration of A$[___] billion in this capacity and has been servicing
Westpac and Westpac's clients since 1944.
The Issuer Trustee is an Authorized Trustee Corporation under Regulation
7.1.01 Schedule 9 of the Corporations Law; is an approved trustee for the
purposes of the Superannuation Industry (Supervision) Act 1993; and holds a
Securities Dealers License No. 11123 under the Corporations Law of New South
Wales, Australia.
The Issuer Trustee has five subsidiaries incorporated in New South Wales.
Experience
Currently, the Issuer Trustee is the trustee for superannuation trusts
with assets exceeding [A$___] billion. In total the Issuer Trustee acts as
trustee or custodian (through its subsidiary company Westpac Custodian Nominees
Limited) for clients with assets exceeding A$69.8 billion.
The Issuer Trustee's experience in trusteeship began in the 1940's. The
Issuer Trustee is associated with leading investment managers and in addition,
the Issuer Trustee's experience with administrators, consultants and industry
specialists complements its capacity to service the diversified requirements of
corporate trust schemes.
The Issuer Trustee's balance sheet for the year ended September 30, 1997
showed Total Shareholder's Equity as A$40.7 million.
Directors
The directors of the Issuer Trustee are as follows:
Name Home Address Principal Activities
- ---- ------------ --------------------
Martyn John Berry 5 Bimbimbie Place, Bayview, Investment Fund
New South Wales, 2104 Australia Executive
David Matthew Fite 51 Bower Street, Manly, Bank Executive
New South Wales, 2095 Australia
John Charles Lawson 4 Allerton Road, Beecroft, Banker
New South Wales, 2119 Australia
Robert McDonald 46/26 Werona Avenue, Padstow, Finance Executive
New South Wales, 2211 Australia
Michael Anthony Migro 4 Stack Street, Balmain, Manager
New South Wales, 2041 Australia
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<PAGE>
Powers
Subject to the Master Trust Deed and the Series Notice, the Issuer Trustee
has all the rights, powers and discretion over and in respect of the Trust
Assets which it could exercise as if it were the beneficial owner of those
assets. These powers include the ability to invest in Authorized Investments
(including the eligible Housing Loans and Mortgages), to issue Notes and to
enter into Support Facilities.
The Master Trust Deed expressly permits the Issuer Trustee to appoint the
Servicer to retain custody of the mortgage documents for the Trust in accordance
with the Servicing Agreement, and for the Issuer Trustee to lodge documents with
the Servicer.
Full details of the powers of the Issuer Trustee are set out in the Master
Trust Deed.
Duties
The Issuer Trustee is required to act honestly and in good faith and to
exercise such diligence and prudence as a prudent person of business would
exercise in performing its express functions and in exercising its discretion
under the Master Trust Deed. It must keep each WST trust separate from the
others and do everything necessary to ensure it can comply with its obligations
under the Transaction Documents.
In particular the Issuer Trustee has the duty to maintain a register of
Authorized Investments and to ensure that the Trust Manager keeps accounting
records which correctly record and explain all amounts paid and received by the
Issuer Trustee.
The Issuer Trustee is required to act continuously as trustee of the Trust
until the Trust is terminated as provided by the Master Trust Deed or the Issuer
Trustee has retired or been removed from office in the manner detailed below.
Each Noteholder acknowledges that:
(1) In the absence of fraud, negligence or breach of trust on its part,
the Issuer Trustee shall not be liable personally in the event of
failure to make payments on the Remittance Date for payment to any
Noteholder, any Beneficiary, the Trust Manager or any other person
or for any loss howsoever caused in respect of any of the trusts or
to any Noteholder, any Beneficiary, the Trust Manager or any other
person.
(2) The Issuer Trustee acts as issuer trustee only in its capacity as
trustee of the Trust and in no other capacity. Any liability arising
under or in connection with a Transaction Document can be enforced
against the Issuer Trustee only to the extent to which it can be
satisfied out of property of the Trust out of which the Issuer
Trustee is actually indemnified for the liability. This limitation
of the Issuer Trustee's liability applies despite any other
provision of the Transaction Documents and extends to all
liabilities and obligations of the Issuer Trustee in any way
connected with any representation, warranty, conduct, omission,
agreement or transaction related to the Transaction Documents or the
Trust. The limitation will not apply if there is a reduction in the
Issuer Trustee's indemnification out of trust assets as a result of
the Issuer Trustee's fraud, negligence or breach of trust.
(3) the Issuer Trustee has no duty, and is under no obligation, to
investigate whether a Trust Manager's default, Servicer Transfer
Event or Title Perfection Event has occurred in relation to the
Trust other than where it has actual notice;
(4) the Issuer Trustee is required to provide the notices referred to in
the Master Trust Deed in respect of a determination of Adverse
Effect only if it is actually aware of the facts giving rise to the
Adverse Effect; and
(5) in making any such determination, the Issuer Trustee will seek and
rely on advice given to it by its advisers in a manner contemplated
by the Master Trust Deed.
The Issuer Trustee is entitled to rely conclusively on, and is not
required to investigate the accuracy of:
(i) the contents of a Sale Notice given to it by an Approved Seller;
(ii) the contents of any report given to it by the Trust Manager or the
Servicer;
(iii) any calculations made by an Approved Seller, a Servicer or the Trust
Manager including the calculation of payments due to, or to be charged
against, the Noteholders;
(iv) the amount of, or allocation of, Collections; or
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<PAGE>
(v) the contents of any certificate provided to the Issuer Trustee under
the Master Trust Deed or any certificate given by the Trust Manager or the
Servicer,
unless the Issuer Trustee is actually aware of the contrary. The Issuer Trustee
is not liable to any person in any manner whatsoever in respect of these
matters.
The Master Trust Deed also contains other provisions which regulate the
Issuer Trustee's liability to Noteholders, other creditors and any Beneficiary.
The Issuer Trustee is not liable to any person for any losses, costs,
liabilities or expenses arising out of the exercise or non exercise of its
discretion (or by the Trust Manager of its discretion) or for any instructions
or directions given to it by the Trust Manager, the Servicer or either of the
Approved Sellers. The Issuer Trustee is also not liable for any Trust Manager's
Default, Servicer Transfer Event or Title Perfection Event. The Issuer Trustee
is not liable for any act, omission or default of the Servicer in relation to
its custodian duties or its obligations under the Servicing Agreement.
Delegation
In exercising its powers and performing its obligations and duties under
the Master Trust Deed, the Issuer Trustee may, with the approval of the Trust
Manager, delegate any or all of the duties, powers, discretion or other
functions of the Issuer Trustee under the Master Trust Deed or otherwise in
relation to the Trust, to a related company of the Issuer Trustee which is a
trustee company or trustee corporation for the purposes of any State or
Territory legislation governing the operation of trustee companies.
Issuer Trustee Fees and Expenses
The Issuer Trustee is entitled to a quarterly fee (the "Issuer Trustee
Fee") based on the average daily balance of the aggregate Housing Loan principal
during each Collection Period, payable in arrears on the relevant Payment Date.
The Issuer Trustee is entitled to be reimbursed out of the assets of the
Trust for all expenses incurred in connection with the performance of its
obligations in respect of the Trust (other than general overhead costs and
expenses).
Removal of the Issuer Trustee
The Issuer Trustee is required to retire as trustee after a direction from
the Trust Manager following an "Issuer Trustee's Default." An Issuer Trustee's
Default occurs if:
(1) an Insolvency Event has occurred and is continuing in relation to the
Issuer Trustee;
(2) any action is taken by or in relation to the Issuer Trustee which
causes the rating of any Notes to be downgraded;
(3) the Issuer Trustee, or any employee, delegate, agent or officer of the
Issuer Trustee, breaches any obligation or duty imposed on the Issuer
Trustee under the Master Trust Deed or any other Transaction Document in
relation to the Trust where the Trust Manager reasonably believes it may
have an Adverse Effect and the Issuer Trustee fails or neglects after 30
days' notice from the Trust Manager to remedy that breach;
(4) the Issuer Trustee merges or consolidates with another entity without
obtaining the consent of the Trust Manager and ensuring that the resulting
merged or consolidated entity assumes the Issuer Trustee's obligations
under the Transaction Documents; or
(5) there is a change in effective control of the Issuer Trustee from that
subsisting as at the date of the Master Trust Deed unless approved by the
Trust Manager.
Where the Issuer Trustee is removed because of its default, it shall bear
the costs of its removal. The Issuer Trustee indemnifies the Trust Manager and
the Trust for those costs.
On the removal of the Issuer Trustee, the Trust Manager, subject to giving
prior notice to the Rating Agencies, shall be entitled to appoint in writing
some other statutory trustee to be the Issuer Trustee under the Master Trust
Deed provided that appointment will not in the reasonable opinion of the Trust
Manager materially prejudice the interests of Noteholders. Until the appointment
is completed the Trust Manager shall act as Issuer Trustee and will be entitled
to the trustee's fee for the period it so acts as Issuer Trustee.
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<PAGE>
Voluntary Retirement of the Issuer Trustee
The Issuer Trustee may resign on giving to the Trust Manager (with a copy
to the Rating Agencies) not less than 3 months' notice in writing (or such other
period as the Trust Manager and the Issuer Trustee may agree) of its intention
to do so.
Before retirement, the Issuer Trustee must appoint a successor trustee who
is approved by the Trust Manager, or who may be the Trust Manager, and whose
appointment will not materially prejudice the interests of Noteholders. If a
successor trustee has not been appointed by the end of the 3 months' notice
period the Trust Manager shall act as trustee until a successor trustee is
appointed.
Limitation of Issuer Trustee's Liability
In the absence of fraud, negligence or breach of trust on its part, the
Issuer Trustee shall not be liable personally in the event of failure to pay
moneys on the Remittance Date for payment to any Noteholder, any Beneficiary,
the Trust Manager or any other person or for any loss howsoever caused in
respect of any of the trusts or to any Noteholder, any Beneficiary, the Trust
Manager or any other person.
The Issuer Trustee acts as issuer trustee only in its capacity as trustee
of the Trust and in no other capacity. A Noteholder cannot sue the Issuer
Trustee personally except in the case of fraud, negligence or breach of trust.
Any liability arising under or in connection with a Transaction Document can be
enforced against the Issuer Trustee only to the extent to which it can be
satisfied out of property of the Trust out of which the Issuer Trustee is
actually indemnified for the liability. This limitation of the Issuer Trustee's
liability applies despite any other provision of the Transaction Documents and
extends to all liabilities and obligations of the Issuer Trustee in any way
connected with any representation, warranty, conduct, omission, agreement or
transaction related to the Transaction Documents or the Trust. The limitation
will not apply if there is a reduction in the Issuer Trustee's indemnification
out of trust assets as a result of the Issuer Trustee's fraud, negligence or
breach of trust.
The Issuer Trustee is also indemnified out of the Trust assets against
certain payments which it may be liable to make under the Consumer Credit
Legislation. Westpac has also indemnified the Issuer Trustee in relation to such
payments and the Issuer Trustee is required to first call on the indemnity from
Westpac.
Rights of Indemnity
Except where the Issuer Trustee fails to exercise due care or is otherwise
disentitled (including, without limitation, because of fraud, negligence or
breach of trust on its behalf) the Issuer Trustee will be indemnified out of the
Trust Assets against all losses and liabilities incurred by the Issuer Trustee
in properly performing any of its duties or exercising any of its powers under
the Transaction Documents in relation to the Trust.
The description of the Issuer Trustee set forth above has been provided by
the Issuer Trustee; the Issuer Trustee has not, however, been involved in the
preparation of, and does not accept responsibility for, this Prospectus as a
whole.
Limitation of Seller Trustee's Liability and Rights of Indemnity
In the absence of fraud, negligence or breach of trust on its part, the
Seller Trustee shall not be liable personally in the event of failure to pay
moneys on the Remittance Date for payment to any Noteholder, any Beneficiary,
the Trust Manager or any other person or for any loss howsoever caused in
respect of any of the trusts or to any Noteholder, any Beneficiary, the Trust
Manager or any other person.
The Seller Trustee acts as Seller Trustee only in its capacity as seller
trustee of the relevant Seller Trust and in no other capacity. A liability
arising under or in connection with a Transaction Document can be enforced
against the Seller Trustee only to the extent to which it can be satisfied out
of property of the relevant Seller Trust out of which the Seller Trustee is
actually indemnified for the liability. This limitation of the Seller Trustee's
liability applies despite any other provision of the Transaction Documents and
extends to all liabilities and obligations of the Seller Trustee in any way
connected with any representation, warranty, conduct, omission, agreement or
transaction related to the Transaction Documents, the Trust or the relevant
Seller Trust. The limitation will not apply if there is a reduction in the
Seller Trustee's indemnification out of trust assets or the relevant Seller
Trust as a result of the Seller Trustee's fraud, negligence or breach of trust.
The Seller Trustee is also indemnified out of the assets of the relevant
Seller Trust against certain payments which it may be liable to make under the
Consumer Credit Legislation. Westpac has also indemnified the Seller Trustee in
relation to such payments and the Seller Trustee is required to first call on
the indemnity from Westpac.
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<PAGE>
Rights of Indemnity
Except where the Seller Trustee fails to exercise due care or is otherwise
disentitled (including, without limitation, because of fraud, negligence or
breach of trust on its behalf) the Seller Trustee will be indemnified out of
each relevant Seller Trust against all losses and liabilities incurred by the
Seller Trustee in properly performing any of its duties or exercising any of its
powers under the Transaction Documents in relation to the Trust or any Seller
Trust.
The description of the Seller Trustee set forth above has been provided by
the Seller Trustee; the Seller Trustee has not, however, been involved in the
preparation of, and does not accept responsibility for, this Prospectus as a
whole.
ORIGINATOR OF THE HOUSING LOANS
Westpac Banking Corporation ("Westpac") was established from an
amalgamation of the Bank of New South Wales and the Commercial Bank of Australia
Limited (the "CBA") in 1982. The Bank of New South Wales was Australia's first
bank and was established in 1817 to promote the commercial growth of the colony
and thus helped to lay the foundations of Australia's banking system. The CBA
was established in Melbourne, Victoria in 1866 in response to the needs of the
expanding business community, principally brought about by the Victorian gold
rush of the period.
Today Westpac is one of the four major commercial banks in Australia and
is the largest commercial bank in New Zealand. The Westpac Group undertakes a
wide range of banking and financial activities including commercial and
investment banking, personal and small business banking, retail and wholesale
funds management, financial services and finance company operations.
The banking activities of Westpac come under the supervision of the
Reserve Bank of Australia.
THE SERVICER
General
In 1996, Westpac established a wholly owned subsidiary, TMC of Level 6,
228 Pitt Street, Sydney 2000, Australia, to provide mortgage servicing
capability to both Westpac and to third parties. TMC operates from a new purpose
built servicing center in Adelaide, known as the Mortgage Processing Centre
("MPC"). The MPC employs over 1,000 staff, and processes approximately 1400 new
applications per day.
The MPC performs the following functions for Westpac: application
processing, telephone support, pre-settlement, settlement, post-settlement,
servicing and account maintenance, collections and enforcement and document
custody.
Servicing of Housing Loans
Under the Servicing Agreement, the ongoing servicing of the Housing Loans
will be performed by TMC, as the Servicer at the MPC. Servicing procedures
include responding to customer inquiries, managing and servicing the features
and facilities available under the Housing Loans and the management of
delinquent Housing Loans. The servicing functions performed by the MPC support,
and are supported by, the activities of Westpac's branches, telemarketing and
telebanking centers. In addition, the MPC services housing loans for third
parties.
The Servicer is contractually obligated to administer the Housing Loans in
accordance with (i) the Servicing Agreement; (ii) Westpac's policies, which are
under regular review and may change from time to time in accordance with
business judgment and changes to legislation and guidelines established by
relevant regulatory bodies; and (iii) to the extent not covered by paragraphs
(i) and (ii), by exercising the degree of diligence and care expected of an
appropriately qualified Servicer of the relevant Housing Loans. See "DESCRIPTION
OF THE SERVICING AGREEMENT."
Document Custody
The Servicer is responsible for custody of the mortgage title documents on
behalf of the Issuer Trustee and has custody of the Relevant Documents in
accordance with the Servicing Agreement. See "DESCRIPTION OF THE SERVICING
AGREEMENT--Document Custody."
Collection and Enforcement Procedures
Borrowers must make the minimum payment due under the terms and conditions
of the Housing Loan on or before the due date for that instalment under the
relevant loan documents. Payments are credited to the Housing Loan on the day of
49
<PAGE>
receipt. Interest is calculated daily and can be charged monthly or when a
payment is made. Any payments not received by the due date will produce a
compounding interest effect.
A Housing Loan is considered delinquent ("Delinquent") whenever the
minimum instalment amount is not met. The collections system inspects all
accounts which are delinquent and records those Housing Loans for action and
follow-up. Borrowers are notified by telephone and/or by mail when their Housing
Loan becomes Delinquent. Housing Loans are allocated to collections officers who
take action depending on the delinquency history, equity in the property and the
ability of the Borrower to meet future installments. Where a Housing Loan that
is Delinquent is subject to a Mortgage Insurance Policy, the relevant Mortgage
Insurer is notified of progress of the Housing Loan and all follow-up actions
are taken by Westpac and the Servicer.
Under some Housing Loans which are subject to a variable rate of interest,
a Borrower may prepay amounts which are additional to their minimum payments to
build up a buffer of funds, which is the difference between the total amount
paid by them and the total of the minimum payments required to have been made by
them. If the Borrower subsequently fails to make some or all of a minimum
payment, the collection system will apply the amount of that buffer of funds
against that missed payment. The relevant Housing Loan will not be considered to
be Delinquent until the total amount of missed payments exceeds the "credit
buffer."
Under a Housing Loan which is charged a variable rate of interest, a
Borrower who is on maternity or paternity leave and who meets specific
eligibility criteria may apply to reduce their monthly home loan repayment by up
to 50% for a maximum of six months. During the reduced repayments period, if the
payment is not sufficient to meet the interest due, the unpaid interest payment
will capitalize on the loan balance and the loan may negatively amortize.
Repayments are adjusted at the end of the parental leave period to ensure that
the loan will be repaid within its original contracted maturity.
Where a satisfactory arrangement cannot be made to bring the account into
order, legal notices are issued and recovery action initiated. Recovery action
is arranged by experienced collections staff in conjunction with appointed legal
advisers. All sources of recoveries are pursued with respect to a Housing Loan
including guarantees, mortgagee sale and claims on mortgage insurance.
The collection and enforcement procedures may change from time to time in
accordance with business judgment and changes to legislation and guidelines
established by the relevant regulatory bodies.
Delinquencies and Mortgagee in Possession ("MIP") with respect to the
Securitized Portfolios
The following tables set forth delinquency and MIP information for each of
the Securitized Portfolios (as defined herein) serviced by the Servicer in its
capacity as Servicer of securitized loans as of December 1997 and March 1998.
The portfolios of securitized housing loans (the "Securitized Portfolios")
consist of the Housing Loans relating to the Series 1997-2 WST Trust, Series
1997-3 WST Trust and the Series 1997-4E WST Trust. The indicated periods of
delinquency are based on the number of days past due on a contractual basis. The
information contained in the reports presented through Reuters which will be
sent to investors will be compiled using the same methodology as that used to
compile the information contained in the table below.
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<PAGE>
Delinquencies and MIP
Series 1997-2 WST Trust
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of As of
December 14, 1997 March 14, 1998
------------------------------------------ -------------------------------------------
Percent Percent
By Percent By By Percent By
By No. Dollar By No. Dollar By No. Dollar By No. Dollar
of Loans Amount of Loans Amount of Loans Amount of Loans Amount
-------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series 1997-2 Portfolio
Period of Delinquency:
30-59 Days........
60-89 Days........
90 Days or more...
Total Delinquent Loans
Housing Loans in MIP(1)
</TABLE>
- ----------
(1) Housing Loans in MIP are also included under the heading "Total Delinquent
Loans."
Delinquencies and MIP
Series 1997-3 WST Trust
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of As of
December 31, 1997 March 14, 1998
------------------------------------------ -------------------------------------------
Percent Percent
By Percent By By Percent By
By No. Dollar By No. Dollar By No. Dollar By No. Dollar
of Loans Amount of Loans Amount of Loans Amount of Loans Amount
-------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series 1997-3 Portfolio
Period of Delinquency:
30-59 Days........
60-89 Days........
90 Days or more...
Total Delinquent Loans
Housing Loans in MIP(1)
</TABLE>
- ----------
(1) Housing Loans in MIP are also included under the heading "Total Delinquent
Loans."
Delinquencies and MIP
Series 1997-4E WST Trust
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of As of
December 9, 1997 March 7, 1998
------------------------------------------ -------------------------------------------
Percent Percent
By Percent By By Percent By
By No. Dollar By No. Dollar By No. Dollar By No. Dollar
of Loans Amount of Loans Amount of Loans Amount of Loans Amount
-------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series 1997-4E Portfolio
Period of Delinquency:
30-59 Days........
60-89 Days........
90 Days or more...
Total Delinquent Loans
Housing Loans in MIP(1)
</TABLE>
- ----------
(1) Housing Loans in MIP are also included under the heading "Total Delinquent
Loans."
As of the date hereof, there have been no gains or losses with respect to
the Securitized Portfolios. Accordingly, no gain/loss tables are presented
herein.
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<PAGE>
It is unlikely that the delinquency experience of the Housing Loans
comprising the Series 1998-1G WST Trust will correspond to the delinquency
experience of the Securitized Portfolios set forth in the foregoing tables. The
statistics shown above represent the delinquency experience for the Securitized
Portfolios only for the periods presented, whereas the aggregate delinquency
experience on the Housing Loans comprising the Securitized Portfolios will
depend on the results obtained over the life of the Securitized Portfolios.
There can be no assurance that the Housing Loans comprising the Series 1998-1G
WST Trust will perform consistently with the delinquency or foreclosure
experience described herein. It should be noted that if the residential real
estate market in Australia should experience an overall decline in property
values, the actual rates of delinquencies and foreclosures could be higher than
those previously experienced by the Servicer with respect to the Securitized
Portfolios. In addition, adverse economic conditions may affect the timely
payment by Borrowers of scheduled payments of principal and interest on the
Housing Loans and, accordingly, the actual rates of delinquencies and
foreclosures with respect to the Series 1998-1G WST Trust.
THE TRUST MANAGER
General
Westpac Securitisation Management Pty Limited (ACN 081 709 211) is
appointed as trust manager (the "Trust Manager" or "WSML") of the Trust on the
terms set out in the Master Trust Deed and the Series Notice. WSML is a wholly
owned indirect subsidiary of Westpac and located at Level 5, 60 Martin Place,
Sydney, NSW 2000, Australia. The subsidiary was formed to provide specialized
trust management services for securitization programs for the Westpac Group.
Incorporation
The Trust Manager was incorporated on February 19, 1998 in the Australian
Capital Territory under the Corporations Law of the Commonwealth of Australia.
Share Capital
The authorized share capital of the Trust Manager is A$100,000,000 shares.
The issued share capital of the Trust Manager is 1 fully paid share of A$1.00.
Such share is held by Westpac Equity Holdings Pty Ltd.
Business
The Trust Manager is a wholly owned indirect subsidiary of Westpac formed
to provide specialized trust management services for securitization programs for
the Westpac Group.
Directors
The directors of the Trust Manager are as follows:
Name Home Address Principal Activities
---- ------------ --------------------
R. Patrick Handley 3/22 Alpert Street Bank Executive
Edgecliff
New South Wales 2027
Australia
Philip Chronican 86 Cremorne Road Bank Executive
Cremorne Point
New South Wales 2090
Australia
Lewis E. Love, Jr. 160 West End Avenue, Legal Counsel
Apartment 7J
New York, New York 10023
Marten Touw Group Treasurer
Kimberly Gire Head of Group Securitization
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<PAGE>
Duties and Role of the Trust Manager
Powers
The Trust Manager will carry out and perform the duties and obligations
contained in the Master Trust Deed and will have full and complete powers of
management of the Trust, including in relation to the conduct of the day to day
operation of the Trust and the administration and servicing of the assets (which
are not serviced by the Servicer), borrowings and other liabilities of the
Trusts. The Issuer Trustee has no duty to supervise the Trust Manager in the
performance of its functions and duties or the exercise of its discretion.
The Trust Manager has the absolute discretion to recommend Authorized
Investments to the Issuer Trustee and direct the Issuer Trustee in relation to
those Authorized Investments. The Issuer Trustee's role is to give effect to all
such recommendations or directions.
Delegation
The Trust Manager may in carrying out and performing its duties and
obligations contained in the Master Trust Deed delegate to Westpac, or any of
the Trust Manager's or Westpac's officers and employees, all acts, matters and
things (whether or not requiring or involving the Trust Manager's judgment or
discretion), or appoint any person to be its attorney, agent, delegate or
sub-contractor for such purposes and with such powers as the Trust Manager
thinks fit.
Trust Manager's Fees and Expenses
The Trust Manager is entitled to a quarterly fee (the "Trust Manager Fee")
on the average daily balance of the aggregate principal balance of Housing Loans
outstanding during the Collection Period payable in arrears on the relevant
Payment Date.
The Trust Manager is entitled to be reimbursed out of the Trust Assets for
all expenses incurred in connection with the performance of its obligations in
respect of the Trust (other than general overhead costs and expenses).
Removal of the Trust Manager
The Trust Manager shall retire as trust manager if so directed by the
Issuer Trustee following a Trust Manager's Default. A "Trust Manager's Default"
occurs if:
(1) the Trust Manager fails to make any payment required by it within the
time period specified in a Transaction Document, and that failure is not
remedied within 10 Business Days of receipt from the Issuer Trustee of
notice of that failure;
(2) an Insolvency Event has occurred and is continuing in relation to the
Trust Manager;
(3) the Trust Manager breaches any obligation or duty imposed on the Trust
Manager under the Master Trust Deed, any other Transaction Document or any
other deed, agreement or arrangement entered into by the Trust Manager
under the Master Trust Deed in relation to the Trust, the Issuer Trustee
reasonably believes that breach has an Adverse Effect and the breach is
not remedied within 30 days' notice being given by the Issuer Trustee
(except in the case of reliance by the Trust Manager on the Servicer); or
(4) a representation, warranty or statement by or on behalf of the Trust
Manager in a Transaction Document or a document provided under or in
connection with a Transaction Document, is not true in a material respect
or is misleading when repeated and is not remedied to the Issuer Trustee's
reasonable satisfaction within 90 days after notice from the Issuer
Trustee where (as determined by the Issuer Trustee) it has an Adverse
Effect.
The costs of removal of the Trust Manager after a Trust Manager's Default
shall be borne by the Trust Manager. The Trust Manager has agreed to indemnify
the Issuer Trustee and the Trust for those costs.
On retirement or removal of the Trust Manager, the Issuer Trustee may
appoint another trust manager, provided the appointment will not materially
prejudice the interests of Noteholders. Until a replacement Trust Manager is
appointed, the Trust Manager must continue as Trust Manager. If a replacement
Trust Manager is not appointed within 120 days of the Issuer Trustee electing to
appoint a new Trust Manager, the Issuer Trustee will be the new Trust Manager.
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Voluntary Retirement of the Trust Manager
The Trust Manager may resign on giving to the Issuer Trustee (with a copy
to the Rating Agencies) not less than 3 months' notice in writing (or such other
period as the Trust Manager and the Issuer Trustee may agree) of its intention
to do so.
Before retirement, the Trust Manager must appoint a successor Trust
Manager who is approved by the Issuer Trustee, or who may be the Issuer Trustee,
and whose appointment will not materially prejudice the interests of
Noteholders. If a successor Trust Manager has not been appointed by the end of
the 3 months' notice period the Issuer Trustee shall act as Trust Manager until
a successor trust manager is appointed.
Limitation of Trust Manager's Liability
The principal limitations on the Trust Manager's liability are set out in
full in the Master Trust Deed. These include the following limitations:
(1) in the absence of fraud, negligence or wilful default on its part or
on the part of any of its officers, employees, agents or delegates, the
Trust Manager shall not be liable personally in the event of failure to
pay moneys on the due date for payment to any Noteholder, any Beneficiary,
the Issuer Trustee or any other person or for any loss howsoever caused in
respect of any of the Trusts or to any Noteholder, any Beneficiary, the
Issuer Trustee or other person;
(2) the Trust Manager will not be personally liable to indemnify the
Issuer Trustee or make any payments to any other person in relation to the
Trust except that there will be no limit on the Trust Manager's liability
for any fraud, negligence or wilful misconduct by it in its capacity as
the Trust Manager of the Trust;
(3) the Trust Manager will be indemnified out of the Trust in respect of
any liability, cost or expense properly incurred by it in its capacity as
Trust Manager of the Trust or so incurred by any of its delegates,
sub-delegates or agents; and
(4) subject to the Master Trust Deed, the Trust Manager is not responsible
for any act, omission, misconduct, mistake, oversight, error of judgment,
forgetfulness or want of prudence on the part of the Issuer Trustee, the
Servicer or any agent appointed by the Issuer Trustee or the Trust Manager
or on whom the Issuer Trustee or the Trust Manager is entitled to rely
under this deed (other than a related company), attorney, banker,
receiver, barrister, solicitor, agent or other person acting as agent or
adviser to the Issuer Trustee or the Trust Manager.
WESTPAC RESIDENTIAL LOAN PROGRAM
Origination of Housing Loans
The primary sources for the origination of housing loans for Westpac are:
the Westpac branch network, mobile finance managers, accredited brokers and
national telemarketing centers. Inquiries are also often generated by
advertising and direct mail campaigns.
The origination process for housing loans is carried out initially within
the appropriate Westpac branch or broker office. The origination process for all
housing loans is completed within the MPC.
Underwriting of Housing Loans
The following is a description of the underwriting processes employed by
Westpac in evaluating whether to fund a particular housing loan. When an
application is received, it is processed in accordance with Westpac's credit
policy and procedures. Credit assessment is undertaken initially using Westpac's
centrally controlled credit scoring system. The scoring system is based on
proprietary information, such as Westpac's own historical credit underwriting
experience and product policy rules. The process also includes a reference from
the Credit Reference Association of Australia. Housing loans passing through the
credit scoring system will either be approved, declined or referred to a credit
specialist. Where a housing loan is referred to a credit specialist, it is
generally because the application is more complex (for example, where the
Housing Loan principal is over A$300,000 or because the application is from a
self-employed individual). An assessment is carried out by either credit
officers within the Credit Unit at the MPC or, in some cases, by State based
Credit Centers, in accordance with designated Westpac credit policy and their
credit approval limits. Each housing loan is considered on its merits within
Westpac's credit policy and procedures.
Central to the approval process is the verification of the information
provided by the applicant(s), valuation of the proposed security property and
confirmation of the ability of the applicant to make payments on the housing
loan. The verification process involves conducting an independent check as to
the accuracy and correctness of the information
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provided by the potential Borrower, particularly the documentation provided by
the prospective borrower and the employment and income details of the
prospective borrower. Verification relating to the income of self-employed
applicants involves checking annual accounts and other financial information.
All applicants are required to have a minimum monthly income net of taxes
in excess of all monthly expenditures (including the housing loan being applied
for) with consideration given to likely increases in future interest rates.
Westpac policy requires substantiation of the property value either by
contract of sale or valuation by a registered panel valuer. A valuation of the
security property is required where lender's mortgage insurance is required,
where the Housing Loan Principal is greater than A$250,000 or the LVR is greater
than 80% (although the LVR may be lower if the relevant Mortgaged Property is in
a particular geographic area). Valuations must be performed by registered
valuers who are members of the Australian Institute of Valuers and Land
Economists. In some remote centers, assessment of the security value is
undertaken by the local branch manager. In addition, housing loans may be
secured by more than one property and in such cases the combined values of all
relevant security properties is considered.
Following pre-approval of a housing loan, a terms and conditions letter is
sent to the applicant from the MPC. When Westpac has verified details relating
to the Housing Loan to its satisfaction and acceptance of the loan offer is
received, the housing loan can proceed through to settlement and disbursement.
Once all documentation is completed to Westpac's satisfaction and settlement or
disbursement has occurred, the security documents are stamped and registered. It
is a condition of Westpac's standard mortgage documentation that the mortgagor
must maintain full replacement value property insurance at all times.
Approval policies are under regular review and may change from time to
time in accordance with business judgment and changes to legislation and
guidelines established by the relevant regulatory bodies.
Servicing of Housing Loans
Under the Servicing Agreement, the ongoing servicing of the Housing Loans
will be performed by the Servicer. See "THE SERVICER" and "DESCRIPTION OF THE
SERVICING AGREEMENT."
Housing Loan Products
Westpac originates loans for both owner-occupied and investment housing.
The products within the housing loan portfolio are the following: Premium Option
Home Loan, Premium Option Home Loan with 1 year Guaranteed Rate, Special Offer
Fixed Option Home Loan, First Option Home Loan, Fixed Option Home Loan, Variable
Rate Investment Property Loan, Fixed Rate Investment Property Loan, First Option
Investment Property Loan and Special Fixed Rate Investment Property Loan or any
other similar loan product, however named, with some or all the features
referred to under "Housing Loan Features." During the term of any Housing Loan,
Westpac may from time to time or at the request of the related Borrower change
any of the features of such Housing Loans.
The following provides a general description of some of the Housing Loan
products detailed above. The Housing Loans comprising the Mortgage Pool must
satisfy certain eligibility criteria as specified under "THE TRUST
FUND--Representations and Warranties."
Owner Occupied Home Loans
First Option Home Loans: These loans are low variable rate owner-occupied
home loans for borrowers motivated by price. The product was developed to
compete with products offered by non-bank originators. Additional loan features
(as described below) can be activated on request by the borrower for a fee. The
current maximum term for this product is 25 years, although it may be changed to
30 years in the future.
Premium Option Home Loans: These loans are variable rate owner-occupied
home loans. These loans have a maximum term to maturity of 30 years and a higher
rate of interest than the First Option Home Loan and as a result, borrowers are
allowed access to the various loan features at no or reduced additional cost.
Premium Option Home Loans with 1 Year Guaranteed Rate: These loans have an
introductory discounted fixed rate for 12 months that then converts to a Premium
Option Home Loan. Apart from the introductory fixed rate period, the loan has
the same features as the Premium Option Home Loan.
Special Offer Fixed Option Home Loans: These loans have a fixed rate
period of one or two years that converts to a Premium Option Home Loan. Apart
from the fixed rate period, the loan has the same features as the Premium Option
Home Loan. In 1996, this product was replaced by the Premium Option Home Loan
with 1 Year Guaranteed Rate product described above.
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Fixed Option Home Loans: These loans are fixed rate owner-occupied home
loans. Loan terms are to a maximum of 30 years with a maximum fixed rate term of
10 years. On maturity of the fixed rate term, the loan converts to the Premium
Option Home Loan unless the borrower requests a further fixed rate period.
Certain product features (e.g., redraw) are not available during the fixed rate
period.
Investment Property Loans
An investment property loan is a loan which assists with the purchase or
refinance of residential property for investment purposes such as rental income
or capital gain. The primary security for the loan is a registered first party
first ranking mortgage over residential property.
Investment property loans can be either fixed rate or variable rate loans
with a maximum term of 25 years. The loans may provide for interest only
payments for a maximum term of 5 years and then must convert to required payment
of principal and interest. Loans may have fixed rate terms for up to a maximum
of 10 years which will convert at such time to a variable rate unless the
borrower requests another fixed rate term.
The First Option Investment Property Loan is a low variable rate loan
which is similar to the First Option Home Loan and the Variable Investment
Property Loan is similar to the Premium Option Home Loan, the major difference
being the loan purpose.
Housing Loan Features
General
Housing Loans originated by Westpac may have some or all of the features
described below. In addition, during the term of any Housing Loan, Westpac may
change any of the features of such Housing Loan from time to time at the request
of the related Borrower.
Substitution of Security
A Borrower may apply to substitute a new Mortgage over a residential
property for an existing Mortgage, to add a further Mortgage as security for a
Housing Loan or to release a security property under a Mortgage. Provided that
the application meets certain credit criteria, the Mortgage which secures a loan
may be portable and may be discharged without full repayment of the Housing Loan
provided another acceptable Mortgage is substituted in its place.
Where the substitute property meets the Eligibility Criteria and is
acceptable to the relevant Mortgage Insurer, and settlement on the substitute
property can occur simultaneously with the discharge of the current property,
the Housing Loan will remain in the Mortgage Pool. Where the substitute property
does not meet the Eligibility Criteria or is not acceptable to the Mortgage
Insurer, or the settlement does not occur simultaneously with discharge, the
Housing Loan will be transferred out of the Mortgage Pool for a corresponding
cash payment in the amount of the Unpaid Balance.
Redraw
Certain Housing Loans in the Mortgage Pool which are charged a variable
rate of interest have the benefit of a redraw facility which allows the Borrower
to draw on repayments made in excess of scheduled repayments (a "Redraw").
Borrowers may request a redraw at any time. In certain circumstances, Westpac
has a contractual obligation under the loan document to provide the redraw
should the Borrower be entitled to a redraw because of prepayments and the
Housing Loan is not delinquent.
A Redraw will not result in the Housing Loan being removed from the
Mortgage Pool.
See "DESCRIPTION OF THE OFFERED NOTES--Description of the Redraw Facility,
Redraw Funding Securities and RFS Class A Notes."
Repayment Holiday
The terms of the Mortgage securing a Housing Loan which is charged a
variable rate of interest may provide for a "payment holiday." A payment holiday
can occur where the Borrower has prepaid amounts of principal, creating a buffer
of funds between the current principal balance and the amortization scheduled
balance. In such a case, the Borrower may cease to make payments until the
outstanding balance of the Housing Loan plus unpaid interest equals the balance
of the theoretical amortization schedule. Where the Housing Loan allows for a
"payment holiday", the Housing Loan payment will be taken from the buffer of
funds between the current principal balance and the amortization scheduled
balance at that payment date. If a buffer of funds is available, the system will
recognize this as an installment received. Housing Loans are not considered
Delinquent during a payment holiday and remain in the Mortgage Pool.
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Early Repayment
Early repayment and partial prepayment of any Housing Loan is permitted
while such Housing Loan is subject to a variable rate of interest. Housing Loans
which are charged a fixed rate of interest, if repaid within their fixed rate
term, may be subject to an economic break cost or benefit in accordance with the
terms of the Housing Loan. For Housing Loans not regulated by the Consumer
Credit Legislation, an early termination fee may be payable.
Top Up
The loan agreement and/or Mortgage relating to a Housing Loan may allow
for the relevant Borrower to request from Westpac additional funds such that the
resulting principal balance will exceed the amortization scheduled balance at
that time. These are "top ups." Top ups will only be provided by Westpac in
accordance with its then current underwriting and credit policies. Any Housing
Loan subject to a top up will be removed from the Mortgage Pool.
Parental Leave
Under a Housing Loan which is charged a variable rate of interest, any
Borrower who is on maternity or paternity leave and who meets specific
eligibility criteria may apply to reduce the related monthly home loan repayment
by up to 50% of such payment amount for a maximum of six months. During the
reduced repayment period, if the payment is not sufficient to meet the interest
due, the unpaid interest payment will capitalise on the loan balance and the
loan may negatively amortize. Scheduled repayments are adjusted at the end of
the parental leave period to ensure that the loan will be repaid within its
original contracted maturity.
Interest Rate Switching
The interest rate charged on Housing Loans may be either fixed rate or
variable rate. Fixed rate loans will automatically convert to variable rate at
the end of the fixed rate period (as specified in the related loan agreement)
unless the relevant Borrower elects another fixed rate period. Some loans have
an introductory fixed rate of interest which converts to a variable rate of
interest at the end of such introductory period. Some loans allow the Borrower
the option to convert from a variable rate to a fixed rate (or vice versa).
Account Management Facility
A Borrower may elect to have his/her regular salary paid in full into
their Housing Loan account. If this amount exceeds the amortised scheduled
balance at that time, surplus funds are created therein that may be redrawn.
This feature will allow the customer up to five automatic disbursements in each
payment cycle against these surplus funds to other accounts. These disbursements
will be treated as Redraws.
Payment Type
On the Cut-Off Date, the payment types under the Housing Loans will be
interest only or principal, interest and fees ("P & I"). Interest only periods
can be for terms of 1-5 years. At the end of any interest only period, the
payment type under the relevant Housing Loan will convert to P & I payments such
that the scheduled payments will result in the Housing Loan being repaid on an
amortizing schedule within the contractual term of the Housing Loan.
Switching to an Investment or Owner-Occupied Loan
The Borrower may elect to switch the purpose of a Housing Loan from
owner/occupied property finance to investment property finance or vice versa.
Any such switch will not require the relevant Housing Loan to be removed from
the Mortgage Pool. The Borrower is required to notify Westpac of such switch and
the Mortgage Rate with respect to such Housing Loan may be changed accordingly.
Capitalized Fees
Westpac may offer Borrowers the ability to choose certain product features
without paying an up-front fee. Instead, the fee may be capitalized under the
Housing Loan and would constitute part of the principal to be amortized over the
life of the Housing Loan.
Combination Housing Loans
A Borrower may split his/her Housing Loan into different portions which
may (among other things) be subject to different interest rate options. This
could occur, for example, where a Borrower elects to have one part of their
Housing Loan at a fixed rate and the other at a variable rate. Each loan is
effectively a separate loan which operates independently of the other loans in
the combined product and is governed by its own policy and procedures.
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If a Housing Loan is "split" into more than one loan, any newly created
loans will not form part of the pool. In the event that the original loan is
retained (potentially at a reduced balance) in certain circumstances (e.g., it
satisfies all Eligibility Criteria and does not have any feature that would
require it to be removed from the pool) it will remain in the pool.
Additional Features
Westpac may, in relation to a Housing Loan in the Mortgage Pool, from time
to time seek to offer additional features which are not referred to above.
Before doing so, Westpac must satisfy the Trust Manager that the additional
features would not affect any relevant Mortgage Insurance Policy and would not
cause the rating of any Offered Notes to be downgraded or withdrawn.
THE MORTGAGE INSURANCE POLICIES
Mortgage Insurance Policies - General
On or before the Closing Date, the Mortgage Pool Insurance Policy will be
provided by Housing Loans Insurance Corporation Limited of 31 Market Street,
Sydney NSW 2000, Australia ("HLIC") to the Issuer Trustee to cover losses in
respect of each Housing Loan that is not subject to a PMI Policy. The Mortgage
Pool Insurance Policy generally applies to loans with an LVR of 80% or less at
the Cut-Off Date. The Mortgage Pool Insurance Policy will cover losses up to a
maximum aggregate amount of A$___________.
Each Housing Loan with an LVR of greater than 80% at the time of
origination (or a lower LVR where required by Westpac's standard credit policy)
will have been insured under a PMI Policy issued by SunAlliance and Royal
Mortgage Insurance Limited (ACN 001 825 725) of Level 9, 465 Victoria Avenue,
Chatswood NSW ("SunAlliance"), MGICA Limited (ACN 000 511 017) of Level 23 AMP
Centre, 50 Bridge Street, Sydney NSW ("MGICA"), Westpac Lenders Mortgage
Insurance Limited (ACN 074 042 934) of Level 11, 50 Pitt Street, Sydney NSW
("WLMI") or HLIC. Each Approved Seller will equitably assign its interest in
each PMI Policy to the Issuer Trustee on the Closing Date.
The HLIC Mortgage Pool Insurance Policy
General
The HLIC Mortgage Pool Insurance Policy (the "Mortgage Pool Insurance
Policy") is an insurance policy put in place to cover Housing Loans that were
not insured prior to the Cut-Off Date and which had an LVR of less than or equal
to 80% as of the Cut-Off Date. Under the Mortgage Pool Insurance Policy, HLIC
will insure the Issuer Trustee with effect from the Closing Date for Finance
Charge Losses and Principal Losses in respect of the Housing Loans (other than
those Housing Loans which are individually covered by an HLIC, a SunAlliance,
WLMI or an MGICA Insurance Policy) (see "--Primary Mortgage Insurance Policies"
below).
Loss Covered
Subject to the exclusions mentioned below, the Mortgage Pool Insurance
Policy covers, among other things:
(1) principal and interest losses;
(2) certain bank fees and charges; and
(3) if recoverable under the relevant Mortgage, certain insurance
premiums, rates, statutory charges and costs of sale and enforcement
reasonably and necessarily incurred which are not recovered from
enforcement.
If the Consumer Credit Legislation applies to a Mortgage, HLIC's liability
is limited to the amount required to discharge the mortgage under the Consumer
Credit Legislation.
Aggregate Limit
The Mortgage Pool Insurance Policy will be subject to an aggregate limit
of loss of A$_________.
Issuer Trustee's Interest Extinguished
If the Issuer Trustee's interest in a Housing Loan is extinguished in
favor of Westpac as a result of:
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(1) a breach of Westpac's representations and warranties in relation to
the Housing Loan which is discovered within 120 days of the Closing Date
(or, in relation to Housing Loans assigned to the Issuer Trustee from the
assets of another Seller Trust, 120 days after the date on which those
Housing Loans were first sold by Westpac to the Issuer Trustee in its
capacity as trustee of other Seller Trusts) and which breach was not
remedied within that period (see "WESTPAC RESIDENTIAL LOAN
PROGRAM--Eligibility Criteria"); or
(2) a repurchase of a Housing Loan in accordance with Westpac's right of
first refusal,
then Westpac will be entitled to the benefit of the Mortgage Pool Insurance
Policy in so far as it applies to that Housing Loan.
Exclusions
The Mortgage Pool Insurance Policy excludes coverage of certain losses,
including: (1) fines and penalties to the extent that they are not admitted by
HLIC; and (2) break costs arising from any switch from variable to fixed rate
interest or vice versa.
Refusal or Reduction in Claim
No claim can be made under the Mortgage Pool Insurance Policy unless the
Mortgage over the relevant Mortgaged Property is a registered first mortgage.
The amount of a claim may be reduced or cancelled by HLIC in certain
circumstances. These circumstances include that:
(1) the relevant mortgaged premises are not, in certain circumstances,
insured under a general insurance policy;
(2) there ceases to be a manager of the Trust;
(3) a claim under the policy is not lodged within a prescribed period;
(4) a Mortgage is transferred without the consent of HLIC; and
(5) there is any material incorrect disclosure or non-disclosure by the
insured in relation to the Mortgage Pool Insurance Policy.
Any reduction will be such amount as in the sole opinion of HLIC
represents the amount by which the value of the rights of the Issuer Trustee in
relation to the loan or the Mortgaged Property has been diminished or impaired
by certain events occurring without the approval of HLIC, including:
(1) any charge or mortgage taking effect as security over the Mortgaged
Property so as to rank ahead of the relevant Mortgage;
(2) the Servicer enforcing the relevant Mortgage or entering into a loan
compromise or other discharge arrangement with a defaulting Borrower,
without the prior approval of HLIC, other than by way of the Servicer
exercising its loan management policies in the ordinary course of its
business;
(3) the approval by Westpac or the insured of any additional loan which is
secured by the relevant Mortgage; or
(4) breach of the Mortgage Pool Insurance Policy by the insured.
Claims
A claim may only be made under the Mortgage Pool Insurance Policy if the
property subject to the relevant Mortgage has been sold (either by the Servicer
or by the relevant mortgagor with the Servicer's and HLIC's consent),
foreclosure has occurred or the property has been compulsorily acquired by a
government body for public purposes. The insured and the Issuer Trustee may
agree to HLIC paying out a claim prior to these events in certain circumstances.
Claims are payable within 30 days of receipt by HLIC of the completed claim
form.
HLIC may, as a condition to payment of a claim, require an assignment to
it by the Issuer Trustee of rights against the Borrower or any mortgagor.
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Housing Loan Insurance Corporation Ltd (HLIC Ltd)
HLIC was established in 1965 by the Commonwealth Government of Australia
("Government") and is Australia's leading lenders' mortgage insurer ("LMI") with
approximately 50% of the Australian LMI market. In December 1997, the Government
sold HLIC to GE Capital Australia ("GECA") which is a wholly owned subsidiary of
GE Capital Services Inc.
GE is a diversified industrial and financial services company with
operations in over 100 countries. It is rated AAA by Standard & Poor's, Aaa by
Moody's and AAA by Fitch IBCA. It has significant LMI business around the world,
operating in the United States, United Kingdom, Canada and now Australia and has
over US$165 billion of loans insured globally.
HLIC has been given a AAA claims paying rating in its own right by
Standard & Poor's and a Aa1 rating by Moody's. Loans insured prior to the sale
to GECA will also have the benefit of a guarantee by the Government. That
proportion that has the benefit of the Government guarantee is $_____ as of the
Cut-Off Date.
Primary Mortgage Insurance Policies
General
Each Borrower under a Housing Loan which had an LVR of greater than 80% at
the date of origination (or a lower LVR where required by Westpac's standard
credit policy) was required to effect a mortgage insurance policy with either
SunAlliance, MGICA, WLMI or HLIC (a "PMI Policy"). Westpac is required to
equitably assign its interest in each Primary Mortgage Insurance Policy to the
Issuer Trustee on the Closing Date. The consent of SunAlliance, MGICA, WLMI and
HLIC is required for the assignment of the relevant Mortgages and the Primary
Mortgage Insurance Policies, and for the Servicer servicing the insured Housing
Loans. Westpac must ensure that these consents are obtained on or prior to the
Closing Date.
Where a provision of the HLIC PMI Policy is inconsistent with the HLIC
Mortgage Pool Insurance Policy, the provision in the HLIC Mortgage Pool
Insurance Policy will be taken to apply to the HLIC PMI Policy.
The HLIC Mortgage Pool Insurance Policy provides for the assignment to the
Trust of any HLIC PMI Policy.
Restrictions and Cancellation
The amount recoverable under each PMI Policy will generally be the amount
owing in relation to the relevant Mortgage (including unpaid principal, accrued
interest at any non-default rate, proper tax and reasonable enforcement costs
(subject in certain instances to insurer's consent)) less all amounts recovered
from enforcement of the Mortgage. However, there are a number of requirements
and restrictions imposed on the insured under each PMI Policy which may entitle
the Mortgage Insurer to cancel the PMI Policy or reduce the amount of a claim;
including:
(1) the existence of an encumbrance or other interest which affects or has
priority over the Mortgage;
(2) the relevant Mortgage, or a guarantee or indemnity relating to the
Mortgage, ceasing to be effective;
(3) that there is a material omission or misstatement by the insured in
relation to the Primary Mortgage Insurance Policy;
(4) that any premium is not paid within the relevant grace period (if
any);
(5) termination by the insurer upon the giving of a set period of notice;
(6) a breach by the insured of the PMI Policy; and
(7) certain circumstances which affect the insured's rights or recoveries
under the relevant Housing Loan or Mortgage.
Each PMI Policy has different provisions. The above is a summary of
certain provisions -- some may not relate to, or may differ from, a particular
PMI Policy.
Servicer Undertakings with Respect to Insurance Policies
Under the Servicing Agreement, the Servicer undertakes to:
(1) act in accordance with the terms of any Mortgage Insurance Policy;
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(2) not do anything that would prejudicially affect the rights of the
Issuer Trustee under a Mortgage Insurance Policy; and
(3) promptly make claims and notify the Trust Manager when claims are
made.
Description of SunAlliance, MGICA and WLMI
The Royal SunAlliance Group entered into the lenders mortgage insurance
market in Australia in 1989. Since then SunAlliance's Mortgage Insurance
Division has displayed solid growth and operates as one of the major divisions
of the Royal and SunAlliance Group. SunAlliance is a subsidiary of Royal and
SunAlliance Insurance Australia Limited, which is one of the five largest
insurers in Australia with premium revenue of some A$1.1 billion, assets in
excess of A$1.8 billion and a net asset position at December 31, 1997 of over
A$373 million. Royal & Sun Alliance Lenders Mortgage Insurance Ltd ("RSALMI") is
rated AA- by Standard & Poor's, and is owned by the Sun Alliance group. Under a
deed of indemnity, RSALMI is explicitly indemnified for past, present and future
obligations arising from insurance contracts net of reinsurance by the
Australian holding company for the group, Sun Alliance and Royal Insurance
Australia Holdings Ltd. The business address of SunAlliance is Level 9, 465
Victoria Avenue, Chatswood, New South Wales, Australia.
MGICA has been operating in the Australian housing market since 1965 and
is a specialist insurer of residential mortgage loans. MGICA is owned and
explicitly supported by, Australian Mutual Provident Society ("AMP"),
Australia's largest insurance company rated AAA by Standard & Poor's and Aa2 by
Moody's. MGICA is rated AA- by Standard & Poor's and A1 by Moody's for its
claims paying ability. MGICA is strongly capitalized after receiving an
injection of A$50mm of capital from its parent, AMP, in 1995. Moody's indicates
the geographic diversity of MGICA's insurance risk profile is good and
underwriting standards are considered appropriately conservative. The business
address of MGICA is Level 23 AMP Centre, 50 Bridge Street, Sydney, New South
Wales, Australia.
WLMI is an unrated insurance company authorized under the Insurance Act
1973 to carry on insurance business in Australia. WLMI is a wholly owned
subsidiary of Westpac Insurance Services (Brokers) Limited. The ultimate parent
entity is Westpac Banking Corporation. Under a Management Agreement and Quota
Share Reinsurance Agreement between WLMI and Royal and SunAlliance Mortgage
Insurance Limited both dated August 27, 1996 SunAlliance agrees to provide
management and administration services to WLMI and accepts 65% of the obligation
on each and every policy issued by WLMI. Under a Deed of Guarantee, SunAlliance
will unconditionally and irrevocably guarantee the obligations of WLMI arising
under policies issued by WLMI prior to the termination of the deed, and to the
extent that those obligations are not recovered or met by contracts of
reinsurance. The business address of WLMI is 50 Pitt Street, Sydney, New South
Wales, Australia.
PREPAYMENT AND YIELD CONSIDERATIONS
The following information is given solely to illustrate the effect of
prepayments of the Housing Loans on the weighted average life of the Offered
Notes under the stated assumptions and is not a prediction of the prepayment
rate that might actually be experienced by the Housing Loans.
General
The rate of principal payments on the Offered Notes, the aggregate amount
of distributions on the Offered Notes and the yield to maturity of the Offered
Notes will be related to the rate and timing of payments of principal on the
Housing Loans. The rate of principal payments on the Housing Loans will in turn
be affected by the amortization schedules of the Housing Loans and by the rate
of principal prepayments (including for this purpose prepayments resulting from
refinancing, liquidations of the Housing Loans due to defaults, casualties,
condemnations and repurchases by an Approved Seller). The Housing Loans may be
prepaid by the Mortgagors at any time (subject, in the case of fixed rate
Housing Loans, to the payment of any applicable fees).
Prepayments
Prepayments, liquidations and purchases of the Housing Loans (including
optional purchase of the remaining Housing Loans in connection with the
termination of the Trust) will result in distributions on the Offered Notes of
principal amounts which would otherwise be distributed over the remaining terms
of such Housing Loans. Since the rate of payment of principal of the Housing
Loans will depend on future events and a variety of factors, no assurance can be
given as to such rate or the rate of principal prepayments. The extent to which
the yield to maturity of any Offered Note may vary from the anticipated yield
will depend upon the degree to which a Note is purchased at a discount or
premium, and the degree to which the timing of payments thereon is sensitive to
prepayments, liquidations and purchases of such Housing Loans. The rate of
prepayment on the Housing Loans cannot be predicted. The prepayment experience
of the Trust with respect to the Housing Loans may be affected by a wide variety
of factors, including economic conditions, prevailing interest rate levels, the
availability of alternative financing and homeowner mobility.
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As with obligations generally, the rate of prepayment on the Mortgage Pool
is affected by prevailing market rates for Housing Loans of a comparable term
and risk level. When the market interest rate is below the interest rate on the
Housing Loan, Borrowers may have an increased incentive to refinance their
Housing Loans. Depending on prevailing market rates, the future outlook for
market rates and economic conditions generally, some Borrowers may sell or
refinance Mortgaged Properties in order to realize their equity in the Mortgaged
Properties, to meet cash flow needs or to make other investments.
Weighted Average Lives
Generally, greater than anticipated prepayments of principal will increase
the yield on Offered Notes purchased at a price less than par and will decrease
the yield on Offered Notes purchased at a price greater than par. The effect on
an investor's yield due to principal prepayments on the Housing Loans occurring
at a rate that is faster (or slower) than the rate anticipated by the investor
in the period immediately following the issuance of the Notes will not be
entirely offset by a subsequent like reduction (or increase) in the rate of
principal payments. The weighted average life of the Offered Notes will also be
affected by the amount and timing of delinquencies and defaults on the Housing
Loans and the recoveries, if any, on defaulted Housing Loans and foreclosed
properties.
The "weighted average life" of a Note refers to the average amount of time
that will elapse from the date of issuance of the Note to the date each dollar
in respect of principal repayable under such Note is reduced to zero. The
weighted average life of the Offered Notes will be influenced by, among other
factors, the rate at which principal payments are made on the Housing Loans.
The following tables are based on a constant prepayment rate model ("CPR"
or the "Prepayment Model"). CPR represents an assumed constant rate of
prepayment each month, expressed as a per annum percentage of the principal
balance of the pool of mortgage loans for that month. CPR does not purport to be
a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of housing loans, including the
Housing Loans. The Prepayment Model does not purport to be a historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of mortgage loans, including the Housing Loans. None of
the Approved Sellers, the Trust Manager nor the Issuer Trustee believes that any
existing statistics of which it is aware provide a reliable basis for holders of
Offered Notes to predict the amount or the timing of receipt of prepayments on
the Housing Loans.
Since the following table was prepared on the basis of the assumptions in
the following paragraph, there are discrepancies between characteristics of the
actual Housing Loans and the characteristics of the Housing Loans assumed in
preparing the tables. Any such discrepancy may have an effect upon the
percentages of the principal balances outstanding and weighted average lives of
the Offered Notes set forth in the tables. In addition, since the actual Housing
Loans in the Trust have characteristics which differ from those assumed in
preparing the tables set forth below, the distributions of principal on the
Offered Notes may be made earlier or later than as indicated in the tables.
For the purpose of the tables below, it is assumed that: (i) the Housing
Loans consist of level pay loans, (ii) the Closing Date for the Offered Notes is
May __, 1998, (iii) payments on the Offered Notes are made on the 19th day of
each Quarter regardless of the day on which the Payment Date actually occurs,
commencing in July 1998 and are made in accordance with the priorities described
herein, (iv) the scheduled monthly payments of principal and interest on the
Housing Loans will be timely delivered on the first day of each month commencing
in July 1998 (with no defaults), (v) the Housing Loans' prepayment rates are a
multiple of the Prepayment Model, (vi) all prepayments are prepayments in full
received on the last day of each month and include 30 days' interest thereon,
(vii) no optional termination is exercised and (viii) the Offered Notes have the
Interest Rate and initial principal balances set forth herein. The preceding
clauses are the assumptions used in preparing the following tables and are not
necessarily expected to be predictive of the Mortgage Pool's actual performance.
It is not likely that the Housing Loans will prepay at any constant
percentage of the Prepayment Model to maturity or that all Housing Loans will
prepay at the same rate. In addition, the diverse remaining terms to maturity of
the Housing Loans (which include recently originated Housing Loans) could
produce slower distributions of principal than as indicated in the tables at the
various percentages of the Prepayment Model specified even if the weighted
average remaining term to maturity of the Housing Loans is the same as the
weighted average remaining term to maturity of the assumptions described above.
Investors are urged to make their investment decisions on a basis that includes
their determination as to anticipated prepayment rates under a variety of the
assumptions discussed herein as well as other relevant assumptions.
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Percent of Original Invested Amount Outstanding
at the Following Percentages of CPR(1)
<TABLE>
<CAPTION>
Class A Notes: US$
------------------------------------------------------------------------------------------------
Date 0% % % % % %
---- --- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
Initial Percent................... 100 100 100 100 100 100
June 1999.........................
June 2000.........................
June 2001.........................
June 2002.........................
Weighted Average Life(2) --
To Maturity (Years)...........
To Call (Years)...............
</TABLE>
- ----------
(1) The percentages in this table have been rounded to the nearest whole
number.
(2) The weighted average life of a Class is determined by (a) multiplying the
amount of each payment of principal thereof by the number of years from
the date of issuance to the related Payment Date, (b) summing the results
and (c) dividing the sum by the aggregate distributions of principal
referred to in clause (a) and rounding to one decimal place.
Percent of Original Invested Amount Outstanding
at the Following Percentages of CPR(1)
<TABLE>
<CAPTION>
Class B Notes: $
------------------------------------------------------------------------------------------------
Date 0% % % % % %
---- --- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
Initial Percent................... 100 100 100 100 100 100
June 1999.........................
June 2000.........................
June 2001.........................
June 2002.........................
Weighted Average Life(2) --
To Maturity (Years)...........
To Call (Years)...............
</TABLE>
- ----------
(1) The percentages in this table have been rounded to the nearest whole
number.
(2) The weighted average life of a Class is determined by (a) multiplying the
amount of each payment of principal thereof by the number of years from
the date of issuance to the related Payment Date, (b) summing the results
and (c) dividing the sum by the aggregate distributions of principal
referred to in clause (a) and rounding to one decimal place.
DESCRIPTION OF THE OFFERED NOTES
General
The Notes will be issued pursuant to the terms of the Transaction
Documents. The following summary describes certain terms of the Transaction
Documents. A copy of the form of each of the Master Trust Deed, the Series
Notice, the Note Trust Deed and the Security Trust Deed has been filed with the
Commission as an Exhibit to the Registration Statement of which this Prospectus
is a part. A copy of each of the Master Trust Deed, the Series Notice, the Note
Trust Deed and the Security Trust Deed is available at ____________________
[Note Trustee's office in London] [Note: LSE requires docs to be available in
London] [ ], a [ ], will be the Note Trustee.
Pursuant to the Transaction Documents, on the Closing Date the Issuer
Trustee will issue two classes of notes (the "Offered Notes"), consisting of one
class of senior notes, designated as the Class A Mortgage Backed Floating Rate
Notes due May 8, 2029, in the original principal amount of US$[ ] (the "Class A
Notes") and one class of subordinated notes, designated as the Class B Mortgage
Backed Floating Rate Notes, due May 8, 2029, in the original principal amount of
US$[ ] (the "Class B Notes"). In addition to the Class A Notes and the Class B
Notes, the Issuer Trustee may from time to time issue RFSs, which may convert to
RFS Class A Notes in certain circumstances. The Offered Notes, the RFSs and the
RFS Class A Notes are referred to herein as the "Notes." See "--Description of
the Redraw Facility, the Redraw Funding Securities and the RFS Class A Notes"
herein.
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Payments on the Notes will be made by the Note Trustee on each Payment
Date to persons in whose names the Notes are registered as of the related Record
Date (the "Holders" or "Noteholders"). The Payment Date for the Notes will be
the 19th day of each Quarter. A "Quarter" is each three-month period in a year
which period begins on July 1, October 1, January 1 and April 1. If any Payment
Date would otherwise fall on a day which is not a Business Day, it shall be
postponed to the next day which is a Business Day unless it would thereby fall
into the next calendar month in which event it shall be brought forward to the
immediately preceding Business Day. The first Payment Date will be July 19, 1998
in respect of the period from (and including) the Closing Date to (but
excluding) that date. The Record Date for any Payment Date will be the second
Business Day immediately preceding the Payment Date (so long as the Notes are
held in book-entry form), or the last day of the prior calendar month (if
Definitive Notes have been issued).
A "Business Day" means (1) in relation to the Note Trust Deed, the Agency
Agreement and any Note, any day, other than a Saturday, Sunday or public
holiday, on which banks are open for business in Sydney, London and New York
City; and (2) in relation to any other Transaction Document, any day, other than
a Saturday, Sunday or public holiday, on which Banks are open for business in
Sydney.
A "Collection Period" commences on and includes the 10th day of each
Quarter and runs until (and includes) the 9th day of the following Quarter with
the exception of the first Collection Period, which will commence on (and
include) the day after the Cut-Off Date and end on (and include) July 9, 1998.
The first Interest Period in relation to the Notes commences on (and
includes) the Closing Date and ends on (but excludes) the first Payment Date
(being July 19, 1998). Each succeeding Interest Period, commences on (and
includes) a Payment Date and ends on (but excludes) the next Payment Date. The
final Interest Period ends on (but excludes) the Maturity Date.
For any Interest Period other than the initial Interest Period, the
"Interest Determination Date" is the second Business Day prior to the
commencement of that Interest Period. The initial Interest Determination Date is
April 17, 1998. The "Collection Determination Date" is four Business Days prior
to each Payment Date.
Each Class of Offered Notes initially will be represented by one or more
global notes (the "Book-Entry Notes") registered in the name of the nominee of
DTC (together with any successor depository selected by the Note Trustee, the
"Depository"), except as set forth below. Beneficial interests in each Class of
Offered Notes will be available for purchase in minimum denominations of
US$100,000. The Issuer Trustee has been informed by DTC that DTC's nominee will
be Cede & Co. Accordingly, Cede & Co. is expected to be the Noteholder of record
of the Offered Notes. Unless and until Definitive Notes are issued under the
limited circumstances described herein, no Note Owner (as defined herein)
acquiring an interest in any Class of Offered Notes will be entitled to receive
a certificate representing such Note Owner's interest in such Notes. Until such
time, all references herein to actions by Noteholders of any Class of Offered
Notes will refer to actions taken by the Depository upon instructions from its
participating organizations and all references herein to distributions, notices,
reports and statements to Noteholders of any Class of Offered Notes will refer
to distributions, notices, reports and statements to the Depository or its
nominee, as the registered Noteholder of such Class, for distribution to Note
Owners of such Class in accordance with the Depository's procedures. See
"--Book-Entry Registration" and "--Definitive Notes."
Collections and Payment
With respect to each Collection Period and on or prior to the Collection
Determination Date, the Trust Manager will determine the Collections (as defined
below) received and reconcile the receipts against expenses, including Interest
payable to Noteholders, that have accrued during such Collection Period. To the
extent necessary, the Trust Manager must direct the Issuer Trustee to draw on or
claim against the Liquidity Facility where available to make up shortfalls in
Collections due but not received. Various amounts will also be swapped under the
Swap Agreements.
On the Collection Determination Date, the Trust Manager shall advise the
Issuer Trustee of the amounts to be paid. The Issuer Trustee will arrange for
the relevant payments to occur on the Payment Date.
Set out below is an example of relevant dates and periods for the
allocation of cashflows and their payments. All dates are assumed to be Business
Days.
Collection Period 10th April to (and including) 9th July
Collection Determination Date 15th July
Remittance Date 17th July
Interest Determination Date 17th April
Notice Date 18th July
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Payment Date/Rate Set Date 19th July
Interest Period 19th April to (but excluding) 19th July
Collections
With respect to any Collection Period, "Collections" shall consist of
interest and principal receipts from the Housing Loans, the proceeds of
enforcement of Mortgages, the proceeds of claims under Mortgage Insurance
Policies and payments by the Approved Sellers or the Servicer in respect of
breaches of representations or warranties with respect to the Housing Loans.
Westpac or the Servicer, as a delegate of Westpac under the Servicing Agreement,
will receive the Collections in respect of the Housing Loans in the Mortgage
Pool.
So long as both (a) Westpac has a short term rating of at least A-1+ from
Standard & Poor's and P-1 from Moody's and (b) the Collections Account is
maintained with Westpac or a subsidiary or Westpac, each of Westpac and the
Servicer shall deposit the amount equal to the Collections it receives during
the related Collection Period into the relevant Collections Account two Business
Days prior to the relevant Payment Date (the "Remittance Date") together with an
amount equivalent to the interest that would have accrued at the Bank Bill Rate
on such amounts if they had been deposited into the Collections Account five
Business Days following receipt by it (less any relevant tax).
If Westpac has a short term rating of less than A-1+ from Standard &
Poor's and less than P-1 from Moody's, then Westpac and the Servicer shall pay
all Collections in its possession or control into the Collections Account no
later than five Business Days following receipt. Notwithstanding the foregoing,
the Collections Account may continue to be maintained with Westpac.
If, however, the Collections Account is not maintained with Westpac, or a
subsidiary of Westpac, all Collections in relation to the Trust must be
deposited into the Collections Account no later than two Business Days following
receipt of them by Westpac or the Servicer (as the case may be).
Calculation of Total Available Funds
On each Collection Determination Date the Trust Manager will, for the
immediately preceding Collection Period, calculate the total of the Available
Income, plus Principal Draws, plus Liquidity Draws (the sum of such amounts,
(the "Total Available Funds")), all as further described below.
Available Income
"Available Income" for a Collection Period equals the aggregate of:
(1) Finance Charge Collections plus to the extent not included in
paragraph (1):
(2) any amount received or due to be received by or on behalf of the
Issuer Trustee with respect to net receipts under any Swap Agreement (other than
the Currency Swap);
(3) any amount received by or on behalf of the Issuer Trustee under any
Support Facility (other than the Currency Swap), including under a Mortgage
Insurance Policy, which the Trust Manager determines should be accounted for in
respect of a Finance Charge Loss;
(4) any interest income received by or on behalf of the Issuer Trustee in
respect of moneys credited to the Collections Account in relation to the Trust;
(5) amounts in the nature of interest otherwise paid by Westpac, the
Servicer or the Trust Manager to the Issuer Trustee in respect of Collections
held by it; and
(6) all other amounts received by or on behalf of the Issuer Trustee in
respect of the Trust assets in the nature of income, excluding
(7) any interest credited to a Collateral Account for a Support Facility;
and
(8) any amount received by the Issuer Trustee on entry into a replacement
Currency Swap which is payable prior to the prior Currency Swap Provider.
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"Finance Charge Collections" shall equal:
(1) all amounts received by or on behalf of the Issuer Trustee in respect
of interest, fees and other income payable under Housing Loans in the Mortgage
Pool, including:
(i) amounts on account of interest recovered from the enforcement of
a Housing Loan;
(ii) any payments by Westpac to the Issuer Trustee on the repurchase
of a Housing Loan which are attributable to interest;
(iii) any interest adjustments received by the Trust in relation to
the transfer of Housing Loans or related Mortgages from the Trust to
another WST trust; and
(iv) the Prepayment Cost Surplus for that Collection Period (if
any); and
(2) all amounts in respect of interest, fees and other amounts in the
nature of income, received by or on behalf of the Issuer Trustee during that
Collection Period including:
(i) from an Approved Seller or the Servicer in respect of any breach
of a representation, warranty or undertaking contained in the Master Trust
Deed, Servicing Agreement or Series Notice;
(ii) from an Approved Seller or the Servicer under any obligation
under the Master Trust Deed, Servicing Agreement or Series Notice to
indemnify or reimburse or pay damages to the Issuer Trustee for any
amount, in each case which are determined by the Trust Manager to be in
respect of interest; and
(3) any amount received in respect of a Housing Loan in the Mortgage Pool,
or a related Mortgage, after a Finance Charge Loss has occurred, which has not
been received under a Mortgage Insurance Policy and which is not payable to an
insurer under a Mortgage Insurance Policy; less
(4) any amount debited in respect of the Housing Loans in the Mortgage
Pool representing government charges collected by or on behalf of the Issuer
Trustee, financial institutions duty, bank accounts debit tax or similar taxes
and fees or charges due to the Servicer or Westpac under the Housing Loans and
the Prepayment Cost Surplus due to Westpac and collected by Westpac or the
Servicer.
With respect to any Housing Loan, a "Finance Charge Loss" means
Liquidation Losses which are attributable to interest, fees and expenses in
relation to the relevant Housing Loan including on the early discharge of
Housing Loans which bear a fixed rate of interest (other than a Housing Loan
subject to a concessional rate of interest for 12 months or less) the amount, if
any, owed by the relevant Borrower in accordance with the Relevant Documents.
With respect to any Housing Loan, "Liquidation Losses" for a Collection Period,
means the amount (if any) by which the Unpaid Balance of a Housing Loan
(together with the enforcement expenses relating to the Housing Loan and the
related Mortgage) exceeds the Liquidation Proceeds in relation to the Housing
Loan. "Liquidation Proceeds" means all amounts recovered from the enforcement of
a Mortgage (excluding proceeds of a Mortgage Insurance Policy).
With respect to any Housing Loan, a "Prepayment Cost Surplus" means, in
relation to a Collection Period, the amount by which the total of all Prepayment
Costs (as defined below) for that Collection Period exceeds the total of all
Prepayment Benefits for that Collection Period. With respect to any Housing
Loan, a "Prepayment Benefit Shortfall" means, in relation to a Collection
Period, the amount by which the total of all Prepayment Benefits for that
Collection Period exceeds the total of all Prepayment Costs for that Collection
Period.
With respect to any Housing Loan which is a Fixed Option Home Loan or
otherwise bears a fixed rate of interest (other than a Housing Loan subject to
an introductory rate of interest for 12 months or less), "Prepayment Cost"
means, on the early discharge of such Housing Loan, the amount (if any) owed by
the relevant Borrower and collected by Westpac or the Servicer, in accordance
with the relevant Housing Loan agreement with respect to such early discharge.
With respect to any Housing Loan which is a Fixed Option Home Loan or otherwise
bears a fixed rate of interest (other than a Housing Loan subject to an
introductory rate of interest for 12 months or less), a "Prepayment Benefit"
means, on the early discharge of such Housing Loan, the amount (if any) credited
to the relevant Borrower's loan account by Westpac by means of a reduction in
the Housing Loan Principal of that Housing Loan, in accordance with the relevant
Housing Loan agreement.
With respect to a Collection Period and any Housing Loan, "Principal Loss"
means the amount of any Liquidation Loss for that Collection Period which is
attributable to principal in relation to the relevant Housing Loan.
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Principal Draws
If the Trust Manager determines on any Collection Determination Date that
the Available Income of the Trust for the Collection Period ending immediately
prior to that Collection Determination Date is insufficient to meet Total
Payments (as defined herein under "--Remaining Liquidity Shortfall") of the
Trust for that Collection Period (a "Payment Shortfall"), then Principal
Collections collected during that Collection Period will be applied to the
Payment Shortfall (a "Principal Draw") to the extent available for this purpose.
Principal Draws will be reimbursed out of any Excess Available Income
available for this purpose on subsequent Payment Dates.
Liquidity Draws
If, on any Collection Determination Date, the Trust Manager determines
that the related Payment Shortfall, if any, will not be covered fully by a
Principal Draw, the Trust Manager must direct the Issuer Trustee to draw on the
Liquidity Facility in an amount equal to the lesser of the remaining Payment
Shortfall or the Available Liquidity Amount. Any direction by the Trust Manager
to the Issuer Trustee to draw on the Liquidity Facility is subject to there
being available funds under the Liquidity Facility.
Remaining Liquidity Shortfall
If the amount available to be drawn under the Liquidity Facility is not
sufficient to satisfy the remaining Payment Shortfall in full, the amount of
such shortfall will be a "Remaining Liquidity Shortfall." If the Trust Manager
determines that a Remaining Liquidity Shortfall exists, then the Trust Manager
must reduce the Interest payable in respect of the Notes as follows:
(1) first, reduce the A$ Class B Interest Amount payable to the Currency
Swap Provider under the swap confirmation relating to the Class B Notes;
(2) second, if the A$ Class B Interest Amount has been reduced to zero,
any excess Remaining Liquidity Shortfall shall reduce pro rata, based on their
applicable entitlements:
(i) the A$ Class A Interest Amount payable to the Currency Swap Provider
under the swap confirmation relating to the Class A Notes;
(ii) the RFS Interest for all RFSs (if any);
(iii) interest payable for all RFS Class A Notes (if any); and
(iv) any fee payable by the Issuer Trustee under the Redraw Facility.
If there is a reduction in the A$ Class B Interest Amount under (1) above,
the Interest entitlement of the Class B Noteholders shall be reduced by the same
proportion as the reduction in the A$ Class B Interest Amount. If there is a
reduction in the A$ Class A Interest Amount under (2)(i) above, the Interest
entitlement of the Class A Noteholders shall be reduced by the same proportion
as the reduction in the A$ Class A Interest Amount.
With respect to any Payment Date, the "A$ Class A Interest Amount" means
the amount in A$ which is calculated:
(1) on a daily basis at the applicable rate set out in the swap
confirmation relating to the Class A Notes (being AUD- BBR-BBSW, as defined in
the ISDA Definitions, as at the first day of the Interest Period ending on (but
excluding) that Payment Date with a designated maturity of 90 days plus the
spread set out in the Currency Swap);
(2) on the A$ Equivalent (with respect to an amount denominated or to be
denominated in U.S. dollars, the amount converted to (and denominated in)
Australian dollars at the applicable exchange rate) of the aggregate of the
Invested Amount of the Class A Notes as at the first day of the Interest Period
ending on (but excluding) that Payment Date; and
(3) on the basis of the actual number of days in that Interest Period and
a year of 360 days.
With respect to any Payment Date, the "A$ Class B Interest Amount" means,
for any Payment Date, the amount in A$ which is calculated:
(1) on a daily basis at the applicable rate set out in the swap
confirmation relating to the Class B Notes (being AUD- BBR-BBSW, as defined in
the ISDA Definitions, as at the first day of the Interest Period ending on (but
excluding) that Payment Date with a designated maturity of 90 days plus the
spread);
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(2) on the A$ Equivalent of the aggregate of the Invested Amount of the
Class B Notes as at the first day of the Interest Period ending on (but
excluding) that Payment Date; and
(3) on the basis of the actual number of days in that Interest Period and
a year of 360 days.
With respect to any Payment Date, "RFS Interest" means all interest on the
outstanding RFSs in respect of an Interest Period. With respect to any Payment
Date, "RFS Class A Interest" means all interest on the outstanding RFS Class A
Notes in respect of an Interest Period.
Distribution of Total Available Funds
General
On each Payment Date, Total Available Funds will be applied in making the
following payments in the following order of priority:
(1) in relation to the first Payment Date only, the Accrued Interest
Adjustment;
(2) unpaid or unreimbursed Trust Expenses;
(3) amounts payable under any Support Facility (other than the Currency
Swap), pro rata, based on their respective entitlements, including:
(i) the net amount (if any) payable by the Issuer Trustee under the
Variable Rate Basis Swap;
(ii) the net amount (if any) payable by the Issuer Trustee under each
Fixed Rate Basis Swap; and
(iii) any interest or fees payable by the Issuer Trustee under the
Liquidity Facility, but not including amounts due under paragraph (4), (5)
or (6) below;
(4) repayment of any Liquidity Draw made on or prior to the previous
Payment Date;
(5) pro rata, to each of the following, based on their respective
entitlements:
(i) any interest payable on all RFSs (if any);
(ii) the payment to the Currency Swap Provider under the swap confirmation
relating to the Class A Notes of the A$ Class A Coupon Amount at that
date;
(iii) the interest payable on all RFS Class A Notes (if any); and
(iv) any fee payable by the Issuer Trustee under the Redraw Facility; and
(6) the payment to the Currency Swap Provider under the swap confirmation
relating to the Class B Notes of the A$ Class B Coupon Amount as at that date.
The sum of paragraphs (1) to (6) above represents "Total Payments" for a
Collection Period.
The Issuer Trustee shall only make a payment described in paragraphs (1)
to (6) above to the extent that Total Available Funds remain available to do so
after each payment is made in accordance with the above priority in accordance
with the Series Notice.
Trust Expenses
On each Collection Determination Date the Trust Manager will determine the
following payments to be made (together, the "Trust Expenses") in the following
order of priority (as between themselves) on the next Payment Date:
(1) taxes payable in relation to the Trust;
(2) the Issuer Trustee Fee;
(3) the Trust Manager Fee;
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(4) any fee payable to the Security Trustee under the Security Trust Deed;
(5) the Servicing Fee;
(6) any fee payable to the Note Trustee under the Note Trust Deed;
(7) any fee payable to the Agent Bank under the Agency Agreement;
(8) pro rata based on their respective entitlements any costs, charges or
expenses (other than fees) incurred by, and any liabilities owing under any
indemnity granted to, the Security Trustee, the Servicer, the Note Trustee or
the Agent Bank in relation to the Trust under the Transaction Documents, for
that Collection Period; and
(9) pro rata based on their respective entitlements any other costs,
charges or expenses incurred by the Issuer Trustee or the Trust Manager in the
administration or operation of the Trust.
Calculation of Interest Payable on the Notes
The "Interest Rate" for the Class A Notes for a particular Payment Date is
equal to USD-LIBOR-BBA on the related Interest Determination Date (as defined
herein) plus ___%. The Interest Rate on the Class A Notes for the first Payment
Date will be equal to ___%. The "Interest Rate" for the Class B Notes for a
particular Payment Date is equal to USD- LIBOR-BBA on the related Interest
Determination Date plus ___%. The Interest Rate on the Class B Notes for the
first Payment Date will be equal to ____%. See "--Calculation of USD-LIBOR-BBA"
below.
With respect to any Payment Date, interest on a Class of Notes will be
calculated as the product of (a) the Invested Amount of such Class as of the
first day of that Interest Period after giving effect to any payments of
principal made with respect to such Class on such day, (b) the Interest Rate for
such Class for that Interest Period; and (c) a fraction, the numerator of which
is the actual number of days in that Interest Period and the denominator of
which is 360 days (such product, "Interest"). No Noteholder will be entitled to
payments of Interest after the related Stated Amount is reduced to zero.
Calculation of USD-LIBOR-BBA
On the second London banking day before the beginning of each Interest
Period (each an "Interest Determination Date"), the Agent Bank will determine
the rate "USD-LIBOR-BBA" as the applicable Floating Rate Option under the
Definitions of the International Swaps and Derivatives Association, Inc.
("ISDA") (the "ISDA Definitions") being the rate applicable to any Interest
Period for three-month deposits in U.S. dollars which appears on the Telerate
Page 3750 as of 11:00 a.m., London time, on the Interest Determination Date. If
such rate does not appear on the Telerate Page 3750, the rate for that Interest
Period will be determined as if the Issuer Trustee and Agent Bank had specified
"USD-LIBOR-Reference Banks" as the applicable Floating Rate Option under the
ISDA Definitions. "USD-LIBOR-Reference Banks" means that the rate for an
Interest Period will be determined on the basis of the rates at which deposits
in U.S. Dollars are offered by the Reference Banks (being four major banks in
the London interbank market) at approximately 11:00 a.m., London time, on the
Interest Determination Date to prime banks in the London interbank market for a
period of three months commencing on the first day of the Interest Period and in
a Representative Amount (as defined in the ISDA Definitions). The Agent Bank
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are provided,
the rate for that Interest Period will be the arithmetic mean of the quotations.
If fewer than two quotations are provided as requested, the rate for that
Interest Period will be the arithmetic mean of the rates quoted by major banks
in New York City, selected by the Agent Bank, at approximately 11:00 a.m., New
York City time, on that Interest Determination Date for loans in U.S. dollars to
leading European banks for a period of three months commencing on the first day
of the Interest Period and in a Representative Amount, provided that on the
first day of the first Interest Period USD-LIBOR-BBA shall be an interpolated
rate calculated with reference to the period from (and including) the Closing
Date to (but excluding) the first Payment Date.
Excess Available Income
General
On each Collection Determination Date, the Trust Manager must determine
the amount (if any) by which the Total Available Funds for the Collection Period
ending immediately prior to that Collection Determination Date exceeds the Total
Payments for that same Collection Period (such amount, the "Excess Available
Income").
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Distribution of Excess Available Income
On each Collection Determination Date, the Trust Manager must apply such
Excess Available Income for the Collection Period relating to that Collection
Determination Date in the following order of priority:
(1) to reimburse Principal Charge Offs for that Collection Period;
(2) pro rata, based on the Stated Amount of the RFSs (if any), the Stated
Amount of the RFS Class A Notes (if any), the Principal Outstanding under the
Redraw Facility and the A$ Equivalent of the Stated Amount of the Class A Notes:
(i) as a payment to the holders of the RFSs (if any) in or towards
reinstating the Stated Amount of such RFSs, to the extent of any Carryover
RFS Charge Offs;
(ii) as a payment to the holders of the RFS Class A Notes (if any) in or
towards reinstating the Stated Amount of such RFS Class A Notes, to the
extent of any Carryover RFS Class A Charge Offs;
(iii) as a repayment under the Redraw Facility Agreement, as a reduction
of, and to the extent of, any Carryover Redraw Charge Offs;
(iv) as a payment to the Currency Swap Provider under the swap
confirmation relating to the Class A Notes, of the A$ Equivalent of any
Carryover Class A Charge Offs; and
(3) as a payment, denominated in A$, to the Currency Swap Provider under
the swap confirmation relating to the Class B Notes of the A$ Equivalent of any
Carryover Class B Charge Offs;
(4) to all Principal Draws which have not been repaid as at that date; and
(5) as a distribution to any Beneficiaries (an "Excess Collections
Distribution").
All amounts to be paid pursuant to paragraphs (2), (3) and (5) will be
paid on the Payment Date immediately following the Collection Determination
Date.
Once distributed to a Beneficiary, an Excess Collections Distribution will
not be available to the Issuer Trustee to meet its obligations in respect of the
Trust in subsequent periods unless there has been an error in the relevant
calculation of the Excess Collections Distribution. A "Beneficiary" is any party
which holds a residual income unit in the Trust.
Gross Principal Collections
On each Collection Determination Date, the Trust Manager must determine
Gross Principal Collections for the Collection Period ending immediately prior
to that Collection Determination Date. With respect to any Collection
Determination Date, "Gross Principal Collections" are the sum of:
(1) all amounts received by or on behalf of the Issuer Trustee under or in
respect of the Housing Loans during the Collection Period in respect of
principal, including principal prepayments;
(2) all other amounts received under or in respect of the Housing Loans
during the Collection Period in respect of principal, including:
(i) amounts on account of principal recovered from the enforcement of a
Housing Loan or Mortgage;
(ii) any payments by Westpac to the Issuer Trustee on the repurchase of a
Housing Loan in respect of principal;
(iii) any amounts in the nature of principal received by or on behalf of
the Issuer Trustee from the sale of any Trust Asset, including any amount
received on the issue of Notes and which was not used to purchase a
Housing Loan or Mortgage and which the Trust Manager determines is surplus
to the requirements of the Trust;
(iv) any Prepayment Costs applied towards Prepayment Benefit; and
(v) any Prepayment Benefit Shortfall paid by Westpac to the Trust;
(3) all amounts received by or on behalf of the Issuer Trustee during that
Collection Period under any Support Facility (other than the Currency Swap)
which the Trust Manager determines should be accounted for to reduce a Principal
Loss;
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(4) all amounts received by or on behalf of the Issuer Trustee during that
Collection Period:
(i) from an Approved Seller or the Servicer in respect of any breach of a
representation, warranty or undertaking contained in the Master Trust
Deed, Series Notice or Servicing Agreement determined by the Trust Manager
to be in respect of principal; and
(ii) from an Approved Seller or the Servicer under any obligation under
the Master Trust Deed, Series Notice or Servicing Agreement to indemnify,
reimburse or pay damages to the Issuer Trustee for any amount determined
by the Trust Manager to be in respect of principal;
(5) any amount of Excess Available Income to be applied to meet a
Principal Charge Off or a Carryover Charge Off;
(6) any amount received by or on behalf of the Issuer Trustee during that
Collection Period as proceeds from the issue of any RFS to the extent not
applied to reimburse amounts drawn under the Redraw Facility;
(7) any Excess Available Income to be applied to Principal Draws made on a
previous Payment Date;
(8) any Prepayment Calculation Adjustment for that Collection Period; and
(9) any net amount received by the Trust from another trust established
under the Master Trust Deed with respect to any substitution of a Housing Loan
during that Collection Period;
but excluding a premium receivable by the Issuer Trustee on entry into a
replacement Currency Swap.
On the Closing Date, the A$ Equivalent of the total Initial Invested
Amount of the Notes issued by the Issuer Trustee may exceed the Housing Loan
Principal as of the Cut-Off Date. The amount of this difference, if any, will be
treated as a Gross Principal Collection and the US$ Equivalent will be passed
through to Noteholders on the first Payment Date.
With respect to any Collection Period and a Housing Loan, a "Prepayment
Calculation Adjustment" is any amount credited to the related Borrower by
Westpac to reflect an interest adjustment resulting from a change in computer
systems.
Principal Collections
On each Collection Determination Date the Trust Manager must calculate
Principal Collections for the preceding Collection Period. With respect to any
Collection Determination Date, "Principal Collections" shall be equal to:
(1) the Gross Principal Collections for that Collection Period; less
(2) any amounts deducted by or paid to Westpac to reimburse Redraws funded
by Westpac during that Collection Period for which Westpac has not been
reimbursed previously.
Distribution of Principal Collections
Initial Principal Distributions
On each Payment Date, Principal Collections will be distributed in the
following order of priority:
(1) to repay any Redraws provided by Westpac to the extent not previously
reimbursed;
(2) to repay any Principal Outstanding under the Redraw Facility;
(3) to allocate to Total Available Funds any Principal Draw; and
(4) to repay all amounts outstanding under each RFS Series (if any), in
chronological order of issue, until repaid in full, (together, "Initial
Principal Distributions").
Only after Initial Principal Distributions have been distributed will
Principal Collections be available to be paid to the Currency Swap Provider to
enable the Issuer Trustee to make payments to the Class A Noteholders and the
Class B Noteholders in US$ in accordance with the appropriate principal
allocation methodology set forth below. With respect to any Payment Date, "Net
Principal Collections" shall equal the amount of Principal Collections remaining
after the distribution of Initial Principal Distributions.
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Payments of Principal on the Notes
With respect to any Collection Determination Date, the Trust Manager shall
determine the appropriate principal allocation methodology as set forth below.
On each Payment Date, the Trust Manager shall instruct the Issuer Trustee to pay
principal to the Noteholders in the manner and subject to the priority set forth
below.
Serial Method 1
If, on the related Collection Determination Date, the Serial Method 1
Distribution Test has been met, then the Issuer Trustee will pay out of any Net
Principal Collections, on the immediately following Payment Date the following
amounts in the following order of priority:
(1) first, pro rata, based on their respective entitlements:
(i) as a payment, denominated in A$, to the Currency Swap Provider
under the swap confirmation relating to the Class A Notes of an amount
equal to the lesser of:
(a) the Class A Forex Percentage of the sum of: (1) the Class
A Percentage of Net Principal Collections; and (2) 50% of the Class
B Percentage of Net Principal Collections; and
(b) the A$ Equivalent of the Class A Stated Amounts for all
Class A Notes; and
(ii) as a payment denominated in A$ to the holders of the RFS Class
A Notes (if any) of an amount equal to the lesser of:
(a) the RFS Class A Forex Percentage of the sum of: (1) the
Class A Percentage of Net Principal Collections; and (2) 50% of the
Class B Percentage of Net Principal Collections; and
(b) the RFS Class A Stated Amounts for all RFS Class A Notes
(if any); and
(2) second, as a payment, denominated in A$, to the Currency Swap Provider
under the swap confirmation relating to the Class B Notes of an amount
equal to 50% of the Class B Percentage of Net Principal Collections.
The "Serial Method 1 Distribution Test" is met if, on any Collection
Determination Date the following conditions are all satisfied:
(i) the Subordinated Percentage at the previous Collection Determination
Date was greater than or equal to ___% (twice the Initial Subordinated
Percentage);
(ii) that Collection Determination Date occurs on or before April 19,
2001;
(iii) the fraction, expressed as a percentage, the numerator of which is
the Total Invested Amount on such Collection Determination Date and the
denominator of which is the Total Initial Invested Amount, is greater than
or equal to 10%; and
(iv) the Average Quarterly Percentage on such Collection Determination
Date:
(a) does not exceed [2]% and the Total Carryover Charge Off on that
Collection Determination Date does not exceed [30]% of the Class B
Initial Invested Amount; or
(b) does not exceed [4]% and the Total Carryover Charge Off on such
Collection Determination Date does not exceed [10]% of the Class B
Initial Invested Amount; and
(v) the Stated Amount of the Class B Notes on such Collection
Determination Date exceeds 0.25% of the sum of the Class A Initial
Invested Amount and the Class B Initial Invested Amount.
Serial Method 2
If, on the related Collection Determination Date, the Serial Method 2
Distribution Test has been met, then the Issuer Trustee will pay out of any Net
Principal Collections, on the immediately following Payment Date the following
amounts in the following order of priority:
(1) first, pro rata, based on their respective entitlements:
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(i) as a payment, denominated in A$, to the Currency Swap Provider
under the swap confirmation relating to the Class A Notes of an amount
equal to the lesser of:
(a) the Class A Forex Percentage of the Class A Percentage of Net
Principal Collections; and
(b) the A$ Equivalent of the Class A Stated Amounts for all Class A
Notes; and
(ii) as a payment denominated in A$ to the holders of the RFS Class
A Notes (if any) of an amount equal to the lesser of:
(a) the RFS Class A Forex Percentage of the Class A Percentage of
Net Principal Collections; and
(b) the RFS Class A Stated Amounts for all RFS Class A Notes (if
any); and
(2) second, as a payment, denominated in A$, to the Currency Swap Provider
under the swap confirmation relating to the Class B Notes of an amount
equal to the Class B Percentage of Net Principal Collections.
The "Serial Method 2 Distribution Test" is met if, on any Collection
Determination Date the following conditions are all satisfied:
(i) the Subordinated Percentage at the previous Collection
Determination Date was greater than or equal to __% (twice the Initial
Subordinated Percentage);
(ii) that Collection Determination Date occurs after April 19, 2001,
(iii) the fraction, expressed as a percentage, the numerator of
which is the Total Invested Amount on such Collection Determination Date
and the denominator of which is the Total Initial Invested Amount, is
greater than or equal to 10%;
(iv) the Average Quarterly Percentage as at the Collection
Determination Date:
(a) does not exceed 2% and the Total Carryover Charge Off on that
Collection Determination Date does not exceed 30% of the Class B
Initial Invested Amount; or
(b) does not exceed 4% and the Total Carryover Charge Off on that
Collection Determination Date does not exceed 10% of the Class B
Initial Invested Amount; and
(v) the Stated Amount of the Class B Notes on such Collection
Determination Date exceeds 0.25% of the sum of (x) the Class A Initial
Invested Amount, (y) the Class B Initial Invested Amount and (z) the US$
Equivalent of the Invested Amounts of all RFS Class A Notes (if any).
Sequential Method
If neither the Serial Method 1 Distribution Test nor the Serial Method 2
Distribution Test has been met, then the Issuer Trustee will pay out of any Net
Principal Collections, on the immediately following Payment Date the following
amounts in the following order of priority:
(1) first, pro rata, based on their respective entitlements:
(i) as a payment, denominated in A$, to the Currency Swap Provider
under the swap confirmation relating to the Class A Notes of an amount
equal to the lesser of:
(a) the Class A Forex Percentage of the Net Principal Collections;
and
(b) the A$ Equivalent of the Class A Stated Amounts for all Class A
Notes; and
(ii) as a payment denominated in A$ to the holders of the RFS Class
A Notes (if any) of an amount equal to the lesser of:
(a) the RFS Class A Forex Percentage of the Net Principal
Collections; and
(b) the RFS Class A Stated Amounts for all RFS Class A Notes (if
any); and
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(2) second, as a payment, denominated in A$, to the Currency Swap Provider under
the swap confirmation relating to the Class B Notes of an amount equal to the
lesser of (i) the amount remaining after all distributions in (1) above and (ii)
the A$ Equivalent of the Class B Stated Amounts for all Class B Notes.
Certain Related Definitions
With respect to any date, the "Average Quarterly Percentage" is the sum of
Quarterly Percentage for the four full Quarters preceding that date, divided by
four. With respect to any Collection Period, the "Quarterly Percentage" equals a
fraction, expressed as a percentage, the numerator of which is the aggregate
Housing Loan Principal of all Housing Loans which are Delinquent for more than
60 consecutive days as of the close of business on the last day of that
Collection Period, and the denominator of which is the aggregate Housing Loan
Principal of all Housing Loans as of the close of business on the last day of
that Collection Period. With respect to any Housing Loan and date, "Housing Loan
Principal" shall be the unpaid principal amount of that Housing Loan on such
date.
The "Class A Forex Percentage" equals a fraction, expressed as a
percentage, the numerator of which is the A$ Equivalent of the Class A Stated
Amounts at that date and the denominator of which is the sum of the A$
Equivalent of the Class A Stated Amounts and the RFS Class A Stated Amounts at
that date.
The "Class A Percentage" means, on a Collection Determination Date, the
sum of the aggregate of the A$ Equivalent of the Class A Stated Amounts, the RFS
Class A Stated Amounts and the Redraw Limit for the preceding Collection
Determination Date as a percentage of the sum of the aggregate Total Stated
Amount of the Class A Notes, the Class B Notes and the Redraw Limit calculated
as at the preceding Collection Determination Date. The "Class B Percentage"
means, on a Collection Determination Date, the aggregate of the A$ Equivalent of
the Class B Stated Amounts for the preceding Collection Determination Date as a
percentage of the sum of the aggregate A$ Equivalent of the Total Stated Amount,
the RFS Class A Stated Amounts and the Redraw Limit calculated as at the
preceding Collection Determination Date.
The "Initial Subordinated Percentage" shall be ___%.
With respect to any date, the "RFS Class A Forex Percentage" shall be 100%
minus the Class A Forex Percentage as of that date.
The "Subordinated Percentage" means the fraction, expressed as a
percentage, calculated on each Collection Determination Date by the Trust
Manager by the numerator of which is the A$ Equivalent of the aggregate of the
Class B Stated Amounts and the denominator of which is the sum of (i) the A$
Equivalent of the Total Stated Amount at that time, plus (ii) the Redraw Limit
at that time, plus (iii) the aggregate of the RFS Stated Amounts at that time,
plus (iv) the aggregate of the RFS Class A Stated Amounts at that time.
Application of Principal Charge Offs
General
If there is any Liquidation Loss under a Housing Loan, the Trust Manager
will direct the Servicer to make a claim under the relevant Mortgage Insurance
Policy for the aggregate amount of that Liquidation Loss if the Servicer has not
already done so. If a claim on account of a Principal Loss may not be made (or
is reduced) under the Mortgage Insurance Policy for any reason (including
because the maximum amount available under the Mortgage Pool Insurance Policy
has been exhausted, the Mortgage Insurance Policy has been terminated in respect
of that Housing Loan, the Mortgage Insurer is entitled to reduce the amount of
the claim or the Mortgage Insurer defaults in payment of a claim) then a
"Mortgage Shortfall" will arise if:
(1) the total amount recovered and recoverable under the Mortgage Insurance
Policy attributable to principal; plus
(2) any damages or other amounts payable by an Approved Seller or the Servicer
under or in respect of the Master Trust Deed, the Series Notice or Servicing
Agreement relating to the Housing Loan which the Trust Manager determines to be
on account of principal, is insufficient to meet the full amount of the
Principal Loss. In that case, the aggregate amount of all Mortgage Shortfalls
for that Collection Period (a "Principal Charge Off") will be applied to reduce
the Stated Amounts of the Notes as described below.
Charge Offs
On any Collection Determination Date, the Excess Available Income (if any)
will be applied to meet Principal Charge Offs calculated on that Collection
Determination Date for the Collection Period ending immediately prior to that
Collection Determination Date. If the amount of Excess Available Income is less
than the amount of those Principal Charge Offs, then the balance of the
Principal Charge Offs will be:
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(1) applied to reduce the Stated Amounts of the Class B Notes by the US$
Equivalent of that balance (a "Class B Charge Off"), until the Class B Stated
Amount is zero; and
(2) to the extent that balance cannot be applied under paragraph (1) because the
Class B Stated Amount is zero, applied pro rata, based on their respective
Stated Amounts or Principal Outstanding, as applicable, to the reduction of the
RFSs (if any) (an "RFS Charge Off"), the RFS Class A Notes (if any) (an "RFS
Class A Charge Off") and the Class A Notes (a "Class A Charge Off") until the
respective Stated Amounts of the Class A Notes, the RFSs (if any) and the RFS
Class A Notes (if any) are zero and the Principal Outstanding under the Redraw
Facility until the Principal Outstanding is zero (a "Redraw Facility Charge
Off") (using US$ Equivalent amounts in the case of the Class A Notes).
With respect to any date, the "Total Carryover Charge Off" means the sum
of:
(1) all Carryover Class A Charge Offs for all Class A Notes (other than
RFS Class A Notes) as at that date;
(2) all Carryover Class B Charge Offs for all Class B Notes as at that
date;
(3) the US$ Equivalent of all Carryover RFS Charge Offs for all RFSs as at
that date; and
(4) the US$ Equivalent of all Carryover RFS Class A Charge Offs for all
RFS Class A Charge Offs as at that date.
Reimbursement of Charge Offs
On any Collection Determination Date, if there is Excess Available Income
in respect of the Collection Period ending immediately prior to that Collection
Determination Date remaining after the reimbursement of any Principal Charge
Offs for that Collection Period, then the remaining Excess Available Income will
be used to reinstate the Stated Amounts of the Notes in the following priority:
(1) first, the Carryover Redraw Charge Offs, Carryover RFS Charge Offs,
Carryover RFS Class A Charge Offs and Carryover Class A Charge Offs, pro rata
based on the amount of their respective Charge Offs (using A$ Equivalent amounts
in the case of Carryover Class A Charge Offs); and
(2) second, the A$ Equivalent of any Carryover Class B Charge Offs.
On any Collection Determination Date in relation to a Class A Note,
"Carryover Class A Charge Offs" means the aggregate of Class A Charge Offs in
relation to that Class A Note prior to that Collection Determination Date which
have not been reinstated as provided for herein. On any Collection Determination
Date in relation to a Class B Note, "Carryover Class B Charge Offs" means on any
Collection Determination Date in relation to a Class B Note, the aggregate of
Class B Charge Offs in relation to that Class B Note prior to that Collection
Determination Date which have not been reinstated as provided for herein. On any
Collection Determination Date in relation to the Redraw Facility, "Carryover
Redraw Charge Offs" means, the aggregate of Redraw Charge Offs prior to that
Collection Determination Date which have not been reinstated as provided for
herein. On any Collection Determination Date in relation to the RFSs, the
aggregate of RFS Charge Offs in relation to that RFS prior to that Collection
Determination Date which have not been reinstated as provided for herein. On any
Collection Determination Date in relation to an RFS Class A Note, "Carryover RFS
Class A Charge Offs" means the aggregate of RFS Class A Charge Offs in relation
to that RFS Class A Note prior to that Collection Determination Date which have
not been reinstated as provided for herein.
Payments into US$ Account
The Principal Paying Agent shall open and maintain, or cause to be opened
and maintained, an account (the "US$ Account") into which the Currency Swap
Provider shall deposit amounts denominated in US$.
(1) The Issuer Trustee shall direct the Currency Swap Provider to pay all
amounts denominated in US$ payable to the Issuer Trustee by the Currency Swap
Provider under the Currency Swap into the US$ Account or to the Principal Paying
Agent under the Agency Agreement on behalf of the Issuer Trustee.
(2) If any of the Issuer Trustee, the Trust Manager or the Servicer
receives any amount denominated in US$ from the Currency Swap Provider under the
Currency Swap they will promptly pay that amount to the credit of the US$
Account.
Payments out of US$ Account
The Issuer Trustee shall, or shall require that the Paying Agents shall on
its behalf, pay all amounts credited to the US$ Account or otherwise referred to
above to meet its US$ obligations under the Series Notice and the Notes, and in
accordance with the Note Trust Deed and the Agency Agreement.
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Prepayment Costs and Prepayment Benefits
(1) On each Collection Determination Date the Trust Manager will determine
total Prepayment Benefits and total Prepayment Costs for the relevant Collection
Period and will apply an amount equal to those total Prepayment Costs in payment
of those total Prepayment Benefits. If:
(i) there is a Prepayment Cost Surplus, it will be applied under
paragraph (2) below; and
(ii) there is a Prepayment Benefit Shortfall, it will be funded
under paragraph (3) below.
(2) On each Payment Date based on calculations provided to it by the Trust
Manager, the Issuer Trustee will pay to Westpac an amount equal to the
Prepayment Cost Surplus (if any) for the Collection Period on that Payment Date
to the extent received by or on behalf of the Issuer Trustee.
(3) If, on any Collection Determination Date, the Trust Manager calculates
that there is a Prepayment Benefit Shortfall, the Trust Manager must by the
close of business on that Collection Determination Date notify Westpac of the
amount of that Prepayment Benefit Shortfall. Westpac must, by 4:00 p.m. (Sydney
time) on the Remittance Date, deposit in the Collections Account for the credit
of the Issuer Trustee an amount equal to that Prepayment Benefit Shortfall. That
amount will be treated as a Gross Principal Collection.
Description of the Redraw Facility, the Redraw Funding Securities and the RFS
Class A Notes
Certain Housing Loans in the Mortgage Pool which are charged a variable
rate of interest have the benefit of a facility which allows the borrower to
draw on repayments made by the Borrower in excess of scheduled repayments on the
related Housing Loan (any such draw, a "Redraw"). Borrowers may require Westpac
to re-advance to them previously prepaid principal. In certain circumstances,
Westpac has a contractual obligation under the related loan document to provide
the Redraw if the Borrower has made prepayments on the related Housing Loan and
such Borrower is not delinquent. A Redraw will not result in the Housing Loan
being removed from the Mortgage Pool.
Westpac is entitled to be reimbursed by the Issuer Trustee for Redraws
funded by Westpac first, from Gross Principal Collections as described herein
under "--Principal Collections" herein, second, from drawings under the Redraw
Facility and third, from the proceeds of the issue of RFSs (if any), to the
extent each is available.
If Westpac is not fully reimbursed in relation to a Redraw (a "Redraw
Shortfall"), it will bear the cost of funding that Redraw until such time as it
can be reimbursed by the Issuer Trustee.
Redraw Facility
General
On or prior to the Closing Date, Westpac will enter into a Redraw Facility
Agreement (the "Redraw Facility Agreement") in its capacity as "Redraw Facility
Provider" with the Issuer Trustee. Pursuant to the terms of the Redraw Facility
Agreement, the Redraw Facility Provider shall be obligated, subject to the
limitations set forth below, to fund the amount of any Redraws not funded with
Gross Principal Collections. To the extent that Gross Principal Collections are
insufficient to fund Redraws and amounts are available under the Redraw
Facility, the Trust Manager must direct the Issuer Trustee to draw on the Redraw
Facility. Under the Redraw Facility, the Redraw Facility Provider agrees to make
advances to the Issuer Trustee up to the limit from time to time (the "Redraw
Limit") or any lesser amount as agreed between the Redraw Facility Provider, the
Issuer Trustee and the Trust Manager. At the Closing Date, the Redraw Limit is
expected to be A$_________. The Redraw Limit may not be increased without
written confirmation from the Rating Agencies that the increase would not result
in a downgrading or withdrawal of the rating for the Offered Notes then
outstanding.
The Redraw Facility Provider may revoke the Redraw Facility at any time
immediately on giving notice to the Issuer Trustee and the Trust Manager.
Drawings
In the event of a Redraw Shortfall on any Collection Determination Date,
the Trust Manager must direct the Issuer Trustee to draw down on the Redraw
Facility for an amount (a "Redraw Advance") equal to the lesser of the Redraw
Shortfall and the amount available under the Redraw Facility at that time
("Available Redraw Amount"). A drawing may only be made under the Redraw
Facility on account of a Redraw Shortfall.
A drawing may only be made by the Issuer Trustee giving to the Redraw
Facility Provider a duly completed drawdown notice signed by the Issuer Trustee;
provided, however, that each of the following conditions precedent to drawing
are met. The sum of all Redraw Advances outstanding on any particular date shall
be the "Principal Outstanding."
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Conditions Precedent to Drawing
The obligations of the Redraw Facility Provider to make available each
Redraw Advance are subject to the conditions precedent that:
(1) no event of default has occurred and is continuing under the Redraw
Facility at the date of the relevant drawdown notice and the relevant drawdown
date or will result from the provision of the Redraw Advance; and
(2) the representations and warranties by the Issuer Trustee in the Redraw
Facility are true as at the date of the relevant drawdown notice and the
relevant drawdown date as though they had been made at that date in respect of
the facts and circumstances then subsisting.
Draw Fee
With respect to any Redraw Advance made by the Redraw Facility Provider, a
fee (the "Draw Fee") will accrue on such Redraw Advance from the date of its
advance at a rate equal to the Bank Bill Rate plus a margin, calculated on the
basis of the actual number of days elapsed since the advance and a year of 365
days. The Draw Fee shall be payable on each Payment Date and on termination of
the Redraw Facility. To the extent any Draw Fee is not paid, the amount of such
unpaid Draw Fee will be capitalized and interest will accrue on any such unpaid
Draw Fee. On any date, the "Bank Bill Rate" shall be the rate calculated by
taking the rates quoted on the Reuters Screen BBSW Page at approximately 10:00
am, Sydney time, on that date for each Reference Bank so quoting (but not fewer
than five) as being the mean buying and selling rate for a bill (which for the
purpose of this definition means a bill of exchange of the type specified for
the purpose of quoting on the Reuters Screen BBSW Page) having a tenor of 90
days eliminating the highest and lowest mean rates and taking the average of the
remaining mean rates and then (if necessary) rounding the resultant figure
upwards to four decimal places. If on any date fewer than five Reference Banks
have quoted rates on the Reuters Screen BBSW Page, the rate for that date shall
be calculated as above by taking the rates otherwise quoted by five of the
Reference Banks on application by the parties for such a bill of the same tenor.
If in respect of any date the rate for that date cannot be determined in
accordance with the foregoing procedures then the rate for that date shall mean
such rate as is agreed between the Trust Manager and Westpac having regard to
comparable indices then available, provided that on the first day of any first
Interest Period as it relates to a Class of Notes the Bank Bill Rate shall be an
interpolated rate calculated with reference to the tenor of the relevant period.
Availability Fee
For so long as the Redraw Facility exists, a fee (the "Availability Fee")
shall accrue daily from the date of the Redraw Facility on the available redraw
amount, which Availability Fee is payable on each Payment Date and on
termination of the Redraw Facility. The Availability Fee is calculated on the
actual number of days elapsed and a year of 365 days.
Repayment of Redraw Advances
To the extent a Redraw Advance has been made and has not been repaid to
the Redraw Facility Provider, the amount of such unreimbursed Redraw Advance is
repayable on the following Payment Date and on termination of the Redraw
Facility, to the extent that there are funds available for such payment. It is
not an event of default if the Issuer Trustee does not have funds available to
repay the full amount of the unreimbursed Redraw Advance on the following
Payment Date.
Events of Default under the Redraw Facility
It is an event of default under the Redraw Facility (whether or not such
event is within the control of the Issuer Trustee) if:
(1) an amount is available for payment under the Redraw Facility, and the
Issuer Trustee does not pay that amount within 10 Business Days of its due date;
(2) an Insolvency Event occurs in relation to the Trust;
(3) an Insolvency Event occurs in relation to the Issuer Trustee, and a
successor trustee of the Trust is not appointed within 30 days of that
Insolvency Event;
(4) the Termination Date occurs in relation to the Trust; or
(5) an event of default (as defined in the Security Trust Deed) occurs and
any action is taken to enforce the security interest under the Security Trust
Deed over the assets of the Trust (including appointing a receiver or receiver
and manager or selling any of those assets).
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With respect to the Issuer Trustee (in its personal capacity and as
trustee of a Trust), the Trust Manager, a Servicer, or a Mortgage Insurer (each
a "relevant corporation"), an "Insolvency Event" will occur upon the happening
of any of the following events:
(1) an administrator of the relevant corporation is appointed;
(2) except for the purpose of a solvent reconstruction or amalgamation:
(i) an application or an order is made, proceedings are
commenced, a resolution is passed or proposed in a notice of
proceedings or an application to a court or other steps (other
than frivolous or vexatious applications, proceedings, notices
and steps) are taken for:
(a) the winding up, dissolution or administration of the
relevant corporation; or
(b) the relevant corporation entering into an
arrangement, compromise or composition with or
assignment for the benefit of its creditors or a class
of them; or
(ii) the relevant corporation ceases, suspends or threatens to
cease or suspend the conduct of all or substantially all of
its business or disposes of or threatens to dispose of
substantially all of its assets; or
(3) the relevant corporation is, or under applicable legislation is taken
to be, unable to pay its debts (other than as the result of a failure to pay a
debt or claim the subject of a good faith dispute) or stops or suspends or
threatens to stop or suspend payment of all or a class of its debts (except, in
the case of the Issuer Trustee where this occurs in relation to another trust of
which it is the trustee);
(4) a receiver, receiver and manager or administrator is appointed (by the
relevant corporation or by any other person) to all or substantially all of the
assets and undertaking of the relevant corporation or any part thereof (except,
in the case of the Issuer Trustee where this occurs in relation to another trust
of which it is the trustee); or
(5) anything analogous to an event referred to in paragraphs (1) to (5)
(inclusive) or having substantially similar effect, occurs with respect to the
relevant corporation.
The "Termination Date" shall be earlier to occur of:
(1) the date which is 80 years after the date of creation of the Trust;
(2) the termination of the Trust under statute or general law;
(3) full and final enforcement of the Security Trust Deed; or
(4) at any time after all Notes have been repaid in full and the Issuer
Trustee and the Trust Manager agree that no further Notes are proposed to be
issued by the Issuer Trustee in relation to the Trust, the Business Day
immediately following that date.
Consequences of Occurrence of Events of Default
At any time after an event of default (whether or not it is continuing)
the Redraw Facility Provider may do all or any of the following:
(1) by notice to the Issuer Trustee and the Trust Manager declare all
moneys actually or contingently owing under the Redraw Facility immediately due
and payable, and the Issuer Trustee must immediately pay the Principal
Outstanding together with accrued interest and fees and all such other moneys;
or
(2) by notice to the Issuer Trustee and the Trust Manager cancel the
Redraw Limit with effect from any date specified in that notice.
Termination of the Redraw Facility
The Redraw Facility will terminate on the earliest of the following:
(1) the date on which the Issuer Trustee enters into a replacement Redraw
Facility;
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(2) one month after the Offered Notes have been redeemed in full in
accordance with the Master Trust Deed and the Series Notice;
(3) following an event of default under the Redraw Facility, the date on
which the Redraw Facility Provider declares the Redraw Facility terminated;
(4) the date on which the Issuer Trustee, on giving not less than five
Business Days irrevocable notice to the Redraw Facility Provider, has cancelled
all or part of the Redraw Limit;
(5) the date which is one year after the Maturity Date of the Offered
Notes;
(6) the date on which the Redraw Limit is cancelled in full by the Redraw
Facility Provider. On such date the Redraw Facility Provider may cancel all or
part of the Redraw Limit immediately on giving notice to the Issuer Trustee and
the Trust Manager; or
(7) the date on which Westpac Securitisation Management Pty Limited
retires or is removed as Trust Manager under the Master Trust Deed.
Issuance of Redraw Funding Securities ("RFS")
If on a Collection Determination Date:
(1) Gross Principal Collections for the Collection Period preceding that
Collection Determination Date and all amounts available to be drawn under the
Redraw Facility are insufficient to fund Redraws made during that Collection
Period; or
(2) the Principal Outstanding under the Redraw Facility divided by the
Redraw Limit, expressed as a percentage, is equal to or greater than 90% of the
Redraw Limit;
then the Trust Manager may give the Issuer Trustee a direction to issue a series
of RFSs (the "RFS Series").
Condition Precedent to the Issue of RFSs
Notwithstanding the requirements referred to above, before giving a
direction for the issue of an RFS Series the Trust Manager must confirm with the
Rating Agencies that the issue will not result in the downgrading or withdrawal
of the rating of any Offered Note.
RFS Class A Notes
If, on the fifth Collection Determination Date following the date on which
an RFS Series was issued, the RFS Stated Amount for all RFSs in that RFS Series
has not been reduced to zero, each of those outstanding RFSs will convert to an
"RFS Class A Note." The converted RFS will:
(1) have an Initial Invested Amount equal to the RFS Initial Invested
Amount of that Note when it was an RFS;
(2) have an Invested Amount equal to the RFS Invested Amount of that Note
when it was an RFS at the date of conversion;
(3) have a Stated Amount equal to the RFS Stated Amount of that Note when
it was an RFS at the date of conversion;
(4) be denominated in Australian dollars;
(5) receive all payments of principal and interest denominated in
Australian dollars;
(6) have an Interest Rate calculated by reference to the Bank Bill Rate,
not "USD-LIBOR-BBA";
(7) be a registered instrument, not bearer instruments; and
(8) have a Margin equal to the margin under the Class A Notes.
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Form of the RFSs and the RFS Class A Notes
The RFSs and the RFS Class A Notes will be registered instruments
denominated in Australian dollars which will be issued in Australia to
Australian resident investors only. The total issue amount of RFS Class A Notes
(if any) will be determined by the amount of RFSs (if any) issued during the
term of the Offered Notes.
Interest Payable on the RFSs and the RFS Class A Notes
Commencing on the issue date of an RFS or the conversion date of an RFS
Class A Note, Interest is payable monthly in arrears on each RFS and RFS Class A
Note to the person whose name is registered under the Master Trust Deed and the
Series Notice as the holder of the RFS or RFS Class A Note, until the Maturity
Date or until the Stated Amount of the RFS or RFS Class A Note is reduced to
zero (whichever is earlier). "Interest", with respect to an RFS or an RFS Class
A Note, shall be equal to the interest accrued on the Invested Amount for such
RFS or RFS Class A Note at a rate equal to the Bank Bill Rate on the first day
of that Interest Period plus the margin for the RFS or RFS Class A Note, during
the period from the subsequent Payment Date to the day preceding the Payment
Date, calculated on the actual number of days in the related Interest Period
over 365. With respect to any RFS and Payment Date, the margin shall be a per
annum rate specified by the Trust Manager to the Issuer Trustee as applying to
that RFS on its issue date as inscribed in the register for that RFS. With
respect to any RFS Class A Note and a Payment Date, the related margin will be
the Margin applicable to Class A Notes for the same Interest Period (as defined
in the Currency Swap).
Payments to the holders of RFSs and the holders of RFS Class A Notes will
be in Australian dollars. Payments of Interest on the RFSs and the RFS Class A
Notes are pari passu with respect to Interest payable on the Class A Notes and
rank ahead of Interest payable on the Class B Notes.
Subordination of Class B Notes
The Class A Noteholders, the holders of RFSs (if any), the holders of RFS
Class A Notes (if any) and the Redraw Facility Provider will have the benefit of
the subordination of the Class B Notes. That is, to the extent that there is a
loss on a Housing Loan which is not satisfied by a claim (or deemed claim) under
a Mortgage Insurance Policy, by amounts recoverable by the Issuer Trustee from
an Approved Seller or the Servicer, or by the application of Excess Available
Income, the amount of that loss will be allocated to the Class B Notes, reducing
the Stated Amount of the Class B Notes until their Stated Amount is zero. The
amount of any remaining loss will then be allocated pari passu, between the
Class A Notes, the RFSs (if any), the RFS Class A Notes (if any) and the Redraw
Facility, reducing the Stated Amount of the Class A Notes, the RFSs (if any) and
the RFS Class A Notes (if any) until their Stated Amount is zero and reducing
the Principal Outstanding under the Redraw Facility until it is zero. For
further details see "--Application of Principal Charge Offs" above. Payments of
principal on the RFSs will be made prior to payments of principal to the Offered
Noteholders and the holders of the RFS Class A Notes.
Clean-up Offer
If at any time the aggregate Housing Loan Principal, expressed as a
percentage of the aggregate Housing Loan Principal as of the Cut-Off Date, is
less than 10%, then, if instructed by the Trust Manager, the Seller Trustee may
repurchase, on the following Payment Date, the equitable title to the Housing
Loans held by the Trust for an amount equal to the Unpaid Balance (in the case
of performing Housing Loans) or the Fair Market Value (in the case of
non-performing Housing Loans). The proceeds of sale will be applied by the
Issuer Trustee to repay moneys owing to Noteholders at that time in accordance
with the priorities for applying payments of Interest and principal between the
Classes of Notes.
Redemption of the Notes
If an event of default occurs under the Security Trust Deed while the
Notes are outstanding, the Security Trustee may (subject, in certain
circumstances, to the prior written consent of the Note Trustee in accordance
with the provisions of the Security Trust Deed), (and will if so directed by the
Note Trustee alone where it is the only Voting Mortgagee, or, otherwise by a
resolution of 75% of the Voting Mortgagees) enforce the security created by the
Security Trust Deed. That enforcement can include the sale of some or all of the
Housing Loans. There is no guarantee that the Security Trustee will be able to
sell the Housing Loans for their then Unpaid Balance. Accordingly, the Security
Trustee may not be able to realize the full value of the Housing Loans and this
may have an impact upon the Issuer Trustee's ability to repay all amounts
outstanding in relation to the Notes.
Any proceeds from the enforcement of the security will be applied in
accordance with the order of priority of payments as set out in the Security
Trust Deed. See "SECURITY FOR THE NOTES--Priorities Under the Security Trust
Deed."
If the Trust terminates while Notes are outstanding, Westpac has a right
of first refusal to acquire the Housing Loans. The price to be paid by Westpac
for performing and non-performing Housing Loans must not be less than their Fair
Market Value. In the case of performing loans, the Issuer Trustee is required to
offer to sell them to Westpac under its right of
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first refusal for their then Unpaid Balance. Where the Fair Market Value of a
Housing Loan is less than its then Unpaid Balance, its acquisition by Westpac
will be subject to prior approval by an Extraordinary Resolution of Noteholders.
This is because in such circumstances there may be a shortfall in the amount
available to the Issuer Trustee to fully repay all amounts outstanding in
relation to the Notes. The Servicer will determine whether a Housing Loan is
performing or non-performing.
Termination of the Trust
Termination Events
The Trust will terminate on any date which is a Termination Date.
Realization Upon Trust Assets
On the termination of the Trust, subject to Westpac's right of first
refusal outlined below, the Issuer Trustee must sell and realize the assets of
the Trust within 180 days. During the 180 day period, the Housing Loans, if
performing, must not be sold for less than their Unpaid Balance and in the case
of non-performing Housing Loans, for less than their Fair Market Value. The
Issuer Trustee may not sell any performing Housing Loan, within the 180 day
period, for less than its Fair Market Value without the consent of an
Extraordinary Resolution of the relevant Noteholders. The Servicer will
determine whether a Housing Loan is performing or non-performing.
Approved Seller's Right of First Refusal
As soon as practical after the Termination Date of the Trust, the Trust
Manager will direct the Issuer Trustee to offer (by written notice to Westpac)
irrevocably to extinguish in favor of Westpac, or if the Issuer Trustee has
perfected its title, to equitably assign to Westpac, its entire right, title and
interest in and to the Housing Loans, and related Mortgages (if any) for their
Unpaid Balance (for performing Housing Loans) and their Fair Market Value (for
non-performing Housing Loans).
If the Fair Market Value of a Housing Loan is less than its Unpaid
Balance, the sale requires the approval of an Extraordinary Resolution of
Noteholders.
The Issuer Trustee is not entitled to sell any Housing Loans unless
Westpac has failed to accept the offer within 180 days after the occurrence of
the Termination Date by paying to the Issuer Trustee, within 180 days, the
purchase price.
Distribution
After deducting expenses, the Trust Manager shall direct the Issuer Trustee to
distribute the proceeds of realization of the assets of the Trust in accordance
with the cashflow allocation methodology set out above, and in accordance with
any directions given to it by the Trust Manager.
If all Notes relating to the Trust have been fully redeemed and the
Trust's creditors paid in full, the Issuer Trustee may distribute all or part of
the Trust Assets to the relevant Beneficiary.
Trust Accounts
The Trustee will establish and maintain under the Master Trust Deed bank
accounts with an Approved Bank, consisting of the "Collection Account" and the
US$ Account (collectively, the "Trust Accounts"). Each bank account shall be
opened by the Trustee in its name and in its capacity as trustee of the Trust.
No bank account shall be used for any purpose other than for the Trust and in
accordance with the Master Trust Deed. An "Approved Bank" means: (a) a Bank
which has a short term rating of at least A-1+ from Standard & Poor's and P-1
from Moody's; or (b) any bank or financial institution which is specified to be
an Approved Bank in the Series Notice, but means Westpac for so long as it has a
short term rating of A-1 or better from Standard & Poor's.
The Trust Manager shall have the discretion and the duty to recommend or
to propose in writing to the Trustee, the manner in which any moneys forming
part of the Trust shall be invested in Authorized Investments and what
purchases, sales, transfers, exchanges, collections, realizations or alterations
of Trust Assets shall be effected and when and how the same should be effected.
It is the role of the Trustee to give effect to all such recommendations or
proposals of the Trust Manager. Each investment of moneys on deposit in the
Trust Accounts shall be in Authorized Investments that will mature not later
than the Business Day preceding the applicable monthly Payment Date. "Authorized
Investments" include, among other investments, (a) Housing Loans, Mortgages and
other related securities, (b) cash, (c) bonds, debentures, stock or treasury
bills of the Commonwealth of Australia or the Government of any State or
Territory of the Commonwealth; (d) debentures or stock of any public statutory
body constituted under the law of the Commonwealth of Australia or of any State
of the Commonwealth where the repayment of the principal is secured and the
interest payable thereon is guaranteed
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by the Commonwealth or any State or Territory of the Commonwealth; (e) notes of
other securities of the Commonwealth of Australia or the Government of any State
or Territory of the Commonwealth; (f) (i) deposits with, or the acquisition of
certificates of deposit (whether negotiable, convertible or otherwise), issued
by, a bank which carries on business in Victoria and New South Wales; (ii) bills
of exchange which at the time of acquisition have a remaining term to maturity
of not more than 200 days, accepted or endorsed by a bank which carries on
business in Victoria and New South Wales, which, in each case, has either: (A)
the highest short-term rating available to be given by the Rating Agencies; or
(B) if such investment has a maturity of 30 days or less and does not exceed 20%
of the total Invested Amount of all relevant Notes on the date of the
investment, a short-term rating of "A-1"/"P-1" by the Rating Agencies; and (g)
any other assets of a class of assets that are both: (i) prescribed for the
purposes of sub-paragraph (iv) of the definition of a "pool of mortgages" in
section 84FA(1) of the Stamp Duties Act, 1920 of New South Wales, or are
otherwise included within that definition of "pool of mortgages"; and (ii)
declared by order of the Governor in Council of Victoria and published in the
Victorian Government Gazette to be assets for purposes of Subdivision 17A of the
Stamps Act, 1958 of Victoria or are otherwise included within sub-paragraph
(b)(ii) of the definition of "pool of mortgages" in section 137NA of that Act.
General
Collections and other amounts credited to the Collection Account will be
allocated by the Trust Manager, and paid by the Trustee as directed by the Trust
Manager, as set forth herein.
Determination Date - Calculations and Reports to Noteholders
On each Determination Date, the Trust Manager will, in respect of the
Collection Period ending before that Determination Date, calculate or otherwise
ascertain:
(i) the Available Income;
(ii) the Total Available Funds;
(iii) in the case of the first Determination Date, the Accrued
Interest Adjustment payable to each Approved Seller;
(iv) the aggregate of all Redraws made during that Collection Period;
(v) the Redraw Shortfall;
(vi) the Trust Expenses;
(vii) the Subordinated Percentage;
(viii) the Initial Subordinated Percentage;
(ix) the Total Payments;
(x) the Payment Shortfall (if any);
(xi) the Principal Draw (if any) for that Collection Period, together
with all Principal Draws made before the start of that
Collection Period and not repaid;
(xii) the Gross Principal Collections;
(xiii) the Principal Collections;
(xiv) the Excess Available Income (if any);
(xv) the Excess Collections Distribution (if any);
(xvi) the Liquidity Shortfall (if any);
(xvii) the Remaining Liquidity Shortfall (if any);
(xviii) the aggregate of all Liquidation Losses (if any);
(xix) the Principal Charge Off (if any);
(xx) the Class A Percentage and the Class B Percentage;
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(xxi) the Class A Bond Factor, the Class B Bond Factor, the RFS Class
A Bond Factor and the RFS Bond Factor for each RFS Series;
(xxii) the Class A Charge Offs, the Class B Charge Offs, the RFS Class
A Charge Offs, the RFS Charge Offs and the Redraw Charge Offs
(if any);
(xxiii) all Carryover Charge Offs (if any);
(xxiv) the Purchase Price adjustment;
(xxv) if required, the Threshold Rate at that Collection Determination
Date;
(xxvi) total Prepayment Costs (if any);
(xxvii) total Prepayment Benefits (if any);
(xxviii) the Prepayment Cost Surplus (if any);
(xxix) the Prepayment Benefit Shortfall (if any);
(xxx) the Substitution Net Transfer Amount (if any);
(xxxi) the Quarterly Percentage;
(xxxii) each US$ Equivalent amount, and each A$ Equivalent amount,
required to be calculated under the Series Notice;
(xxxiii) LIBOR, as at the first day of the related Interest Period
ending immediately after that Collection Determination Date as
calculated by the Agent Bank; and
(xxxiv) all other calculations necessary for the Trustee to make
allocations and distributions to Noteholders.
The Notes will be registered in the name of a nominee of DTC and will not
be registered in the names of the beneficial owners or their nominees. As a
result, unless and until Definitive Notes are issued in the limited
circumstances described under "--Definitive Notes" below, beneficial owners will
not be recognized by the Trustee as Noteholders, as that term is used in the
Master Trust Deed. Hence, until such time, beneficial owners will receive
reports and other information provided for under the Transaction Documents only
if, when and to the extent provided by DTC and its participating organizations.
Book-Entry Registration
Each Class of Notes will be represented by one or more book-entry Notes
(the "Book-Entry Notes"). Persons acquiring beneficial ownership interests in
the Notes ("Note Owners") will hold their Notes through the Depository Trust
Company ("DTC") in the United States, or Cedel or Euroclear (in Europe) if they
are participants of such systems, or indirectly through organizations which are
participants in such systems. The Book-Entry Notes will be issued in one or more
certificates which equal the aggregate principal balance of each Class of Notes
and will initially be registered in the name of Cede & Co., the nominee of DTC.
Cedel and Euroclear will hold omnibus positions on behalf of their participants
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective depositaries which in turn will hold such positions in
customers' securities accounts in the depositaries' names on the books of DTC.
Citibank will act as depositary for Cedel, and Chase will act as depositary for
Euroclear (in such capacities, individually, the "Relevant Depositary" and
collectively, the "European Depositaries"). Investors may hold such beneficial
interests in the Book-Entry Notes in minimum denominations of US$100,000. Except
as described below, no person acquiring a Book-Entry Note (each, a "beneficial
owner") will be entitled to receive a physical certificate representing such
Note (a "Definitive Note"). Unless and until Definitive Notes are issued, it is
anticipated that the only "Noteholder" of each Class of Notes will be Cede &
Co., as nominee of DTC. Note Owners will not be Noteholders as that term is used
in the Master Trust Deed. Note Owners are only permitted to exercise their
rights indirectly through Participants and DTC.
The beneficial owner's ownership of a Book-Entry Note will be recorded on
the records of the brokerage firm, bank, thrift institution or other financial
intermediary (each, a "Financial Intermediary") that maintains the beneficial
owner's account for such purpose. In turn, the Financial Intermediary's
ownership of such Book-Entry Note will be recorded on the records of DTC (or of
a participating firm that acts as agent for the Financial Intermediary, whose
interest will in turn be recorded on the records of DTC, if the beneficial
owner's Financial Intermediary is not a DTC participant and on the records of
Cedel or Euroclear, as appropriate).
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Note Owners will receive all distributions of principal of, and interest
on, each Class of Notes from the Trustee through DTC and DTC participants. While
the Notes are outstanding (except under the circumstances described below),
under the rules, regulations and procedures creating and affecting DTC and its
operations (the "Rules"), DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Notes and is required
to receive and transmit distributions of principal of, and interest on, the
Notes. Participants and indirect participants with whom Note Owners have
accounts with respect to Notes are similarly required to make book-entry
transfers and receive and transmit such distributions on behalf of their
respective Note Owners. Accordingly, although Note Owners will not possess
certificates, the Rules provide a mechanism by which Note Owners will receive
distributions and will be able to transfer their interest.
Note Owners will not receive or be entitled to receive certificates
representing their respective interests in the Offered Notes, except under the
limited circumstances described below. Unless and until Definitive Notes are
issued, Note Owners who are not Participants may transfer ownership of Notes
only through Participants and indirect participants by instructing such
Participants and indirect participants to transfer Notes, by book-entry
transfer, through DTC for the account of the purchasers of such Offered Notes,
which account is maintained with their respective Participants. Under the Rules
and in accordance with DTC's normal procedures, transfers of ownership of Notes
will be executed through DTC and the accounts of the respective Participants at
DTC will be debited and credited. Similarly, the Participants and indirect
participants will make debits or credits, as the case may be, on their records
on behalf of the selling and purchasing Note Owners.
Because of time zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the Business Day following
the DTC settlement date. Such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such Business Day. Cash received in Cedel or Euroclear as
a result of sales of securities by or through a Cedel Participant (as defined
below) or Euroclear Participant (as defined below) to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel or Euroclear cash account only as of the Business Day following
settlement in DTC. For information with respect to tax documentation procedures
relating to the Notes, [see "UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES--Federal Income Tax Consequences to Foreign Investors" and
"--Backup Withholding" herein and "GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES--Certain U.S. Federal Income Tax Documentation
Requirements" in Annex I hereto.]
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the Relevant Depositary; however, such cross market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver instructions
directly to the European Depositaries.
DTC, which is a New York-chartered limited purpose trust company, performs
services for its participants, some of which (and/or their representatives) own
DTC. In accordance with its normal procedures, DTC is expected to record the
positions held by each DTC participant in the Book-Entry Notes, whether held for
its own account or as a nominee for another person. In general, beneficial
ownership of Book-Entry Notes will be subject to the rules, regulations and
procedures governing DTC and DTC participants as in effect from time to time.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally-traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
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Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 32 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions on the Book-Entry Notes will be made on each Payment Date by
the Note Trustee to DTC. DTC will be responsible for crediting the amount of
such payments to the accounts of the applicable DTC participants in accordance
with DTC's normal procedures. Each DTC participant will be responsible for
disbursing such payments to the beneficial owners of the Book-Entry Notes that
it represents and to each Financial Intermediary for which it acts as agent.
Each such Financial Intermediary will be responsible for disbursing funds to the
beneficial owners of the Book-Entry Notes that it represents.
Under a book-entry format, beneficial owners of the Book-Entry Notes may
experience some delay in their receipt of payments, since such payments will be
forwarded by the Trustee to Cede & Co. Distributions with respect to Notes held
through Cedel or Euroclear will be credited to the cash accounts of Cedel
Participants or Euroclear Participants in accordance with the relevant system's
rules and procedures, to the extent received by the Relevant Depositary. Such
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. [See "UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES--Federal Income Tax Consequences to Foreign Investors" and
"--Backup Withholding" herein.] Because DTC can only act on behalf of Financial
Intermediaries, the ability of a beneficial owner to pledge Book-Entry Notes to
persons or entities that do not participate in the Depository system, or
otherwise take actions in respect of such Book-Entry Notes, may be limited due
to the lack of physical certificates for such Book-Entry Notes. In addition,
issuance of the Book-Entry Notes in book-entry form may reduce the liquidity of
such Notes in the secondary market since certain potential investors may be
unwilling to purchase Notes for which they cannot obtain physical certificates.
Monthly and annual reports on the Trust will be provided to Cede & Co., as
nominee of DTC, and may be made available by Cede & Co. to beneficial owners
upon request, in accordance with the rules, regulations and procedures creating
and affecting the Depository, and to the Financial Intermediaries to whose DTC
accounts the Book-Entry Notes of such beneficial owners are credited.
DTC has advised the Note Trustee that, unless and until Definitive Notes
are issued, DTC will take any action permitted to be taken by the holders of the
Book-Entry Notes under the Master Trust Deed only at the direction of one or
more Financial Intermediaries to whose DTC accounts the Book-Entry Notes are
credited, to the extent that such actions are taken on behalf of Financial
Intermediaries whose holdings include such Book-Entry Notes. Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a Noteholder under the Transaction Documents on behalf of a Cedel
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to the ability of the Relevant Depositary to effect
such actions on its behalf through DTC. DTC may take actions, at the direction
of the related Participants, with respect to some Notes which conflict with
actions taken with respect to other Notes.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Notes among participants of DTC, Cedel and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.
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Neither the Issuer Trustee, the Servicer nor the Trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Book-Entry Notes held by Cede &
Co., as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Definitive Notes
The Notes of each Class will be issued in registered, certificated form to
the Note Owners of such Class or their nominees ("Definitive Notes"), rather
than to the Depository or its nominee, only if (i) the Depository advises the
Note Trustee in writing that it is no longer willing or able to discharge
properly its responsibilities as Depository with respect to the Notes of such
Class, and the Note Trustee is unable to locate a qualified successor, or (ii)
an Event of Default has occurred, and Note Owners representing not less than 75%
of the Invested Amount of such Class advise the Note Trustee and the Depository
through Participants in writing that the continuation of a book-entry system
through the Depository is no longer in the best interest of the Note Owners of
such Class.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Notes [and the Note
Trustee will be required to notify all beneficial owners of the occurrence of
such event.] Upon surrender by the Depository of the definitive certificate
representing the Notes of the affected Class and instructions for registration,
the Trustee will issue the Notes of such Class as Definitive Notes, and
thereafter the Trustee will recognize the Note Owners of such Definitive Notes
as Noteholders under the Master Trust Deed, Series Notice and Note Trust Deed.
Distributions of principal and interest on the Notes will be made by the
Trustee directly to Noteholders in accordance with the procedures set forth
herein and in the Master Trust Deed, Series Notice and the Note Trust Deed.
Interest payments and any principal payments on each Payment Date will be made
to Noteholders in whose names the Definitive Notes were registered at the close
of business on the related Record Date. Distributions will be made by check
mailed to the address of such Noteholder as it appears on the register
maintained by the Trustee. The final payment, on any Note, however, will be made
only upon presentation and surrender of such Note at the office or agency
specified in the notice of final distribution to Noteholders. The Trustee will
provide such notice to registered Noteholders mailed not later than the fifth
day of the month of such final distributions.
Definitive Notes will be transferable and exchangeable at the offices of
the transfer agent and registrar, which initially will be the Trustee (in such
capacity, the "Transfer Agent and Registrar"). No service charge will be imposed
for any registration of transfer or exchange, but the Transfer Agent and
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith. The Transfer Agent and
Registrar will not be required to register the transfer or exchange of
Definitive Notes for the period from the Record Date preceding the due date for
any payment to the Payment Date with respect to such Definitive Notes.
Modification of Master Trust Deed Without Noteholder Consent
The Issuer Trustee, the Trust Manager and the Servicer may by way of
supplemental deed alter, add to or modify the Master Trust Deed or a Series
Notice so long as such alteration, addition or modification was effected upon
consent of the Noteholders or Beneficiaries (see "--Modification of Master Trust
Deed with Noteholder Consent" below) or is:
(a) to correct a manifest error or ambiguity or is of a formal,
technical or administrative nature only;
(b) necessary to comply with the provisions of any statute or regulation
or with the requirements of any Australian governmental agency;
(c) appropriate or expedient as a consequence of an amendment to any
statute or regulation or altered requirements of any Government
Agency (including, without limitation, an alteration, addition or
modification which is appropriate or expedient as a consequence of
the enactment of a statute or regulation or an amendment to any
statute or regulation or ruling by the Australian Commissioner or
Deputy Commissioner of Taxation or any governmental announcement or
statement, in any case which has or may have the effect of altering
the manner or basis of taxation of trusts generally or of trusts
similar to any of the Trusts); or
(d) in the opinion of the Issuer Trustee desirable to enable the
provisions of the Master Trust Deed to be more conveniently,
advantageously, profitably or economically administered or is
otherwise desirable for any reason (including to give effect, in the
Trust Manager's reasonable opinion, to an allocation of expenses).
Modification of Master Trust Deed With Noteholder Consent
Where in the reasonable opinion of the Issuer Trustee a proposed
alteration, addition or modification to the Master Trust Deed (except an
alteration, addition or modification referred to in "--Modification of Master
Trust Deed Without
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Noteholder Consent" above) is prejudicial or likely to be prejudicial to the
interests of the Noteholders or a Class of Noteholders or the Beneficiaries such
alteration, addition or modification may only be effected by the Issuer Trustee
with the prior consent of the Noteholders or a Class of Noteholders (as the case
may be) under an Extraordinary Resolution of the Noteholders or a Class of
Noteholders (as the case may be) in the Trust or with the prior written consent
of the Beneficiaries (as the case may be).
Meetings of Voting Mortgagees and Meetings of Class A Noteholders; Modification;
Consents; Waiver
The Security Trust Deed contains provisions for convening meetings of the
Voting Mortgagees to, inter alia, enable the Voting Mortgagees to direct or
consent to the Security Trustee taking or not taking certain actions under the
Security Trust Deed, for example to enable the Voting Mortgagees to direct the
Security Trustee to enforce the Security Trust Deed.
For so long as the amounts outstanding under the Offered Notes are 75% or
more of all amounts secured by the Security Trust Deed, the Note Trustee may
direct the Security Trustee to do any act or thing which the Security Trustee is
required to do, or may only do, at the direction of an Extraordinary Resolution
of the Voting Mortgagees.
Neither the Security Trustee nor the Trust Manager may call a meeting of
Voting Mortgagees without the Note Trustee's consent, if the amounts outstanding
under the Notes are 75% or more of all amounts secured by the Security Trust
Deed.
The Note Trust Deed contains provisions for convening meetings of Class A
Noteholders to consider any matter affecting their interests, including the
directing, of the Note Trustee to direct the Security Trustee to enforce the
security under the Security Trust Deed, or the sanctioning by Extraordinary
Resolution of the Class A Noteholders of a modification of the Class A Notes or
the provisions of any of the Relevant Documents, provided that no modification
of certain terms including, inter alia, the date of maturity of the Class A
Notes, or a modification which would have the effect of postponing any day for
payment of interest in respect of any Class A Notes, reducing or cancelling the
amount of principal payable in respect of any Class A Notes or the rate of
interest applicable to any Class A Notes or altering the majority required to
pass an Extraordinary Resolution or altering the currency of payment of any
Class A Notes or an alteration of the date or priority of redemption of the
Class A Notes (any such modification being referred to below as a "Basic Terms
Modification") shall be effective except that, if the Note Trustee is of the
opinion that such a Basic Terms Modification is being proposed by the Issuer
Trustee as a result of, or in order to avoid, an Event of Default, such Basic
Terms Modification may be sanctioned by Extraordinary Resolution of the Class A
Noteholders as described below. The quorum at any meeting of Class A Noteholders
for passing an Extraordinary Resolution shall be two or more persons holding or
representing over 50% of the aggregate of the Class A Notes then outstanding or,
at any adjourned meeting, two or more persons being or representing Class A
Noteholders whatever the aggregate Investment Amount of the Class A Notes so
held or represented except that, at any meeting the business of which includes
the sanctioning of a Basic Terms Modification, the necessary quorum for passing
an Extraordinary Resolution shall be two or more persons holding or representing
75% or at any adjourned such meeting 25%, or more of the aggregate Investment
Amount of the Class A Notes (irrespective of class) then outstanding. The Note
Trust Deed contains provisions limiting the powers of the Class B Noteholders,
inter alia, to request or direct the Note Trustee to take any action or to pass
an effective Extraordinary Resolution according to the effect thereof on the
interests of the Class A Noteholders. Except in certain circumstances, the Note
Trust Deed imposes no such limitations on the powers of the Class A Noteholders,
the exercise of which will be binding on the Class B Noteholders, irrespective
of the effect on their interests. An Extraordinary Resolution passed at any
meeting of Class A Noteholders shall be binding on all Class A Noteholders,
whether or not they are present at the meeting. The majority required for an
Extraordinary Resolution shall be 75% of the votes cast in respect of that
Extraordinary Resolution.
Pursuant to the terms of the Note Trust Deed, the Note Trustee may agree,
without the consent of the Class A Noteholders, among other things, (i) to any
modification (except a Basic Terms Modification) of, or to the waiver or
authorization of any breach or proposed breach of the Class A Notes (including
the Conditions), or any of the Transaction Documents which is not, in the
opinion of the Note Trustee materially prejudicial to the interests of the Class
A Noteholders or (ii) to any modification of the Class A Notes (including the
Conditions, or any of the Transaction Documents which, in the Note Trustee's
opinion, is to correct a manifest error or is of a formal, minor or technical
nature. The Note Trustee may also, without the consent of the Class A
Noteholders, determine that any Event of Default or any condition, event or act
which with the giving of notice and/or lapse of time and/or the issue of a
certificate would constitute an Event of Default shall not, or shall not subject
to specified conditions, be treated as such. Any such modification, waiver,
authorization or determination shall be binding on the Class A Noteholders and,
unless the Note Trustee agrees otherwise, any such modification shall be
notified to the Class A Noteholders as specified in the Transaction Documents as
soon as practicable thereafter.
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Meetings of Voting Mortgagees and Meetings of Class B Noteholders;
Modifications; Consents; Waiver
The Security Trust Deed contains provisions for convening meetings of the
Voting Mortgagees to, inter alia, enable the Voting Mortgagees to direct or
consent to the Security Trustee taking or not taking certain actions under the
Security Trust Deed, for example to enable the Voting Mortgagees to direct the
Security Trustee to enforce the Security Trust Deed.
For so long as the amounts outstanding under the Notes are 75% or more of
all amounts secured by the Security Trust Deed, the Note Trustee may direct the
Security Trustee to do any act or thing which the Security Trustee is required
to do, or may only do, at the direction of an Extraordinary Resolution of the
Voting Mortgagees.
Neither the Security Trustee nor the Trust Manager may call a meeting of
Voting Mortgagees without the Note Trustee's consent, if the amounts outstanding
under the Notes are 75% or more of all amounts secured by the Security Trust
Deed.
The Note Trust Deed contains provisions for convening meetings of Class B
Noteholders to consider any matter affecting their interests, including the
directing of the Note Trustee, to direct the Security Trustee to enforce the
security under the Security Trust Deed, or the sanctioning by Extraordinary
Resolution of the Class B Noteholders of a modification of the Class B Notes
(including the Conditions with respect to the Class B Notes) or the provisions
of any of the Transaction Documents, provided that no modification of certain
terms including, inter alia, the date of maturity of the Class B Notes, or a
modification which would have the effect of postponing any day for payment of
interest in respect of any Class B Notes, reducing or cancelling the amount of
principal payable in respect of any Class B Notes or the rate of interest
applicable to any Class B Notes or altering the majority required to pass an
Extraordinary Resolution or altering the currency of payment of any Class B
Notes or an alteration of the date or priority of redemption of the Class B
Notes (any such modification being referred to below as a "Basic Terms
Modification") shall be effective except that, if the Note Trustee is of the
opinion that such a Basic Terms Modification is being proposed by the Issuer
Trustee as a result of, or in order to avoid, an Event of Default, such Basic
Terms Modification may be sanctioned by Extraordinary Resolution of the Class B
Noteholders as described below. The quorum at any meeting of Class B Noteholders
for passing an Extraordinary Resolution shall be two or more persons holding or
representing over 50% of the aggregate of the Class B Notes then outstanding or,
at any adjourned meeting, two or more persons being or representing Class B
Noteholders whatever the aggregate Invested Amount of the Class A Notes so held
or represented except that, at any meeting the business of which includes the
sanctioning of a Basic Terms Modification, the necessary quorum for passing an
Extraordinary Resolution shall be two or more persons holding or representing
75% or at any adjourned such meeting 25%, or more of the aggregate Invested
Amount of the Class B Notes (irrespective of class) then outstanding. The Note
Trust Deed contains provisions limiting the powers of the Class B Noteholders,
inter alia, to request or direct the Note Trustee to take any action or to pass
an effective Extraordinary Resolution according to the effect thereof on the
interests of the Class B Noteholders. Except in certain circumstances, the Note
Trust Deed imposes no such limitations on the powers of the Class B Noteholders,
the exercise of which will be binding on the Class B Noteholders, irrespective
of the effect on their interests. An Extraordinary Resolution passed at any
meeting of Class B Noteholders shall be binding on all Class B Noteholders,
whether or not they are present at the meeting. The majority required for an
Extraordinary Resolution shall be 75% of the votes cast in respect of that
Extraordinary Resolution.
Pursuant to the terms of the Note Trust Deed, the Note Trustee may agree,
without the consent of the Class B Noteholders; among other things (i) to any
modification (except a Basic Terms Modification) of; or to the waiver or
authorization of any breach or proposed breach of the Class B Notes (including
the Conditions with respect to the Class B Notes), or any of the Transaction
Documents which is not, in the opinion of the Note Trustee materially
prejudicial to the interests of the Class B Noteholders or (ii) to any
modification of the Class B Notes (including the Conditions with respect to the
Class B Notes, or any of the Transaction Documents which, in the Note Trustee's
opinion, is to correct a manifest error or is of a formal, minor or technical
nature. The Note Trustee may also, without the consent of the Class B
Noteholders, determine that any Event of Default or any condition, event or act
which with the giving of notice and/or lapse of time and/or the issue of a
certificate would constitute an Event of Default shall not, or shall not subject
to specified conditions, be treated as such. Any such modification, waiver,
authorization or determination shall be binding on the Class B Noteholders and,
unless the Note Trustee agrees otherwise, any such modification shall be
notified to the Class B Noteholders as specified in the Transaction Documents as
soon as practicable thereafter.
Events of Default; Rights Upon Event of Default
An "Event of Default" under the Security Trust Deed will occur if:
(1) the Issuer Trustee fails to pay any Interest within 10 Business Days
of the Payment Date on which the Interest was due to be paid to
Class A Noteholders, Class B Noteholders, holders of RFSs or holders
of RFS Class A Notes;
(2) the Issuer Trustee fails to pay any other amount owing to Class A
Noteholders, Class B Noteholders, holders of RFSs, holders of RFS
Class A Notes or any other Mortgagee (as defined in the Security
Trust Deed) within
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10 Business Days of the due date for payment (or within any
applicable grace period agreed with the relevant Mortgagee or where
the Mortgagee is a Noteholder with the Note Trustee);
(3) the Issuer Trustee fails to perform or observe any other provisions
(other than the obligations referred to in paragraphs (1) and (2))
of a Transaction Document (other than the Underwriting Agreement or
the Subscription Agreement) where such failure will have a material
and adverse effect on the amount of any payment to be made to any
Noteholder or will materially and adversely affect the timing of
such payment, and that default (if in the opinion of the Security
Trustee capable of remedy (that opinion, being subject in certain
circumstances to the approval of the Note Trustee in accordance with
the provisions of the Security Trust Deed) is not remedied within 30
days (or such longer period as may be specified in the notice, that
longer period having been approved by the Note Trustee, for so long
as amounts outstanding under the Notes are the Majority Secured
Amounts) after written notice from the Security Trustee requiring
the failure to be remedied;
(4) an Insolvency Event occurs relating to the Issuer Trustee (in its
personal capacity or as trustee of the Trust);
(5) the charge created by the Security Trust Deed is not or ceases to be
a first ranking charge over the Trust Assets, or any other
obligation of the Issuer Trustee (other than as mandatorily
preferred by law) ranks ahead of or pari passu with any of the
moneys secured by the Security Trust Deed;
(6) any security interest over the Trust Assets is enforced;
(7) all or any part of any Transaction Document, other than the
Underwriting Agreement, the Redraw Facility or the Swap Agreements,
is terminated or is or becomes void, illegal, invalid, unenforceable
or of limited force and effect, or a party becomes entitled to
terminate, rescind or avoid all or part of any Transaction Document
(other than the Underwriting Agreement, the Redraw Facility or the
Swap Agreements); or
(8) without the prior consent of the Security Trustee (that consent
being subject in certain circumstances to the prior written consent
of the Note Trustee in accordance with the provisions of the
Security Trust Deed), (i) the Trust is wound up, or the Issuer
Trustee is required to wind up the Trust under the Master Trust Deed
or applicable law, or the winding up of the Trust commences; (ii)
the Trust is held or is conceded by the Issuer Trustee not to have
been constituted or to have been imperfectly constituted; or (iii)
unless another trustee is appointed to the Trust under the Relevant
Documents, the Issuer Trustee ceases to be authorized under the
Trust to hold the property of the Trust in its name and to perform
its obligations under the Relevant Documents.
Enforcement
The Security Trustee must promptly convene a meeting of the Voting
Mortgagees after it receives notice, or has actual knowledge of, an Event of
Default. The Security Trustee may waive (such waiver, being subject to the prior
written consent of the Note Trustee in accordance with the provisions of the
Security Trust Deed), an Event of Default before it is required to convene a
meeting of Mortgagees if that Event of Default is not (in the opinion of the
Security Trustee) materially prejudicial to the Mortgagees' interests.
At the meeting, the Voting Mortgagees must vote by Extraordinary
Resolution (being a resolution passed at a duly convened meeting by a majority
consisting of not less than 75% of the votes capable of being cast by Voting
Mortgagees present in person or by proxy or by written resolution signed by all
of the Voting Mortgagees) on whether to direct the Security Trustee to:
(1) declare the charge to be enforceable;
(2) declare all amounts owing by the Issuer Trustee which are secured by
the Security Trust Deed (including amounts outstanding under the Notes plus
accrued and unpaid interest) to be immediately due and payable on demand;
(3) crystalize the floating charge created under the Security Trust Deed
in relation to any or all of the Mortgaged Property; and/or
(4) appoint a receiver over the Trust Assets or itself exercise the powers
that a receiver would otherwise have under the Security Trust Deed.
The Security Trustee cannot exercise the powers referred to above unless
directed by an Extraordinary Resolution in the manner outlined above or unless
in the reasonable opinion of the Security Trustee it is necessary to do so to
protect the interests of the Security Trustee in its personal capacity. The
Security Trustee is not obligated to act unless it obtains an indemnity from the
Voting Mortgagees, and is put in funds to the extent to which it may become
liable for the relevant enforcement actions.
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For so long as the Note Trustee is the only Voting Mortgagee it may direct
the Security Trustee to do any act which the Security Trustee is required to do,
or may only do, at the direction of an Extraordinary Resolution of Voting
Mortgagees.
Neither the Security Trustee nor the Trust Manager may call a meeting of
Voting Mortgagees while the Note Trustee is the only Voting Mortgagee, unless
the Note Trustee otherwise consents.
The Note Trustee will be the only Voting Mortgagee for so long as the
amounts outstanding under the Notes are 75% or more of all amounts secured by
the Security Trust Deed.
At any time after an Event of Default occurs,the Security Trustee shall
enforce the charge as if directed to do so by an Extraordinary Resolution of
Voting Mortgagees:
(i) if the Note Trustee is not the only Voting Mortgagee; and
(ii) the Note Trustee directs the Security Trustee to enforce the charge
(whether directed to do so by Class A Noteholders or as the Note Trustee
determines on behalf of the Class A Noteholders).
No Mortgagee is entitled to enforce the charge under the Security Trust
Deed, or appoint a receiver or otherwise exercise any power conferred by any
applicable law on charges, otherwise than in accordance with the Security Trust
Deed. "Voting Mortgagee" means:
(1) for so long as the amounts outstanding under the Class A Notes and the
Class B Notes are 75% or more of all amounts secured by the Security Trust Deed,
the Note Trustee alone; and
(2) at any other time:
(i) the Note Trustee, acting on behalf of the Noteholders under the Note
Trust Deed and the Security Trust Deed; and
(ii) each other Mortgagee under the Security Trust Deed (other than the
Noteholders).
Subject to being indemnified in accordance with the Security Trust Deed,
the Security Trustee shall take all action necessary to give effect to any
direction by the Note Trustee where it is the only Voting Mortgagee or to any
Extraordinary Resolution of the Voting Mortgagees and shall comply with all
directions given by the Note Trustee where it is the only Voting Mortgagee or
contained in or given pursuant to any Extraordinary Resolution of the Voting
Mortgagees in accordance with the Security Trust Deed.
No Noteholder is entitled to enforce the Security Trust Deed or to appoint
or cause to be appointed a receiver to any of the assets secured by the Security
Trust Deed or otherwise to exercise any power conferred by the terms of any
applicable law on chargees except as provided in the Security Trust Deed.
(3) If any of the Class A Notes remains outstanding and are due and
payable otherwise than by reason of a default in payment of any amount due on
the Class A Notes, the Note Trustee must not vote under the Security Trust Deed
to, or otherwise direct the Security Trustee to, dispose of the Mortgaged
Property unless either:
(i) a sufficient amount would be realized to discharge in full all amounts
owing to the Class A Noteholders and any other amounts payable by the
Issuer Trustee ranking in priority to or pari passu with the Class A
Notes; or
(ii) the Note Trustee is of the opinion, reached after considering at any
time and from time to time the advice of a merchant bank or other
financial adviser selected by the Note Trustee, that the cash flow
receivable by the Issuer Trustee (or the Security Trustee under the
Security Trust Deed) will not (or that there is a significant risk that it
will not) be sufficient, having regard to any other relevant actual,
contingent or prospective liabilities of the Issuer Trustee, to discharge
in full in due course all the amounts referred to in paragraph (i).
(4) Neither the Note Trustee nor the Security Trustee will be liable for
any decline in the value, nor any loss realized upon any sale or other
dispositions made under the Security Trust Deed, of any Mortgaged Property or
any other property which is charged to the Security Trustee by any other person
in respect of or relating to the obligations of the Issuer Trustee or any third
party in respect of the Issuer Trustee or the Notes or relating in any way to
the Mortgaged Property. Without limitation, neither the Note Trustee nor the
Security Trustee shall be liable for any such decline or loss directly or
indirectly arising from its acting, or failing to act, as a consequence of an
opinion reached by it.
(5) The Note Trustee shall not be bound to vote under the Security Trust
Deed, or otherwise direct the Security Trustee under the Security Trust Deed or
to take any proceedings, actions or steps under, or any other proceedings
pursuant
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to or in connection with the Security Trust Deed, the Note Trust Deed, any Class
A Notes, unless directed or requested to do so (i) by an Extraordinary
Resolution of the Class A Noteholders or the Class B Noteholders, as
appropriate; or (ii) in writing by the holders of at least one-quarter of the
aggregate Invested Amount of the Class A Notes or the Class B Notes, as
appropriate, and then only if the Note Trustee is indemnified to its
satisfaction against all action, proceedings, claims and demands to which it may
render itself liable and all costs, charges, damages and expenses which it may
incur by so doing.
(6) Only the Security Trustee may enforce the provisions of the Security
Trust Deed and neither the Note Trustee nor any holder of a Class A Note is
entitled to proceed directly against the Issuer Trustee to enforce the
performance of any of the provisions of the Security Trust Deed, the Class A
Notes (including the Class A Conditions).
(7) The rights, remedies and discretion of the Class A Noteholders under
the Security Trust Deed including all rights to vote or give instructions or
consent can only be exercised by the Note Trustee on behalf of the Class A
Noteholders in accordance with the Security Trust Deed. The Security Trustee may
rely on any instructions or directions given to it by the Note Trustee as being
given on behalf of the Class A Noteholders from time to time and need not
enquire whether the Note Trustee or the Noteholders from time to time have
complied with any requirements under the Note Trust Deed or as to the
reasonableness or otherwise of the Note Trustee. The Security Trustee is not
obliged to take any action, give any consent or waiver or make any determination
under the Security Trust Deed without being directed to do so by the Note
Trustee or the Voting Mortgagees in accordance with the Security Trust Deed.
Upon enforcement of the security created by the Security Trust Deed, the
net proceeds thereof may be insufficient to pay all amounts due on redemption to
the Noteholders. The proceeds from enforcement (which will not include amounts
required by law to be paid to the holder of any prior ranking security interest,
the proceeds of or amounts credited to the collateral account under the
Liquidity Facility Agreement and payable to the Liquidity Facility Provider and
the proceeds of cash collateral lodged with and payable to a Swap Provider or
other provider of a Support Facility will be applied in the order of priority as
set out in the Security Trust Deed (see "SECURITY FOR THE NOTES--Priorities
under the Security Trust Deed." Any claims of the Noteholders remaining after
realization of the security and application of the proceeds as aforesaid shall,
except in certain limited circumstances, be extinguished.
See "SECURITY FOR THE NOTES" for a description of the Security Trust Deed
and the order of priorities for the proceeds from the enforcement of the
Security Trust Deed.
Certain Covenants
So long as any of the Class A Notes or the Class B Notes remains
outstanding, the Issuer Trustee has made the following covenants for the benefit
of Class A Noteholders and the Class B Noteholders which are set out in the
Master Trust Deed, including the following:
(1) The Issuer Trustee shall act continuously as trustee of the Trust
until the Trust is terminated as provided by the Master Trust Deed or the
Issuer Trustee has retired or been removed from office in the manner
provided under the Master Trust Deed.
(2) The Issuer Trustee shall:
(i) act honestly and in good faith in the performance of its duties
and in the exercise of its discretion under the Master Trust Deed;
(ii) subject to the Master Trust Deed, exercise such diligence and
prudence as a prudent person of business would exercise in
performing its express functions and in exercising its discretion
under the Master Trust Deed, having regard to the interests of the
Class A Noteholders and the Class B Noteholders and other creditors
and beneficiaries of the Trust;
(iii) use its best endeavors to carry on and conduct its business in
so far as it relates to the Master Trust Deed in a proper and
efficient manner;
(iv) keep, or ensure that the Trust Manager keeps, accounting
records which correctly record and explain all amounts paid and
received by the Issuer Trustee;
(v) keep the Trust separate from each other trust which is
constituted under the Master Trust Deed and account for assets and
liabilities of the Trust separately from those of other trusts
constituted under the Master Trust Deed; and
(vi) do everything and take all such actions which are necessary
(including obtaining all appropriate authorizations) to ensure that
it is able to exercise all its powers and remedies and perform all
its obligations under
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the Master Trust Deed, the Transaction Documents and all other
deeds, agreements and other arrangements entered into by the Issuer
Trustee under the Master Trust Deed.
(3) Except as provided in the Master Trust Deed, the Issuer Trustee shall
not, nor shall it permit any of its officers to, sell, mortgage, charge or
otherwise encumber or part with possession of any Trust Assets.
(4) The Issuer Trustee's officers, employees, agents, attorneys, delegates
and sub-delegates shall duly observe and perform the covenants and
obligations of the Master Trust Deed in the same manner as is required of
the Issuer Trustee, and the Issuer Trustee agrees to indemnify the Trust
Manager for its own benefit or for the benefit of the Trust against any
loss or damage that the Trust, the Trust Manager, the Servicer, the Class
A Noteholders, the Class B Noteholders, the Beneficiaries (as defined in
the Master Trust Deed) the holders of RFSs (if any) and the holders of RFS
Class A Notes (if any) or other creditors incur or sustain in connection
with, or arising out of, any breach or default by such officers,
employees, agents, delegates and persons in the observance or performance
of any such covenant or obligation, to the extent that the Issuer Trustee
would have been liable if that breach or default had been the Issuer
Trustee's own act or omission.
(5) The Issuer Trustee will open and operate certain bank accounts in
accordance with the Master Trust Deed and the Series Notice.
(6) Subject to the Master Trust Deed and any Transaction Document to which
it is a party, the Issuer Trustee shall act on all directions given to it
by the Trust Manager in accordance with the terms of the Master Trust
Deed.
(7) The Issuer Trustee shall properly perform the functions which are
necessary for it to perform under all Transaction Documents in respect of
the Trust.
The Note Trustee
_________________ will be the Note Trustee. The Note Trustee may resign at
any time, in which event the Issuer Trustee will be obligated to appoint a
successor trustee. The Issuer Trustee may also remove the Note Trustee if the
Note Trustee ceases to be eligible to continue as such under the Master Trust
Deed, if the Note Trustee becomes insolvent or if the rating assigned to the
long-term unsecured debt, obligations of the Trustee (or the holding company
thereof) by the Rating Agencies shall be lowered below ______________________ or
equivalent rating or be withdrawn by any Rating Agency. In such circumstances
and others set forth in the Master Trust Deed, the Issuer Trustee will be
obligated to appoint a successor trustee. Any resignation or removal of the Note
Trustee and appointment of a successor trustee will not become effective until
acceptance of the appointment by a successor trustee.
Governing Law
The Notes and the Transaction Documents are governed by, and shall be
construed in accordance with, the laws of New South Wales, Australia.
DESCRIPTION OF THE SERVICING AGREEMENT
General
Under the Servicing Agreement, TMC will be appointed as the initial
Servicer of the Housing Loans and custodian of the Relevant Documents relating
to the Housing Loans and Mortgages.
Servicing
The Servicer manages and services the Housing Loans in accordance with the
Servicing Agreement. To the extent not provided in the Servicing Agreement, the
Servicer shall manage and service the Housing Loans in accordance with the
Procedures Manual as that is interpreted and applied by the Servicer in the
ordinary course of its business. "Procedures Manual" means, in relation to the
Housing Loans, those policies and procedures of Westpac or the Servicer (as the
case may be) relating to the origination, management and enforcement of the
Housing Loans as those policies and procedures are amended in accordance with
the Servicing Agreement with and applied from time to time in Westpac's or the
Servicer's ordinary course of business (as the case may be). To the extent not
covered by the Servicing Agreement or the Procedures Manual, the Servicer
manages and services the Housing Loans by exercising the degree of diligence and
care expected of an appropriately qualified servicer of the relevant financial
products and custodian of documents. All acts of the Servicer in servicing the
Housing Loans in accordance with the relevant procedures manual are binding on
the Issuer Trustee.
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Powers
Subject as set out in the Servicing Agreement, the Servicer has the
express power, among other things, to the extent such action will not cause an
Adverse Effect (that is, an event which will materially and adversely affect the
amount of any payment to be made to any Noteholder, or will materially and
adversely affect the timing of such payment):
(1) to waive any fees and break costs which may be collected in the
ordinary course of servicing the Housing Loans or arrange the rescheduling
of interest due and unpaid following a default under any Housing Loans;
(2) in its discretion, to waive any right in respect of any Housing Loans
and Mortgages in the ordinary course of servicing the Housing Loans and
Mortgages (including in accordance with its normal collection procedures);
and
(3) to grant an extension of maturity beyond 30 years from the date any
Housing Loan that relates to a Mortgage was made, when required to do so
by law or a government agency. The restriction on granting extensions that
will not have an Adverse Effect shall not apply where the extension is
required by law or a governmental agency.
Delegation by the Servicer
The Servicer is entitled to delegate its duties under the Servicing
Agreement. The Servicer at all times remains liable for the acts or omissions of
any delegate.
Servicer Undertakings
The Servicer has undertaken, among other things, the following:
(1) If so directed by the Issuer Trustee following a Title Perfection
Event, it will promptly take action to perfect the Issuer Trustee's title
to Housing Loans and related Mortgages in the Mortgage Pool by notifying
the Issuer Trustee's interests to Borrowers and mortgagors, registering
transfers, delivering documents to the Issuer Trustee and taking other
action required to perfect title.
(2) In relation to Housing Loans of which Westpac is the legal owner, it
will assist Westpac in collecting all moneys due under those Housing Loans
and Mortgages and pay them into the Collections Account.
(3) In relation to Housing Loans of which the Issuer Trustee is the legal
owner, it will collect all moneys due under those Housing Loans and
Mortgages and pay them into the Collections Account.
(4) If a Material Default occurs in respect of a Housing Loan, it will
take action to enforce the relevant Housing Loan and the related Mortgage
to the extent it determines to be appropriate.
(5) Act in accordance with the terms of any Mortgage Insurance Policies,
not to do or omit to do anything which could be reasonably expected to
prejudicially affect or limit its rights or the rights of the Issuer
Trustee under or in respect of a Mortgage Insurance Policy, and promptly
make a claim under any Mortgage Insurance Policy when it is entitled to do
so and notify the Trust Manager.
(6) Except in limited circumstances, it will not consent to the creation
or existence of any security interest in favor of a third party in
relation to any Mortgaged Property in connection with a Housing Loan and
the related Mortgage.
(7) It will not, except as required by law, release a Borrower or
otherwise vary or discharge any Housing Loan or Mortgage where it would
have an Adverse Effect.
(8) It will set the interest rate on the Housing Loans in accordance with
the requirements of the Series Notice.
(9) If directed by the Issuer Trustee following a Title Perfection Event,
it will take action to perfect the Issuer Trustee's legal title to the
Housing Loans and related Mortgages.
Performance of Services
In performing any services under the Servicing Agreement the Servicer
shall have regard to whether its performance of such services does or does not
have any Adverse Effect. The Servicer may ask the Issuer Trustee or the Trust
Manager if, and may rely upon any statement by the Issuer Trustee or the Trust
Manager that, any action or inaction on its part is reasonably likely to, or
will, have an Adverse Effect.
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Servicing Compensation and Payment of Expenses
The Servicer is entitled to a fee (the "Servicing Fee") for servicing the
Housing Loans, payable in arrears on the Payment Date following the end of the
Collection Period. The Servicing Fee is based on the average daily balance of
Housing Loan Principal during the Collection Period and on the actual number of
days in that Collection Period divided by 365 days.
The Servicer must pay from such fee all expenses incurred in connection
with servicing the Housing Loans except for expenses relating to the enforcement
of any Housing Loan or its related securities, the recovery of any amounts owing
under any Housing Loan or any amount repaid to a liquidator or trustee in
bankruptcy pursuant to any applicable law, binding code, order or decision of
any court, tribunal or the like or based on advice of the Servicer's legal
advisers.
Servicer Transfer Event and Removal
The Issuer Trustee may only terminate the Servicer's appointment if the
Issuer Trustee determines that a Servicer Transfer Event has occurred and is
continuing. A "Servicer Transfer Event" is any of the following:
(1) an Insolvency Event occurs in relation to the Servicer;
(2) the Servicer fails to pay any amount within five Business Days of
receipt of a notice to do so;
(3) the Servicer fails to comply with any of its other obligations under
any Transaction Document and such action has had, or, if continued will
have, an Adverse Effect and that failure is not remedied within 30 days
after the Servicer becomes aware of that failure by receipt of notice;
(4) any representation, warranty or certification made by the Servicer is
incorrect when made and is not waived by the Issuer Trustee or remedied to
the Issuer Trustee's reasonable satisfaction within 90 days after notice,
and the Issuer Trustee determines that breach would have an Adverse
Effect; or
(5) if it is unlawful for the Servicer to perform the services under the
Servicing Agreement.
In the event of a Servicer Transfer Event, the Issuer Trustee must, upon
notice to the Trust Manager, the Approved Sellers, Westpac, the Servicer and the
Rating Agencies, terminate the rights and obligations of the Servicer with
immediate effect and appoint an Eligible Servicer. Until an Eligible Servicer is
appointed and that Eligible Servicer agrees to act as the servicer, the Issuer
Trustee shall act as the Servicer and is entitled to the fee for so acting.
The Servicer has indemnified the Issuer Trustee against all expenses
incurred as a result of a Servicer Transfer Event or a failure by the Servicer
to perform its duties under the Servicing Agreement.
Resignation
The Servicer must not resign without first giving three months' notice to
the Rating Agencies, the Trust Manager and the Issuer Trustee. If an Eligible
Servicer has not agreed to act as Servicer by the expiration of that notice
period the Issuer Trustee shall act as Servicer.
Document Custody
General
The Servicer will be responsible for custody of the Relevant Documents on
behalf of the Issuer Trustee. The Servicer must hold those documents as
custodian at the direction of the Issuer Trustee in accordance with its standard
safekeeping practices and in the same manner and to the same extent that it
holds documents for Westpac. The Servicer will hold custody of the Relevant
Documents in accordance with procedures contained in the Servicing Agreement.
The procedures include the following: (i) keeping the Housing Loan and mortgage
documents for Housing Loans in the Mortgage Pool separate from other documents;
(ii) maintaining reports on movements of documents; and (iii) being able to
locate security packets.
The Servicer will be audited on an annual basis (or more regularly if any
audit gives an adverse finding) in relation to its custodial procedures,
identification of documents, security and tracking systems.
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Termination of Servicer as document custodian
If any of the following occurs:
(1) the Servicer does not comply with the requirements of the Servicing
Agreement to the satisfaction of the auditor, and a further audit also
results in an adverse finding by the auditor;
(2) the long term credit rating of the holding company of the Servicer is
downgraded:
(i) below BBB by Standard & Poor's; or
(ii) below Baa2 by Moody's;
(3) the Servicer is in default under a servicing agreement between it and
any other person, and by reason of the default that other person removes
any documents in the Servicer's custody under the servicing agreement
where that person would otherwise not have been entitled to do so; or
(4) a Servicer Transfer Event occurs,
then the Servicer must deliver the Title Documents to, or at the direction of,
the Issuer Trustee. If the Servicer does not do so within 10 Business Days, then
the Issuer Trustee must enter the premises where the Title Documents are kept,
take possession of and remove the Title Documents. If the Issuer Trustee does
not have possession of the documents within 10 Business Days it must lodge
caveats in relation to and/or take all other action it considers necessary to
protect its interests.
Amendment
The Servicing Agreement may be amended by the parties thereto in writing
and provided that prior notice of any proposed amendment is given to the Rating
Agencies.
Termination of Servicing Agreement
The Servicing Agreement shall continue until the expiration of the Term.
The "Term" means the period from the date of the Servicing Agreement until the
earlier of:
(a) the date on which the Servicing Agreement is terminated pursuant to a
Servicer Transfer Event;
(b) the date which is one month after the Notes have been redeemed in full
in accordance with the Transaction Documents and the Trustee ceases to
have any obligation to any creditor in relation to any Trust;
(c) the date on which the Trustee replaces the Servicer with an Eligible
Servicer; and
(d) the date on which the Servicer is replaced after resigning pursuant to
the Servicing Agreement.
THE LIQUIDITY FACILITY
General Description
Under the Liquidity Facility, the Liquidity Facility Provider agrees to
make advances to the Issuer Trustee for the purpose of funding certain income
shortfalls in the Trust, up to an aggregate amount being the lesser of:
(1) A$__________;
(2) the Unpaid Balance of all Performing Loans from time to time; and
(3) any lesser amount as is agreed in writing between the Liquidity
Facility Provider, the Issuer Trustee, the Trust Manager and the Rating
Agencies for each class of Notes,
as reduced or cancelled under the Liquidity Facility (the "Liquidity Limit").
A "Performing Loan" at any date is a Housing Loan which is not Delinquent
or has been Delinquent for less than 90 consecutive days, or if it has been
Delinquent for 90 or more consecutive days was insured under a Mortgage
Insurance Policy at the date of the Liquidity Facility.
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A Housing Loan is "Delinquent" if the related Borrower fails to pay any
amount due on the related due date. Delayed payments arising from agreed payment
holidays based on early repayments, or from maternity or paternity leave
repayment reductions will not, by themselves, lead to a Housing Loan being
Delinquent.
Liquidity Draws
If the Trust Manager determines on any Collection Determination Date that
the Available Income of the Trust plus Principal Draws for the Collection Period
relating to that Collection Determination Date is insufficient to meet Total
Payments of the Trust (a "Liquidity Shortfall"), then the Trust Manager must
direct the Issuer Trustee to make a drawing under the Liquidity Facility to
apply towards the Liquidity Shortfall. The drawing will (subject to certain
assumptions as to payment) be the lesser of the Liquidity Shortfall and the
difference between the Liquidity Limit and the aggregate of all outstanding
amounts under the Liquidity Facility (the "Available Liquidity Amount"). A
drawing may only be made by a duly completed drawdown notice signed by an
authorized signatory of the Issuer Trustee.
Conditions Precedent to a Liquidity Draw
A drawing may only be made under the Liquidity Facility (a "Liquidity
Draw") if (among other things) no event of default (see "--Events of Default"
below) subsists at the date of the relevant drawdown notice and the relevant
drawdown date or will result from the provision of the Liquidity Draw.
Deposit into a Collateral Account
If at any time the Liquidity Facility Provider's short term credit rating
is less than A-1+ from Standard & Poor's or P-1 from Moody's, the Liquidity
Facility Provider must within five Business Days or such longer period as
Standard & Poor's and Moody's may agree, deposit into an account held in the
name of the Issuer Trustee an amount equal to the Available Liquidity Amount at
that time.
If and for so long as the Liquidity Facility Provider has a short term
credit rating of not lower than A-1 from Standard & Poor's and P-1 from Moody's,
the Collateral Account shall be maintained with the Liquidity Facility Provider.
If at any time the short term credit rating of the bank holding the
Collateral Account is less than A-1 from Standard & Poor's or P-1 from Moody's
then the Collateral Account, and all amounts standing to the credit of the
Collateral Account, must (subject to certain limited restrictions) be
transferred to a bank with a short term credit rating from Standard & Poor's of
not lower than A-1+ and not lower than P-1 from Moody's.
If the short term credit rating of the Liquidity Facility Provider is not
less than A-1 from Standard & Poor's and P-1 from Moody's, and the total of the
credit balance of the Collateral Account with the Liquidity Facility Provider
plus the amount of all short term investments of the Issuer Trustee is greater
than 20% of the Total Invested Amount, then so much of the credit balance of the
Collateral Account as is necessary for the 20% threshold not to be breached must
(subject to certain limited restrictions) be deposited with a bank with a short
term credit rating from Standard & Poor's of not lower than A-1+ and not lower
than P-1 from Moody's.
Withdrawals from a Collateral Account are restricted to, among other
things, making a Liquidity Draw, paying financial institutions duty and bank
account debit tax (being taxes charged on account transactions) and investing in
short term investments.
All interest accrued on the moneys in the Collateral Account shall belong
to the Liquidity Facility Provider. If the Liquidity Facility Provider's short
term credit rating is upgraded to not lower than A-1+/P-1, then the balance in
the Collateral Account deposit must be repaid to the Liquidity Facility Provider
and any advances under the Liquidity Facility thereafter will be made directly
from the Liquidity Facility Provider in the normal course of business.
Interest on Liquidity Draws
Interest is payable to the Liquidity Facility Provider on the principal
amount drawn under the Liquidity Facility. This interest is payable at the Bank
Bill Rate plus a margin, calculated on days elapsed and a year of 365 days.
Interest is payable on each Payment Date and on repayment of a drawing. Unpaid
interest will capitalize, and interest accrues on any unpaid interest.
Commitment Fee
A commitment fee accrues daily from the date of the Liquidity Facility on
the Available Liquidity Amount, and is payable on each Payment Date and on
termination of the facility.
The commitment fee is calculated on the actual number of days elapsed and
a year of 365 days.
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Repayment of Liquidity Drawings
If an amount has been drawn down under the Liquidity Facility, the
principal amount is repayable on the following Payment Date, to the extent that
amounts are available for this purpose under the Series Notice; see "DESCRIPTION
OF THE OFFERED NOTES--Distribution of Total Available Funds" above. It is not an
event of default if the Issuer Trustee does not have funds available to repay
the full amount outstanding on the following Payment Date.
Events of Default
It is an event of default under the Liquidity Facility (whether or not
such event is within the control of the Issuer Trustee) if:
(1) at any time the Available Liquidity Amount is zero, and the Issuer
Trustee fails to pay an amount payable by it under the Liquidity Facility
within 10 Business Days of its due date;
(2) an amount is available for payment under the Liquidity Facility and
the Issuer Trustee does not pay that amount;
(3) an Insolvency Event occurs in relation to the Trust;
(4) an Insolvency Event occurs in relation to the Issuer Trustee, and a
successor trustee of the Trust is not appointed within 30 days of that
Insolvency Event;
(5) the Termination Date occurs in relation to the Trust; or
(6) all or any part of the Liquidity Facility is terminated or is or
becomes void, illegal, invalid or unenforceable.
Consequences of Default
In addition to rights provided by law or any Transaction Document, at any
time after an event of default has occurred under the Liquidity Facility
(whether or not it is continuing), the Liquidity Facility Provider may do all or
any of the following by notice to the Issuer Trustee and the Trust Manager:
(1) declare all moneys actually or contingently owing at that time
immediately due and payable, and the Issuer Trustee must immediately pay
the total amount of all outstanding Liquidity Draws, together with accrued
interest and fees and all other such moneys; and
(2) cancel the Liquidity Limit with effect from any date specified in that
notice.
Termination
The Liquidity Facility will terminate on the earliest of the following to
occur:
(1) the date on which the Issuer Trustee enters into a replacement
liquidity facility;
(2) one month after the Notes have been redeemed in full in accordance
with the Master Trust Deed;
(3) following an event of default under the Liquidity Facility, the date
on which the Liquidity Facility Provider declares the Liquidity Facility
terminated; and
(4) the date on which the Issuer Trustee, on giving not less than five
Business Days irrevocable notice to the Liquidity Facility Provider, has
cancelled all or part of the Liquidity Limit. Cancellation is conditional
on the Rating Agencies confirming that such cancellation will not result
in a downgrading of the credit rating assigned by the Rating Agencies to
the Notes.
DESCRIPTION OF THE SWAP AGREEMENTS
Description of Interest Rate Swap Agreements
The following summary describes certain terms of the Swap Agreements,
which the Issuer Trustee will enter into with the Interest Rate Swap Provider.
The summary does not purport to be complete and is qualified in its entirety by
reference to the provisions of the Swap Agreements.
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Fixed Rate and Variable Rate Basis Swaps
The Issuer Trustee will enter into a Variable Rate Basis Swap and two
Fixed Rate Basis Swaps with Westpac, in its capacity as the provider of the
Variable Rate Basis Swap and Westpac, in its capacity as the provider of the
Fixed Rate Basis Swaps (together the "Interest Rate Swap Provider"). Such swaps
will use the ISDA Master Agreement amended by a supplementary schedule and a
confirmation for each swap. See "ORIGINATOR OF THE HOUSING LOANS" for a
description of the Interest Rate Swap Provider.
A Variable Rate Basis Swap will be used to hedge the basis risk between
the floating rate obligations of the Trust (including Interest payable on the
Notes) and the variable rate set, as permitted by the relevant Housing Loan
agreements, at the discretion of Westpac. The Variable Rate Basis Swap will
include those loans with a concessional fixed rate of interest for the first 12
months, converting to the standard variable rate after that period. The Issuer
Trustee will pay an amount based on the applicable daily weighted average
variable housing rates and receive the Bank Bill Rate (as defined herein) plus a
fixed margin. The margin is fixed for the life of the swap and has been set
having regard to the ongoing obligations of the Trust.
Two Fixed Rate Basis Swaps will be used to hedge the basis risk between
the floating rate obligations of the Trust (including Interest payable on the
Notes) and the discretionary fixed rates set by Westpac on the Housing Loans
which are subject to a fixed rate of interest (not including those loans with a
concessional fixed rate of interest for the first 12 months, which converts to
the standard variable rate after that period).
The first Fixed Rate Basis Swap will be used to hedge the basis risk
occurring when Borrowers switch from a variable rate of interest to a Fixed Rate
of interest after the Cut-Off Date. The Issuer Trustee will pay the applicable
daily weighted average Fixed Rate and the Interest Rate Swap Provider will pay
the Bank Bill Rate plus a fixed margin. The margin is fixed for the life of the
swap and has been set having regard to the ongoing obligations of the Trust.
The second Fixed Rate Basis Swap will be entered into as at the Closing
Date to hedge those Housing Loans subject to a Fixed Rate of interest as of the
Cut-Off Date. The Issuer Trustee will pay the applicable daily weighted average
Fixed Rate and the Interest Rate Swap Provider will pay the Bank Bill Rate plus
a fixed margin. The margin is fixed for the life of the swap and has been set
based on the actual margin on the Fixed Rate Housing Loans and the prevailing
wholesale market rate existing at the Cut-Off Date.
All Housing Loans being charged a Fixed Rate of interest as of the Cut-Off
Date have a maximum Fixed Rate period of 5 years.
Downgrade of Interest Swap Provider
If there is a downgrading of the Interest Rate Swap Provider's long term
or short term debt rating below A-1+ or A2 by either Standard & Poor's or
Moody's, respectively, the Interest Swap Provider will either:
(1) provide cash collateral security sufficient to enable Standard &
Poor's and Moody's to confirm that the downgrade will not cause a
reduction in or a withdrawal of the rating of the Notes; or
(2) arrange for a suitably rated counterparty to intermediate the swap or
act as substitute swap provider.
Termination
The termination provisions of the Interest Rate Swap Agreements adopt
usual ISDA provisions. An Insolvency Event in relation to the Issuer Trustee in
its personal capacity is not an event of default if the relevant Swap is novated
within 30 Business Days of that Insolvency Event and the novation will not cause
a reduction or withdrawal of the rating of the Notes. If there is a downgrading
of the Interest Rate Swap Provider's long term or short term debt rating below
Al+ or A2 by either Standard & Poor's or Moody's and the Swap Provider fails to
act, as described in "--Downgrade of Interest Swap Provider" above, it will be
an "Additional Termination Event" under the Variable Rate Basis Swap. If under
similar circumstances the Interest Rate Swap Provider fails to establish certain
collateral arrangements it will be an "Additional Termination Event" under each
of the Fixed Rate Basis Swaps only at the discretion of the Issuer Trustee. The
"Automatic Early Termination" provisions under the Fixed and Variable Rate Basis
Swaps do not apply.
Threshold Rate
If at any time the Variable Rate Basis Swap is terminated, the Trust
Manager must, on each Collection Determination Date following that termination,
calculate the minimum rate of interest that must be set on the Housing Loans
which are subject to a discretionary variable rate, in order to cover (assuming
all counterparties to the Transaction Documents, the Housing Loans and any
Mortgages and other relevant securities meet their obligations), when aggregated
with the income produced by all other Housing Loans and taking into account the
other Swap Agreements, the obligations of the Trust (the
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"Threshold Rate"). If the Servicer is notified of the Threshold Rate, it is
required, subject to the terms of the relevant Housing Loans, to ensure that the
rate of interest on each relevant discretionary variable rate Housing Loan is
not less than the Threshold Rate (see "DESCRIPTION OF THE SERVICING AGREEMENT"
above).
Description of Currency Swap
The following summary describes certain terms of the Currency Swap, which
the Issuer Trustee will enter into with Morgan Guaranty Trust Company of New
York, acting through its [Sydney Branch] (the "Currency Swap Provider" and
together with the Interest Rate Swap Provider, the "Swap Providers"). The
summary does not purport to be complete and is qualified in its entirety by
reference to the provisions of the Currency Swap.
Collections in relation to the Housing Loans and related Mortgages and
under the Variable Rate Basis Swap and the Fixed Rate Basis Swap ("Collections")
will be denominated in Australian dollars. However, the payment obligations of
the Issuer Trustee in relation to Interest and principal on the Notes are
denominated in United States dollars. To hedge its currency exposure, the Issuer
Trustee will enter into two distinct swap transactions, relating to the Class A
Notes and the Class B Notes, respectively (together, the "Currency Swap") with
the Currency Swap Provider. The Currency Swap will be evidenced by two swap
confirmations which will be governed by an ISDA Master Agreement dated ________,
1998, as supplemented by the Schedule thereto (such ISDA Master Agreement,
Schedule and swap confirmations, the "Agreement"). Under the Currency Swap, the
Issuer Trustee is required to pay to the Currency Swap Provider amounts in A$
equal to the amount of any Collections received by the Issuer Trustee and the
Currency Swap Provider is required to pay to or at the direction of the Issuer
Trustee an amount denominated in US$ which is equivalent to such A$ payment
(calculated by reference to an exchange rate which is fixed at the Closing Date
and set forth in the swap confirmations). In addition, under the Currency Swap
on each Payment Date the Issuer Trustee will make A$ floating rate payments to
the Currency Swap Provider and the Currency Swap Provider will make US$ floating
rate payments which are equivalent in amount to the Interest payable in US$ to
the Noteholders. If on any Payment Date, the Issuer Trustee does not make the
full floating payment, the US$ floating rate payment to be made by the Currency
Swap Provider on such Payment Date will be reduced by the same proportion as the
reduction in the payment from the Issuer Trustee.
Subscription amounts for the Notes will be paid by investors in US$, but
the consideration for the purchase by the Issuer Trustee of equitable title to
the Housing Loans and related Mortgages will be in A$. Under the Currency Swap,
an amount equal to the US$ subscription amounts will be paid to the Currency
Swap Provider, which will pay the A$ Equivalent of such amounts to the Issuer
Trustee. See "CURRENCY SWAP PROVIDER" below for more information.
In the event that the Currency Swap Provider is ever downgraded below a
specified level, the Currency Swap Provider will give a commitment to provide
cash collateral or other credit enhancement in respect of the Currency Swap.
The Currency Swap comprises two distinct swap transactions, relating to
the Class A Notes and the Class B Notes respectively. On the Closing Date the
Issuer Trustee will be obliged to pay to the Currency Swap Provider an amount
equal to the proceeds of the issue of the Notes in US$. In return the Issuer
Trustee will be paid the A$ equivalent of that US$ amount (calculated by
reference to an exchange rate which is fixed by the Closing Date (in the Swap
confirmations)).
The cash flow methodology in the Series Notice provides that amounts equal
to certain amounts allocated from Principal Collections and (in some cases) from
Excess Available Income are paid by the Issuer Trustee to the Currency Swap
Provider on each Payment Date. Under the Currency Swap the Currency Swap
Provider pays to the Issuer Trustee, against receipt of the A$ denominated
payment, an amount denominated in US$ which is equivalent to the A$ payment from
the Issuer Trustee (calculated by reference to the exchange rate referred to
above).
The cash flow methodology in the Series Notice provides that the Issuer
Trustee also pays to the Currency Swap Provider amounts equal to scheduled A$
floating rate payments (the A$ Class A Coupon Amount and the A$ Class B Coupon
Amount) on each Payment Date. Under the Currency Swap the Currency Swap Provider
pays to the Issuer Trustee on each Payment Date, against receipt of those A$
denominated payments, scheduled US$ floating rate payments equivalent to the
Interest due to the Noteholders. If on any Payment Date the Issuer Trustee does
not make the full scheduled A$ payment, the scheduled US$ payment from the
Currency Swap Provider will be reduced by the same proportion as the reduction
in the payment from the Issuer Trustee.
The Series Notice requires that the US$ amounts received by the Issuer
Trustee from the Currency Swap Provider are paid to the Noteholders in
accordance with their entitlements and the priorities set out in "DESCRIPTION OF
THE OFFERED NOTES."
Termination of the Currency Swap
Termination by the Currency Swap Provider
Under the Currency Swap, the Currency Swap Provider has the following
rights to terminate:
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(1) An immediate right of termination if the Issuer Trustee fails to make
a payment under the Currency Swap within the applicable grace period of 10
Business Days.
(2) If due to change in law it becomes illegal for either party to make or
receive payments or comply with any other material provision of the
Currency Swap, the Currency Swap requires each party to make certain
efforts to transfer their rights and obligations to avoid this illegality.
If those efforts are not successful then the Currency Swap Provider will
have the right to terminate. These provisions relating to termination
following an illegality have been modified so that they are not triggered
by the introduction of certain exchange controls by any Australian
Government body.
(3) The Currency Swap Provider has the limited right to terminate where it
is required to gross-up or receive payments from which amounts have been
withheld.
(4) Any Event of Default under the Conditions of the Notes occurs.
If neither the Currency Swap Provider nor the Issuer Trustee elect to
terminate the Currency Swap following an Event of Default under the Conditions
of the Notes occurs, then the Note Trustee may do so.
Termination by the Issuer Trustee
There are a number of circumstances in which the Issuer Trustee has the
right to terminate the Currency Swap. In each of these cases it is only
permitted to exercise that right with the prior written consent of the Note
Trustee:
(1) Where the Currency Swap Provider fails to make a payment under the
Currency Swap within any applicable grace period or the Currency Swap
Provider becomes insolvent or merges into another entity without that
entity properly assuming responsibility for the obligations of the
Currency Swap Provider under the Currency Swap.
(2) If it becomes illegal for either party to make or receive payments
under the Currency Swap or perform any of its other material obligations
under it, both the Issuer Trustee and the Currency Swap Provider are
obliged to make certain efforts to transfer their rights and obligations
to avoid that illegality. If those efforts fail the Currency Swap may be
terminated.
(3) If the Issuer Trustee becomes obliged under the Currency Swap to
receive payments from which amounts have been withheld or deducted
(including where this situation arises from a merger affecting the
Currency Swap Provider).
(4) Any Event of Default under the Conditions of the Notes occurs.
(5) The Currency Swap may also be terminated if the Issuer Trustee becomes
obliged to make a withholding or deduction in respect of the Notes and the
Notes are redeemed as a result or if the Issuer Trustee is or will be
subject to certain increased costs or expenses.
If neither the Currency Swap Provider nor the Issuer Trustee elect to
terminate the Currency Swap following an Event of Default under the Conditions
of the Notes occurs, then the Note Trustee may do so.
The Issuer Trustee (and the Note Trustee) may only terminate the Currency
Swap following prior consultation by the Note Trustee with the Currency Swap
Provider as to the timing of termination.
Termination Payments
On the Termination Date or the Early Termination Date (each as defined in
the Currency Swap) in respect of the Currency Swap, a termination payment will
be due to be paid by the Issuer Trustee to the Currency Swap Provider or to the
Issuer Trustee by the Currency Swap Provider in respect of the Currency Swap.
There is no guarantee that upon any such termination the funds realized from the
sale of the relevant Loans and Mortgages plus or minus (as the case may be) the
termination payment due in respect of the Currency Swap will be sufficient to
pay in full amounts owing to the holders of the relevant Notes.
The termination payment in respect of a Currency Swap will be determined
on the basis of quotations from four leading dealers in the relevant market
(selected by the Currency Swap Provider) to enter into a replacement transaction
that would have the effect of preserving the economic equivalent of any payment
that would, but for the early termination, have been required under the terms of
the Currency Swap.
Replacement of Currency Swap
If the Currency Swap is terminated, the Issuer Trustee may enter into a
currency swap which replaces the Currency Swap (other than by way of transfer
under section 6(b) of the Currency Swap) (a "Replacement Currency Swap") if and
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only if the amount payable (if any) to the Issuer Trustee by the provider of the
Replacement Currency Swap as an up front premium to enter into the Replacement
Currency Swap is greater than or equal to the termination payment payable (if
any) to the Currency Swap Provider by the Trustee on termination of the Currency
Swap. If the condition in the previous sentence is satisfied, the Issuer Trustee
may enter into the Replacement Currency Swap and if it does so it must direct
the amount payable (if any) by the provider of the Replacement Currency Swap to
be paid directly to the Currency Swap Provider in satisfaction of and to the
extent of the Issuer Trustee's obligation to pay the termination payment to the
Currency Swap Provider.
Downgrade of Currency Swap Provider
The Currency Swap Provider will give a commitment to provide cash
collateral or other credit enhancement in respect of the Currency Swap in the
event that the Currency Swap Provider is ever downgraded below a specified
level.
CURRENCY SWAP PROVIDER
Morgan Guaranty Trust Company of New York, a Delaware corporation whose
principal office is located in New York, New York, is a wholly owned subsidiary
and the principal asset of J.P. Morgan & Co. Incorporated ("J.P. Morgan"). The
Currency Swap Provider is a commercial bank offering a wide range of banking
services to its customers both domestically and internationally. Its business is
subject to examination and regulation by Federal and New York State banking
authorities. As of December 31, 1997, the Currency Swap Provider and its
subsidiaries had total assets of $196.4 billion, total net loans of $30.9
billion, total deposits of $60.7 billion, and stockholder's equity of $10.4
billion. As of December 31, 1996, the Currency Swap Provider and its
subsidiaries had total assets of $164.8 billion, total net loans of $27.4
billion, total deposits of $53.1 billion and stockholder's equity of $9.9
billion.
The Consolidated Statement of Condition of the Currency Swap Provider as
of December 31, 1997 is set forth on page 11 of Exhibit 99b to Form 8-K dated
January 15, 1998, as filed by J.P. Morgan with the Commission. The Currency Swap
Provider will provide without charge to each person to whom this Prospectus is
delivered, on the request of any such person, a copy of the Form 8-K referred to
above. Written requests should be directed to: Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York 10260-0060, Attention: Office of
the Secretary.
The information with respect to the Currency Swap Provider contained
herein has been obtained from the Currency Swap Provider. The delivery of this
Prospectus will not create any implication that there has been no change in the
affairs of the Currency Swap Provider since the date hereof or that the
information contained or referred to herein is correct as of any time subsequent
to its date.
The Offered Notes do not represent an obligation of the Currency Swap
Provider, J.P. Morgan Securities Inc., J.P. Morgan or any of their respective
affiliates. Holders of the Offered Notes will not have any right to proceed
directly against the Currency Swap Provider in respect of the Currency Swap
Provider's obligations under the Currency Swap.
CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS
The following discussion contains summaries of certain legal aspects of
Australian retail housing loans and mortgages that are general in nature. The
summaries do not purport to be complete. In addition, certain of those legal
aspects are governed by state law (which laws may differ substantially from
state to state), and the summaries do not reflect the particular laws of any
particular state or encompass all relevant laws of all states in which any
Mortgaged Property may be situated. The summaries are qualified in their
entirety by reference to the applicable Australian federal and state laws
governing real property and the granting and enforcement of security over real
property.
General
Each Housing Loan will be secured by a mortgage which is to have a first
ranking priority over all other mortgages granted by the relevant Borrower and
over all unsecured creditors of the Borrower (except in respect of certain
statutory rights such as some rates and taxes, which are granted statutory
priority). The Borrower is prohibited under its loan documents from creating
another mortgage or other security interest over the relevant Mortgaged Property
without the consent of Westpac. There are two parties to a mortgage, the
mortgagor, who is the borrower and homeowner (or, where the relevant loan is
guaranteed and the guarantee is secured by a mortgage, the guarantor) and who
grants the mortgage over their property, and the mortgagee who is the lender.
Under Torrens title, registration of a mortgage using the prescribed form
executed by the mortgagor is required in order for the mortgagee to obtain the
remedies of a mortgagee granted by statute and the relevant priorities against
other secured creditors. To this extent the mortgagee is said to have a legal
(i.e., registered) title. However, registration does not
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transfer title in the property - the mortgagor remains as legal owner. Rather,
the Torrens mortgage operates as a statutory charge. The mortgagee does not
obtain an estate in the property but does have an interest in the land which is
marked on the register and the "certificate of title" for the property. A search
of the register by any subsequent lender will reveal the existence of the prior
mortgage.
A mortgagee will retain the relevant certificate of title until the
mortgage is discharged. Although the certificate is not a document of title as
such, the procedure for replacement is sufficiently onerous to act as a
deterrent against most mortgagor fraud. In addition, failure to retain the
certificate may in certain circumstances constitute negligent conduct resulting
in a postponement of the mortgagee's priority to a later secured creditor.
Once the mortgagor has repaid the debt, a discharge is lodged with the
registrar and the mortgage is noted as having been released.
Enforcement of Housing Loans
Subject to the discussion below, if a Borrower defaults under a Housing
Loan, the loan documents provide that all moneys under the loan may be declared
immediately due and payable. The lender may sue to recover all outstanding
principal, interest and fees under the personal covenant of the borrower
contained in the loan documents to repay those amounts. In addition, the lender
may enforce a registered mortgage in relation to the defaulted loan. Enforcement
may occur in a number of ways, including the following.
(a) The mortgagee may enter into possession of the property. If it does
so, it does so in its own right and not as agent of the mortgagor,
and so may be personally liable for mismanagement of the property
and to third parties as occupier of the property.
(b) The mortgagee may, in limited circumstances, lease the property to
third parties.
(c) The mortgagee may foreclose on the property - that is, extinguish
the mortgagor's title to the property so that the mortgagee becomes
the absolute owner of the property (a remedy that is, because of
procedural constraints, rarely used). If the mortgagee forecloses on
the property, it loses the right to sue the borrower under the
personal covenant to repay and can look only to the value of the
property for satisfaction of the debt.
(d) The mortgagee may appoint a receiver to deal with income from the
property or exercise certain other rights delegated to the receiver
by the mortgagee. Unlike a mortgagee in possession, a receiver is
the agent of the mortgagor and so in theory the mortgagee is not
liable for the receiver's acts or as occupier of the property. In
practice, the receiver will require indemnities from the mortgagee
that appoints it.
(e) The mortgagee may sell the property, subject to various duties to
ensure that the mortgagee exercises proper care in relation to the
sale. This power of sale is usually expressly contained in the
mortgage documents, and is also implied into registered mortgages
under the relevant Torrens title legislation. The Torrens title
legislation prescribes forms and periods of notice to be given to
the mortgagor prior to enforcement.
A sale under a mortgage may be by public auction or private treaty. Once
registered, the purchaser of property sold pursuant to a mortgagee's power
of sale becomes absolute owner of the property.
A mortgagee's ability to call all amounts under a housing loan or enforce
a mortgage which is subject to the Consumer Credit Legislation is limited by
various demand and notice procedures which are required to be followed. For
example, as a general rule enforcement cannot occur unless the relevant default
is not remedied within 30 days after a default notice is given. Borrowers may
also be entitled to initiate negotiations with the mortgagee for a postponement
of enforcement proceedings.
Penalties and Prohibited Fees
Australian courts will not enforce an obligation of a borrower to pay
default interest on delinquent required payments if the court determines that
the relevant default interest rate is a penalty. Certain jurisdictions prescribe
a maximum recoverable interest rate, although in most jurisdictions there is no
specified threshold rate to determine what is a penalty. In those circumstances,
whether a rate is a penalty or not will be determined by reference to such
factors as the prevailing market interest rates. The Consumer Credit Legislation
does not impose a limit on the rate of default interest, but a rate which is too
high may entitle the borrower to have the loan agreement re-opened on the ground
that it is unjust. Under the Corporations Law, the liquidator of a company may
avoid a loan under which an extortionate interest rate is levied.
The Consumer Credit Legislation requires that any fee or charge to be
levied by the lender must be provided for in the contract, otherwise it cannot
be levied. The regulations under the Consumer Credit Legislation may also from
time to time
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prohibit certain fees and charges. The Consumer Credit legislation also requires
that establishment fees, termination fees and prepayment fees must be reasonable
otherwise they may be reduced or set aside.
Consumer Credit Legislation
Some of the Housing Loans are regulated by consumer credit legislation
(the "Consumer Credit Legislation"). Under that legislation, a Borrower may have
a right to apply to a court to:
(1) vary the terms of his or her Housing Loan on the grounds of hardship
or that it is an unjust contract;
(2) reduce or cancel any interest rate payable on the Housing Loan which
is unconscionable;
(3) have certain provisions of the Housing Loan or relevant Mortgage
which are in breach of the legislation declared unenforceable; or
(4) obtain restitution or compensation from the Issuer Trustee, in
relation to any breaches of the Consumer Credit Legislation in
relation to the Housing Loan or relevant Mortgage.
Any such order may affect the timing or amount of interest or principal
payments or repayments under the relevant Housing Loan (which might in turn
affect the timing or amount of interest or principal payments or repayments
under the Offered Notes).
Breaches of the Consumer Credit Legislation may also lead to civil
penalties or criminal fines being imposed on Westpac, for so long as it holds
legal title to the Housing Loans and the Mortgages. If the Issuer Trustee
acquires legal title, it will then become primarily responsible for compliance
with the Consumer Credit Legislation. The Issuer Trustee will (subject to
limited exceptions) be indemnified out of the assets of the Trust for its
liabilities under the Consumer Credit Legislation. If the Issuer Trustee is
indemnified with respect to such liabilities out of the assets of the Trust,
proceeds of the Trust may be insufficient to make all payments provided for
under the Offered Notes.
Westpac will give, or has given, certain representations and warranties
that the Housing Loans and related Mortgages comply in all material respects
with the Consumer Credit Legislation in force at the time documents were entered
into. The Servicer has undertaken to comply with the Consumer Credit Legislation
in connection with servicing the Housing Loans and related Mortgages where
failure to do so would have an Adverse Effect. An "Adverse Effect" is an event
which will materially and adversely affect the amount of any payment to be made
to any Noteholder, or will materially and adversely affect the timing of such
payment. In certain circumstances the Issuer Trustee may have the right to claim
damages from Westpac or the Servicer, as the case may be, where the Issuer
Trustee suffers loss in connection with a breach of the Consumer Credit
Legislation which is caused by a breach of a relevant representation or
undertaking.
Bankruptcy
The insolvency of a natural person is governed by the provisions of the
Bankruptcy Act 1966, which is a federal statute. Generally, secured creditors of
a natural person (such as mortgagees under real property mortgages) stand
outside the bankruptcy - that is, the property of the bankrupt which is
available for distribution by the trustee in bankruptcy does not include the
secured property. The secured creditor may, if it wishes, prove in the
bankruptcy proceeding as an unsecured creditor in a number of circumstances,
including if they have realized the related mortgaged property and their debt
has not been fully repaid (in which case they can prove for the unpaid balance).
Certain dispositions of property by a bankrupt may be avoided by the
trustee in bankruptcy. These include where (a) the disposition was made to
defraud creditors; or (b) the disposition was made by an insolvent debtor within
6 months of the petition for bankruptcy and gave a preference to an existing
creditor over at least one other creditor.
The insolvency of a company is governed by the Corporations Law of the
relevant Australian jurisdiction. Again, secured creditors generally stand
outside the insolvency. However, a liquidator may avoid a mortgage which is
voidable under the Corporations Law because it is an uncommercial transaction,
or an unfair preference to a creditor or a transaction for the purpose of
defeating creditors, and that transaction occurred when the company was
insolvent (or an act is done to give effect to the transaction when the company
is insolvent, or the company becomes insolvent because of the transaction or the
doing of an act to give effect to the transaction), and the transaction occurred
within a prescribed period prior to the commencement of the winding up of the
company. The liquidator may also avoid a loan under which an extortionate
interest rate is levied.
Environmental
Real property which is mortgaged to a lender may be subject to unforeseen
environmental problems, including land contamination. Environmental legislation
which deals with liability for such problems exists at both state and federal
levels,
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although the majority of relevant legislation is imposed by the states. No
Australian statute expressly imposes liability on "passive" lenders or security
holders for environmental matters, and some states expressly exclude such
liability. However, liability in respect of environmentally damaged land (which
liability may include the cost of rectifying the damage) may attach to a person
who is, for instance, an owner, occupier or person in control of the relevant
property. In some but not all states, lenders are expressly excluded from the
definitions of one or more of these categories.
Merely holding security over property will not convert a lender into an
occupier. However, a lender or receiver who goes into possession of contaminated
mortgaged property or otherwise enforces its security may be liable as an
occupier.
Some environmental legislation provides that security interests may be
created over contaminated or other affected property to secure payment of the
costs of any necessary rectification of the property. The security interest may
have priority over pre-existing mortgages.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used by the Issuer
Trustee to acquire equitable title to the Housing Loans and related Mortgages
from the Approved Sellers and for general expenses (including any premium
payable to any Swap Provider) in relation to the Trust.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material United
States federal income tax consequences of the purchase, ownership and
disposition of Notes by Noteholders who are subject to United States federal
income tax. The summary is based on laws, regulations, rulings and decisions now
in effect, all of which are subject to change (possibly with retroactive effect)
or to different interpretation. The summary does not purport to address federal
income tax consequences applicable to particular categories of investors, some
of which (for example, insurance companies, dealers in securities, financial
institutions or foreign investors) may be subject to special rules. In addition,
this summary is generally limited to investors who will hold the Notes as
"capital assets" (generally, property held for investment) within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code").
Investors should consult their own tax advisors in determining the federal,
state, local, non-United States and any other tax consequences to them of the
purchase, ownership and disposition of Notes, including the advisability of
making any election discussed below. Prospective investors should note that no
rulings have been or will be sought from the Internal Revenue Service (the "IRS"
or the "Service") with respect to any of the federal income tax consequences
discussed below, and no assurance can be given that the IRS will not take
contrary positions. It is anticipated that the Issuer Trustee will not be
indemnified for any United States federal income taxes that may be imposed upon
it, and the imposition of any such taxes on the Trust could result in a
reduction in the amounts available for distribution to the Noteholders.
In the opinion of Mayer, Brown & Platt, tax counsel to the Issuer Trustee
("Tax Counsel"), for United States federal income tax purposes, the Notes will
be characterized as debt of the Issuer Trustee. Each Noteholder, by the
acceptance of a Note, will agree to treat the Notes as indebtedness for federal
income tax purposes.
General
Each Noteholder will be required to report on its federal income tax
return interest income on Notes held by it in accordance with such Noteholder's
method of accounting.
Sales of Notes
A Noteholder's tax basis in a Note will equal its cost of such Note,
reduced by any amortized premium (as described below) and any payments other
than interest made on such Note and increased by any market discount or original
issue discount included in the Noteholder's income. A Noteholder that sells a
Note will recognize gain or loss (in the aggregate) in an amount equal to the
difference between its adjusted tax basis in the Note and the amount realized on
the sale (except to the extent attributable to accrued interest, which should be
taxable as interest income). Subject to the market discount provisions of the
Code (described below), any such gain or loss will be capital gain or loss if
the Note was held as a capital asset and, if the Note was held for more than one
year, will be long-term capital gain or loss. In the case of an individual
taxpayer, any capital gain on the sale of a Note will be taxed at a maximum rate
of 39.6% if the Note is held for not more than 12 months, at 28% if the Note is
held for more than 12 months, but not more than 18 months, and at 20% if the
Note is held for more than 18 months. Any capital losses realized will be
deductible by a corporate taxpayer only to the extent of capital gains and by an
individual taxpayer only to the extent of capital gains plus U.S. $3,000 of
other income.
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Market Discount
A purchaser of a Note will be considered to have acquired such Note at a
"market discount" to the extent the remaining principal amount of such Note
exceeds the Noteholder's tax basis in such Note, unless the excess does not
exceed a prescribed de minimis amount. In the event such excess exceeds the de
minimis amount, the Noteholder will be subject to the market discount rules of
Sections 1276 and 1278 of the Code with regard to such Note.
In the case of a sale or other disposition of a Note subject to the market
discount rules, Section 1276 of the Code requires that gain, if any, from such
sale or disposition be treated as ordinary income to the extent such gain
represents market discount that has accrued during the period in which the Note
was held by such Noteholder. In addition, a disposition of a Note by gift (and
in certain other circumstances), could result in the recognition of market
discount income, computed as if such Note had been sold for its fair market
value.
In the case of a partial principal payment on a Note subject to the market
discount rules, Section 1276 of the Code requires that such payment be included
in gross income as ordinary income to the extent such payment does not exceed
the market discount that has accrued during the period such Note was held by
such Noteholder. The amount of any accrued market discount later required to be
included in income upon a disposition, or subsequent partial principal payment,
will be reduced by the amount of accrued market discount previously included in
income.
Generally, market discount accrues under a straight line method, or, at
the election of the taxpayer, under a constant interest rate method. However, in
the case of bonds the principal of which may be paid in two or more installments
(such as the Notes), the manner in which market discount is to be accrued will
be described in Treasury regulations that have yet to be issued. Until such
Treasury regulations are issued, the explanatory conference committee Report to
the Tax Reform Act of 1986 (the "Conference Report") indicates that holders of
such obligations may elect to accrue market discount either on the basis of a
constant interest rate or as follows: (1) for those obligations that have
original issue discount ("OID"), market discount shall be deemed to accrue in
proportion to the accrual of OID for any accrual period, and (2) for those
obligations which do not have OID, the amount of market discount that is deemed
to accrue is the amount of market discount that bears the same ratio to the
total amount of remaining market discount that the amount of stated interest
paid in the accrual period bears to the total amount of stated interest
remaining to be paid on the obligation as of the beginning of such period.
Under Section 1277 of the Code, if in any taxable year interest paid or
accrued by a Noteholder on indebtedness incurred or continued to purchase or
carry a Note subject to the market discount rules exceeds the interest
(including OID) currently includible in income with respect to such Note,
deductions of such interest must be deferred to extent of the market discount
allocable to the taxable year. The deferred portion of any interest expense will
generally be deductible when such market discount is included in income upon the
sale or other disposition (including repayment) of the indebtedness.
Section 1278 of the Code allows a taxpayer to make an election to include
market discount in its gross income currently. If such election is made, the
rules of Sections 1276 and 1277 of the Code (described above) will not apply to
the taxpayer.
Due to the complexity of the market discount rules, prospective
Noteholders are advised to consult their tax advisors as to the applicability
and operation of the market discount rules.
Premium
A Noteholder will generally be considered to have acquired a Note at a
premium to the extent the Noteholder's tax basis in such Note exceeds the
remaining principal amount of such Note. In that event, a Noteholder who holds a
Note as a capital asset may amortize the premium as an offset to interest income
under Section 171 of the Code, with corresponding reductions in the Noteholder's
tax basis in the Note if an election under Section 171 of the Code is or has
been made with respect to all debt instruments held by the taxpayer (including
the Notes). Generally, such amortization is on a constant yield basis. However,
in the case of bonds the principal of which may be paid in two or more
installments (such as the Notes), the Conference Report indicates a
Congressional intent that amortization will be in accordance with the same rules
that will apply to the accrual of market discount on such obligations (see the
discussion of market discount above).
Backup Withholding
A Noteholder may be subject, under certain circumstances, to backup
withholding at a 31% rate with respect to "reportable payments" on the
Securities. This withholding generally applies only if the Noteholder (i) fails
to provide the Noteholder's social security or other taxpayer identification
number ("TIN"); (ii) furnishes an incorrect TIN; (iii) is notified by the
Service that the Noteholder has failed to report properly payments of interest
and dividends and the Service has notified the Issuer Trustee that the
Noteholder is subject to backup withholding; or (iv) fails, under certain
circumstances, to provide a certified statement, signed under penalty of
perjury, that the TIN provided is the Noteholder's correct number and that the
Noteholder is not subject to backup withholding. Any amount withheld from
payment to a Noteholder under
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the backup withholding rules is allowable as a credit against such Noteholder's
federal income tax liability, provided that the required information is
furnished to the Service. Certain Noteholders (including, among others,
corporations and foreign individuals who comply with certain certification
requirements) are not subject to backup withholding. Noteholders should consult
their tax advisors as to their qualifications for exemption from backup
withholding and the procedure for obtaining such an exemption.
ALL INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL,
STATE, LOCAL OR FOREIGN INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE NOTES.
CERTAIN AUSTRALIAN TAX MATTERS
The following statements with respect to Australian taxation are only
general summaries and are based on advice received by the Issuer Trustee.
Purchasers of Offered Notes should consult their own tax advisers concerning the
consequences, in their particular circumstances, under Australian tax laws, and
the laws of any other taxing jurisdiction, of the ownership of or any dealing in
the Notes. Any such dealing would need to comply with the selling restrictions
and securities law generally.
Payments of Principal, Premiums and Interest
Under existing Australian tax law, non-resident holders of Notes or
interests in any Global Note (other than persons holding such securities or
interest as part of a business carried on, at or through a permanent
establishment in Australia (an "Australian Establishment")) are not subject to
Australian income tax on payments of interest or amounts in the nature of
interest, other than interest withholding tax. Under Article 11 of the 1983
United States-Australia Tax Convention, the maximum Australian withholding rate
on interest paid to United States recipients is 10%. Under Australian law, the
withholding rates for payments to other jurisdictions is currently 10% on
interest or amounts in the nature of interest paid on the Notes. A premium on
redemption would generally be treated as an amount in the nature of interest for
this purpose.
Pursuant to section 128F of the Australian Income Tax Assessment Act 1936
(the "Tax Act"), an exemption from Australian interest withholding tax applies
provided all prescribed conditions are met. Such conditions include the issue of
the Offered Notes in a way that satisfies an objective public offer test. The
Issuer Trustee will seek to issue the Offered Notes in a way that will satisfy
such test and otherwise meet the requirements of section 128F including by
listing the Offered Notes.
The test will not be satisfied if the Issuer Trustee knew, or had
reasonable grounds to suspect, that the Offered Notes were being or would later
be acquired either directly or indirectly by:
(1) a resident of Australia for the purpose of section 128F of the Income
Tax Assessment Act 1936 of Australia; or
(2) an associate of the Issuer Trustee within the meaning of that section,
other than in the capacity of a dealer, manager or underwriter in relation
to the placement of an Offered Note.
The exemption from Australian withholding tax will also not apply to
interest paid by the Issuer Trustee to an associate of the Issuer Trustee within
the meaning of section 128F if, at the time of the payment, the Issuer Trustee
knows, or has reasonable grounds to suspect, that the person is an associate.
In a press release of the Federal Government of Australia late last year
entitled Investing for Growth, it was announced that "in order to encourage the
deepening and greater liquidity of the domestic corporate debt market, the
interest withholding tax exemption provided under section 128F of the Income Tax
Assessment Act 1936 will be widened by removing, for eligible debentures issued
by companies, the present requirement that such exemptions be issued outside
Australia and that the interest be paid outside Australia...this measure will
remove tax discrimination in favor corporate debt issued and foreign financial
markets over corporate debt issued in Australia markets."
The effect, form and timing of the proposed amendments are currently
unclear.
Profit on Sale
Under existing Australian law, non-resident holders of Offered Notes will
not be subject to Australian income tax on profits derived from the sale or
disposal of the Offered Notes provided that:
(1) the Offered Notes are not held as part of an Australian Establishment;
and
(2) the profits do not have an Australian source.
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The source of any profit on the disposal of Offered Notes will depend on
the factual circumstances of the actual disposal. Where the Offered Notes are
acquired and disposed of pursuant to contractual arrangements entered into and
concluded outside Australia, and the seller and the purchaser are non-residents
of Australia and do not have an Australian Establishment, the profit should not
have an Australian source. There are, however, specific withholding tax rules
that can apply to treat a portion of the sale price of Notes as interest for
withholding tax purposes (and which amounts are not covered by the exemption
conditions in section 128F). These rules can apply when:
(1) Offered Notes are sold for an amount in excess of their issue price
prior to maturity; or
(2) Offered Notes are sold to an Australian resident in connection with a
"washing arrangement" (as defined in the Tax Act).
Other Taxes
No stamp, issue, registration or similar taxes are payable in Australia in
connection with the issue of the Offered Notes. Furthermore, a transfer of, or
agreement to transfer, Offered Notes executed outside of Australia will not be
subject to Australian stamp duty.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act ("ERISA"),
and/or Section 4975 of the Code, prohibits a pension, profit-sharing or other
employee benefit plan, as well as individual retirement accounts and certain
types of Keogh Plans (each a "Benefit Plan") from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Code for such persons. Title
I of ERISA also requires that fiduciaries of a Benefit Plan subject to ERISA
make investments that are prudent, diversified (except if prudent not to do so)
and in accordance with governing plan documents.
Certain transactions involving the purchase, holding or transfer of the
Notes might be deemed to constitute prohibited transactions under ERISA and the
Code if assets of the Issuer Trustee were deemed to be assets of a Benefit Plan.
Under a regulation issued by the United States Department of Labor (the "Plan
Assets Regulation"), the assets of the Issuer Trustee would be treated as plan
assets of a Benefit Plan for the purposes of ERISA and the Code only if the
Benefit Plan acquires an "equity interest" in the Issuer Trustee and none of the
exceptions contained in the Plan Assets Regulation is applicable. An equity
interest is defined under the Plan Assets Regulation as an interest in an entity
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. Although there can be no
assurances in this regard, it appears that the Notes should be treated as debt
without substantial equity features for purposes of the Plan Assets Regulation
and that the Notes do not constitute equity interests in the Issuer Trustee for
purposes of the Plan Assets Regulation. However, without regard to whether the
Notes are treated as an equity interest for such purposes, the acquisition or
holding of Notes by or on behalf of a Benefit Plan could be considered to give
rise to a prohibited transaction if the Issuer Trustee or the Trustee, or any of
their respective affiliates is or becomes a party in interest or a disqualified
person with respect to such Benefit Plan. In such case, certain exemptions from
the prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 96-23, regarding transactions effected by "in-house asset managers";
PTCE 90-1, regarding investments by insurance company pooled separate accounts;
PTCE 95-60, regarding transactions effected by "insurance company general
accounts"; PTCE 91-38, regarding investments by bank collective investment
funds; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers." By its acquisition of a Note, each purchaser shall
be deemed to represent and warrant that its purchase and holding of the Note
will not result in a non-exempt prohibited transaction under ERISA or the Code.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
A PLAN FIDUCIARY CONSIDERING THE PURCHASE OF ANY OF THE NOTES SHOULD
CONSULT ITS TAX AND/OR LEGAL ADVISORS REGARDING WHETHER THE ASSETS OF THE ISSUER
TRUSTEE WOULD BE CONSIDERED PLAN ASSETS, THE POSSIBILITY OF EXEMPTIVE RELIEF
FROM THE PROHIBITED TRANSACTION RULES AND OTHER ISSUES AND THEIR POTENTIAL
CONSEQUENCES.
RATINGS OF THE NOTES
It is a condition to the issuance of the Class A Notes that they be rated
"AAA" by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies ("Standard & Poor's") and "Aaa" by Moody's Investors Service, Inc.
107
<PAGE>
("Moody's" and together with Standard & Poor's, the "Rating Agencies"). It is a
condition to the issuance of the Class B Notes that they be rated "AA-" by
Standard & Poor's. The security ratings of the Offered Notes should be evaluated
independently from similar ratings on other types of securities. A security
rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the Rating Agencies.
LEGAL INVESTMENT CONSIDERATIONS
The Offered Notes will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA"),
because the originator of the Mortgage Loans was not subject to United States
State of Federal regulatory authority. Accordingly, many institutions with legal
authority to invest in comparably rated securities based on such mortgage loans
may not be legally authorized to invest in the Offered Notes, which, for the
reasons stated herein, do not constitute "mortgage related securities" under
SMMEA.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Issuer Trustee has agreed to sell to the underwriters named below
(the "Underwriters"), and each of the Underwriters have severally agreed to
purchase, the principal amount of Notes set forth opposite its name below.
Principal Amount Principal Amount
Underwriter of Class A Notes of Class B Notes
- ------------------------------------ ---------------- ----------------
J.P. Morgan Securities Inc..........
Morgan, Stanley & Co. Incorporated..
Other Underwriters.................. ________________ ________________
Total.......................... US$__________ US$__________
The Underwriters have entered into the Underwriting Agreement with the
Issuer Trustee.
In the Underwriting Agreement, the Underwriters named therein have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Offered Notes offered hereby if any Offered Notes are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the Underwriting Agreement may be terminated.
The Issuer Trustee has been advised by the Underwriters that they propose
initially to offer the Offered Notes to the public at the respective offering
prices set forth on the cover page hereof and to certain dealers at such prices
less concessions not to exceed ______% of the Class A Principal Balance and
____% of the Class B Principal Balance.
With respect to the Class A Notes, the Underwriters may allow and such
dealers may reallow, a concession not to exceed ____% of the aggregate of the
Class A Principal Balance. With respect to the Class B Notes, the Underwriters
may allow and such dealers may reallow, a concession not to exceed ____% of the
Class B Principal Balance.
In connection with the offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Securities. Specifically, the Underwriters may overallot the offering, creating
a syndicate short position. In addition, the Underwriters may bid for, and
purchase, the Securities in the open market to cover syndicate shorts or to
stabilize the price of the Securities. Any of these activities may stabilize or
maintain the market price of the Securities above independent market levels. The
Underwriters are not required to engage in these activities, and if commenced,
such activities may be discontinued at any time.
After the initial public offering of the Offered Notes, the public
offering price and such concessions may be changed.
Pursuant to the Underwriting Agreement, Westpac Securities Administration
Limited, Westpac Banking Corporation and Westpac Securitisation Management Pty
Limited have agreed to indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or contribute to payments
which the Underwriters may require to make in respect thereof.
[LISTING AND GENERAL INFORMATION FOR NON-U.S. INVESTORS
Representations of Issuer Trustee and Underwriters
108
<PAGE>
Listing
Issuer Trustee
Documents Available for Collection and Inspection
Authorization
No Material Change
Litigation
Independent Accountants
Euroclear and Cedel
United States Law]
LEGAL MATTERS
Certain legal matters with respect to the Offered Notes will be passed
upon for the Trust and the Issuer Trustee by Mayer, Brown & Platt, Chicago,
Illinois, and Allen Allen & Hemsley, Sydney, Australia and for the Underwriters
by Brown & Wood LLP, New York, New York. The material U.S. federal income tax
consequences of the Offered Notes will be passed upon for the Trust and the
Issuer Trustee by Mayer, Brown & Platt, and certain Australian income tax
consequences will be passed upon for the Trust and Issuer Trustee by Allen Allen
& Hemsley.
109
<PAGE>
INDEX OF DEFINED TERMS
A$ Class A Interest Amount...................................................67
A$ Class B Interest Amount...................................................67
A$ Equivalent................................................................68
Accrued Interest Adjustment..............................................20, 35
ACN..........................................................................45
ACT..........................................................................39
Additional Termination Event.................................................98
Adverse Effect..........................................................30, 103
Agreement....................................................................99
AMP..........................................................................61
Approved Bank................................................................81
Approved Sellers.............................................................10
Australian Establishment....................................................106
Authorized Investments.......................................................81
Availability Fee.............................................................77
Available Income.........................................................19, 65
Available Liquidity Amount...................................................96
Available Redraw Amount......................................................76
Average Quarterly Percentage.................................................74
Bank Bill Rate...............................................................77
Basic Terms Modification.................................................87, 88
beneficial owner.............................................................83
Beneficiary..................................................................70
Benefit Plan................................................................107
Book-Entry Notes.........................................................64, 83
Borrower ....................................................................13
Business Day.............................................................11, 64
Carryover Charge Off.........................................................20
Carryover Class A Charge Offs................................................75
Carryover Class B Charge Offs................................................75
Carryover Redraw Charge Offs.................................................75
Carryover RFS Class A Charge Offs............................................75
CBA..........................................................................49
Cede..........................................................................2
Cedel.........................................................................1
Cedel Participants...........................................................84
Chargor......................................................................24
Class........................................................................11
Class A Charge Off...........................................................75
Class A Forex Percentage.....................................................74
Class A Notes.........................................................1, 10, 63
Class A Percentage...........................................................74
Class B Charge Off...........................................................75
Class B Notes.........................................................1, 10, 63
Class B Percentage...........................................................74
Closing Date.................................................................11
Code........................................................................104
Collection Account...........................................................81
Collection Determination Date................................................64
Collection Period............................................................64
Collections..........................................................19, 65, 99
Collections Account..........................................................14
Commission....................................................................2
common property..............................................................24
Company.......................................................................4
Concessional Fixed Rate......................................................27
Conference Report...........................................................105
Consumer Credit Legislation.............................................30, 103
Cooperative..................................................................85
CPR..........................................................................62
Currency Swap................................................................99
Currency Swap Provider.......................................................99
110
<PAGE>
Cut-Off Date.................................................................11
Cut-Off Date Balance Outstanding.........................................14, 36
Cut-Off Date Loan Balance....................................................36
Definitive Note..............................................................83
Definitive Notes.............................................................86
Delinquent...........................................................15, 50, 96
Depository...................................................................64
Draw Fee ....................................................................77
DTC.......................................................................1, 83
Eligibility Criteria.........................................................37
Eligible Servicer............................................................29
ERISA.......................................................................107
Euroclear.....................................................................1
Euroclear Operator...........................................................85
Euroclear Participants.......................................................85
European Depositaries........................................................83
Event of Default.............................................................88
Excess Available Income..................................................20, 69
Excess Collections Distribution..........................................20, 70
Exchange Act..................................................................2
Fair Market Value............................................................16
Finance Charge Collections...................................................66
Finance Charge Loss..........................................................66
Financial Intermediary.......................................................83
Fixed Rate...................................................................27
Fixed Rate Housing Loans.....................................................39
GECA.........................................................................60
Government...................................................................60
Gross Principal Collections..............................................19, 70
HLIC.....................................................................12, 58
Holders......................................................................64
Housing Loan Principal.......................................................74
Housing Loans.................................................................1
Initial Principal Distributions..............................................71
Initial Subordinated Percentage..............................................74
Insolvency Event.............................................................78
Insurance policy.............................................................37
Insurance proceeds...........................................................37
Interest ............................................................11, 69, 80
Interest Determination Date..............................................64, 69
Interest Period..............................................................11
Interest Rate............................................................11, 69
Interest Rate Swap Provider..................................................98
Invested Amount..........................................................11, 20
IRS.........................................................................104
ISDA.........................................................................69
ISDA Definitions.............................................................69
ISDA Master Agreement........................................................15
Issuer Trustee........................................................1, 10, 44
Issuer Trustee Fee...........................................................47
Issuer Trustee's Default.....................................................47
J.P. Morgan.................................................................101
Liquidation Loss.............................................................20
Liquidation Losses...........................................................66
Liquidation Proceeds.........................................................66
Liquidity Draw...............................................................96
Liquidity Facility Provider..................................................14
Liquidity Limit..........................................................15, 95
Liquidity Shortfall..........................................................96
LMI..........................................................................60
LVR..........................................................................14
Master Trust Deed............................................................10
Maturity Date................................................................11
MGICA....................................................................12, 58
111
<PAGE>
MIP..........................................................................50
Moody's ................................................................16, 108
Mortgage Insurance Policies..................................................12
Mortgage Insurers............................................................13
Mortgage Pool Insurance Policy...........................................12, 58
Mortgage Rates...............................................................14
Mortgage Shortfall.......................................................20, 74
Mortgaged Property...........................................................13
Mortgagees...............................................................15, 33
Mortgages....................................................................36
MPC..........................................................................49
Net Principal Collections................................................12, 71
Note Owners..................................................................83
Noteholder...................................................................83
Noteholders..................................................................64
Notes....................................................................10, 63
NSW..........................................................................39
NT...........................................................................39
Offered Noteholders..........................................................11
Offered Notes.........................................................1, 10, 63
OID.........................................................................105
P & I........................................................................57
Payment Date..............................................................1, 11
payment holiday..............................................................56
Payment Shortfall........................................................14, 67
Performing Loan..........................................................15, 95
Plan Assets Regulation......................................................107
PMI Policy...............................................................12, 60
Prepayment Benefit...........................................................66
Prepayment Benefit Shortfall.................................................66
Prepayment Calculation Adjustment............................................71
Prepayment Cost..............................................................66
Prepayment Cost Surplus......................................................66
Prepayment Model.............................................................62
Principal Charge Off.....................................................20, 74
Principal Collections....................................................19, 71
Principal Draw.......................................................14, 19, 67
Principal Loss...........................................................20, 66
Principal Outstanding........................................................76
Procedures Manual............................................................92
PTCE........................................................................107
QLD..........................................................................39
Quarter......................................................................64
Quarterly Percentage.........................................................74
Rating Agencies.........................................................16, 108
Record Date..................................................................11
Redraw...................................................................56, 76
Redraw Advance...............................................................76
Redraw Facility Agreement....................................................76
Redraw Facility Charge Off...................................................75
Redraw Facility Provider.....................................................76
Redraw Funding Securities....................................................10
Redraw Limit.................................................................76
Redraw Shortfall.............................................................76
Registration Statement........................................................4
Related Securities...........................................................37
Related Security.............................................................37
relevant corporation.........................................................78
Relevant Depositary..........................................................83
Relevant Document............................................................37
Relevant Documents...........................................................66
Remaining Liquidity Shortfall................................................67
Remittance Date..............................................................65
Replacement Currency Swap...................................................100
112
<PAGE>
RFS..........................................................................79
RFS Charge Off...............................................................75
RFS Class A Charge Off.......................................................75
RFS Class A Forex Percentage.................................................74
RFS Class A Interest.........................................................68
RFS Class A Note.............................................................79
RFS Class A Notes............................................................10
RFS Interest.................................................................68
RFS Series...................................................................79
RFSs......................................................................2, 10
RSALMI.......................................................................61
Rules........................................................................84
SA...........................................................................39
Sale Notice..................................................................10
Scheduled Payment............................................................13
Securities Act................................................................4
Securitized Portfolios.......................................................50
Security Trustee.............................................................33
Security Trustee Fee.........................................................35
Seller Trustee...........................................................10, 32
Serial Method 1 Distribution Test............................................72
Serial Method 2 Distribution Test............................................73
Series Notice................................................................15
Service.....................................................................104
Servicer ................................................................10, 37
Servicer Transfer Event......................................................94
Servicing Agreement..........................................................10
Servicing Fee................................................................94
SMMEA...................................................................16, 108
Standard & Poor's.......................................................16, 107
Stated Amount................................................................20
Subordinated Percentage......................................................74
SunAlliance..............................................................12, 58
Support Facility.............................................................15
Swap Agreements..............................................................15
Swap Providers...............................................................99
TAS..........................................................................39
Tax Act.....................................................................106
Tax Counsel.................................................................104
Term.........................................................................95
Termination Date.............................................................78
Terms and Conditions.........................................................85
Threshold Rate...........................................................27, 99
TIN.........................................................................105
Title Perfection Event.......................................................23
TMC..........................................................................10
top ups......................................................................57
Torrens title................................................................24
Total Available Funds........................................................65
Total Carryover Charge Off...................................................75
Total Payments...........................................................20, 68
Transaction Documents........................................................15
Transfer Agent and Registrar.................................................86
Trust.................................................................1, 10, 15
Trust Accounts...............................................................81
Trust Assets..................................................................2
Trust Expenses...............................................................68
Trust Manager............................................................10, 52
Trust Manager Fee............................................................53
Trust Manager's Default......................................................53
Underwriters................................................................108
Unpaid Balance...............................................................15
US$ Account..................................................................75
USD-LIBOR-Reference Banks....................................................69
113
<PAGE>
Variable Rate Housing Loans..................................................39
Vic..........................................................................39
Voting Mortgagee.............................................................90
WA...........................................................................39
weighted average life........................................................62
Westpac...............................................................1, 10, 49
Westpac Group................................................................32
WLMI.....................................................................13, 58
WSML.........................................................................52
114
<PAGE>
A1-I
APPENDIX I - GLOSSARY OF AUSTRALIAN LEGAL TERMS
"Charge" means the charge created by the Security Trust Deed. A Charge is a
proprietary interest created over property.
"Chargor" means the person or entity granting a Charge.
"in Arrears" has substantially the same meaning in the U.S. as "Delinquent" (as
defined herein).
"lodging caveats" in Australia is a practice by which one party identifies
himself or herself to the world at large as another "party in interest" to the
title or other ownership interest in property, similar to the notation of a
security interest or other claim on an instrument of title in the U.S.
Mortgagee in Possession ("MIP") means a mortgagee in possession of the related
Mortgaged Property who is able to deal with the Mortgaged Property without
owning it.
"Registered" means a registration has been filed with lands office, granting
certain rights with respect to the Housing Loan.
"Secured Moneys" means all money which the Issuer Trustee (whether alone or with
another person) is or at any time may become actually or contingently liable to
pay to or for the account of any Mortgagee (whether alone or with another
person) for any reason whatever under or in connection with a Trust Document.
Strata title means a system of title in which the relevant land is divided into
the relevant number of units. Each proprietor has title to, and may freely
dispose of, their unit. All proprietors are members of a "body corporate", which
monitors compliance with rules governing the apartment block. Certain parts of
the property, such as stairwells, entrance lobbies and the like are known as
"common property" and are owned by the body corporate as a whole rather than by
individual proprietors.
Torrens title means a system of title in which the relevant land is freehold
title, interests in which are created by registration in a central land registry
of the relevant State or Territory. Each parcel of land is represented by a
specific certificate of title. The original certificate is retained by the
registry, and in most States a duplicate certificate is issued to the owner. Any
dealing with the relevant land is carried out by pro forma instruments which
become effective on registration.
Appendix I-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution*
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the Notes being registered under this
Registration Statement, other than underwriting discounts and commissions:
SEC Registration Fee............................................ $ 295.00
Printing and Engraving.......................................... $ **
Legal Fees and Expenses......................................... $ **
Trustee Fees and Expenses....................................... $ **
Rating Agency Fees.............................................. $ **
Miscellaneous................................................... $ **
============
Total........................................................... $ **
============
- ----------
* All amounts except the SEC Registration Fee are estimates of expenses
incurred in connection with the issuance and distribution of the Notes.
** To be supplied by amendment.
Item 14. Indemnification of Directors and Officers.
[Include Indemnification Arrangements from Registrant's Certificate of
Incorporation]
Item 15. Recent Sales of Unregistered Securities.
The Registrant has not previously sold unregistered securities.
Item 16. Exhibits and Financial Statement Schedules.
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of the Registrant.*
3.2 By-laws of the Registrant.*
4.1 Form of Master Trust Deed.*
4.2 The Series Notice.*
4.3 The Note Trust Deed.*
4.4 The Security Trust Deed.*
5.1 Opinion of Mayer, Brown & Platt as to legality of the Notes.*
8.1 Opinion of Mayer, Brown & Platt as to certain tax matters.*
10.1 The Servicing Agreement.*
10.2 The Servicing Agreement Amendment Agreement.*
10.3 The Liquidity Facility Agreement.*
23.1 Consent of Mayer, Brown & Platt (included in Exhibit 5.1 and Exhibit
8.1 hereof).*
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of Trustee.*
99.1 Opinion of Allen Allen & Hemsley as to Enforceability of U.S. Judgments
under Australian Law.*
- ----------
* To be filed by amendment.
Item 17. Undertakings.
The undersigned Registrant on behalf of the Westpac Securitization Trust, Series
1998-1G (the "Trust") hereby undertakes:
(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, as amended (the "Act");
II-1
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(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.
(4) To file a post-effective amendment to the registration statement
to include any financial statements required by Rule 3-19 at the start of
any delayed offering or throughout a continuous offering.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sydney, Australia, on the 18th day of February 1998.
WESTPAC SECURITISATION MANAGEMENT PTY LIMITED
By /s/ Lewis E. Love, Jr.
------------------------------------
Lewis E. Love, Jr.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Lewis E. Love, Jr. or Kimberly Gire, or
any of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, 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 he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ R. Patrick Handley Principal Executive Officer February 18, 1998
- --------------------------- and Director
R. Patrick Handley
/s/ Marten Touw Principal Financial Officer February 18, 1998
- --------------------------- and Director
Marten Touw
/s/ David Vaz Principal Accounting Officer February 18, 1998
- ---------------------------
David Vaz
/s/ Kimberly Gire Director February 18, 1998
- ---------------------------
Kimberly Gire
/s/ Lewis E. Love, Jr. Director February 18, 1998
- ---------------------------
Lewis E. Love, Jr.
/s/ Phil Chronican Director February 18, 1998
- ---------------------------
Phil Chronican
II-3
<PAGE>
SIGNATURE OF AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of
1933, the undersigned hereby certifies that it is the duly authorized
representative in the United States of the Registrant with respect to the
Registration Statement and signs this Registration Statement solely in such
capacity and for the limited purpose of said Section 6(a).
/s/ Lewis E. Love, Jr.
--------------------------------------------------------
Name: Lewis E. Love, Jr.
Director & Secretary
Address: Westpac Securitisation Management Pty Limited
575 Fifth Avenue
39th Floor
New York, New York 10017-2422
Telephone: (212) 551-1905
II-4
<PAGE>
EXHIBITS INDEX
Sequential
Exhibit Page
No. Description of Exhibit Number
- ------- ---------------------- ----------
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of the Registrant.*
3.2 By-laws of the Registrant.*
4.1 Form of Master Trust Deed.*
4.2 The Series Notice.*
4.3 The Note Trust Deed.*
4.4 The Security Trust Deed.*
5.1 Opinion of Mayer, Brown & Platt as to legality
of the Notes.*
8.1 Opinion of Mayer, Brown & Platt as to certain
tax matters.*
10.1 The Servicing Agreement.*
10.2 The Servicing Agreement Amendment Agreement.*
10.3 The Liquidity Facility Agreement.*
23.1 Consent of Mayer, Brown & Platt (included in
Exhibit 5.1 and Exhibit 8.1 hereof).*
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of Trustee.*
99.1 Opinion of Allen Allen & Hemsley as to
Enforceability of U.S. Judgments under Australian Law.*
- ----------
* To be filed by amendment.
